Locus raises $50M to build the operating system of logistics

“Logistics decisions are actually not designed for humans because it involves a lot of confusion,” he explained. “For example, dispatching takes into account a lot of fast-moving variables that take place within a small amount of time, and there is no way a human can do it efficiently.”

Rastogi explained that past logistical models are a perfect example of a “spherical cow,” a scientific joke that mocks theorists whose conclusions often come from impractical real-life assumptions. He explained that the Locus team focuses on building patented technology that addresses real-life problems that affect everyday supply chains for customers including BigBasket, Nestle, Modelez, The Tata Group and Unilever. 

“Some addresses will not be correct, some of your orders will be returned, some of your orders will only come in the morning, some will need a security clearance,” he said. “There will be traffic and weather delays, and there will be a driver who will take a coffee break during certain stops. If you can’t factor all of these exceptions, your software will only address 90% of the issues. At some point you will need a human to intervene.”

Rastogi elaborated on the issue of addresses, as many of his customers deliver in areas with much less infrastructure than exists in countries like the United States. Using Locus’ proprietary Smart Geocoding engine, the company is able to convert the fuzziest addresses around the globe into precise geographical coordinates. These addresses are then mapped correctly, avoiding a variety of errors and misrouting.

Solving problems related to planning deliveries in these remote areas has become even more crucial for customers than in the past, and as new delivery technologies like drones and self-driving vehicles come into play, Locus’ patents become even more valuable.

The company has recently filed for over 10 patents and is looking to double that count by this year with its new funds.

Rastogi explained that when raising capital, investors went into the partnership understanding their investment was patient capital for the company, as it aimed to solve long-term problems that would truly change the decision-making around logistical challenges.

“This is why we went with the sovereign wealth fund,” he said. “We gave them 15-year projections because that’s how we think about these problems; it’s not an overnight game. We’re not really just solving for GPS. For example, my chief data scientist was a microbiologist at Scripps Research in San Diego, graduating from Carnegie Mellon. On the surface, that has nothing to do with operational research techniques, but you would be surprised to know how efficient we are in finding solutions.”

He went on to explain that this new raise will be used to add more data scientists to the team for research and development and expand its product managers across the globe.

“These funds will go into two areas,” said Rastogi. “One, the research and development side to collect better data and utilize that data. Second, building a local presence in each of our regions to allow us to serve large clients who are also present in multiple regions. We are hiring product managers within Europe, both Eastern Europe, like Croatia, as well as Western Europe, like London. We will continue to grow in South America and plan to double down in Latin America. We also plan on hiring in Southeast Asia, including Jakarta.”

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