Supply chain: Gatik CEO details growth of self-driving commercial trucking

Gatik CEO and co-founder Gautam Narang joins Yahoo Finance Live to discuss how the company is scaling its self-driving trucking business.

Video transcript

BRIAN SOZZI: Self-driving semi truck startup Gatik has inked a deal with Georgia Pacific and KBX to bring household essentials to Sam's Club warehouse locations in the Dallas Fort Worth area. Joining us now to discuss the road ahead is Gatik CEO and Co-founder, Gautam Narang. Of course, we're joined by Pras Subramanian, our senior auto correspondent.

Good to see you again, Gautam. Talk to us about how you're making these trucks drive on public roads when there's other traffic around them.

GAUTAM NARANG: Sure. Thank you so much for having me on. This week, we announced a major partnership-- this is with Georgia-Pacific and KBX Logistics-- where our Class 6 autonomous box trucks will be moving Georgia-Pacific products from one of the distribution centers to a large network of Sam's Club location, over 30 store locations, to be exact. Our approach towards autonomy has always been route-specific.

So it's a B2B short haul logistics use case where our Class 6 trucks move items on fixed, repeatable routes. And behind all of this the thesis is if we focus on these fixed, repeatable routes, over-optimize the technology for these routes, we can get to the market faster. We can get to the point where we can safely take the driver out sooner. And this is basically what we did in August of last year when Gatik became the first and the only autonomous trucking company to operate in a commercial capacity without anyone behind the steering wheel.

PRAS SUBRAMANIAN: Hey, Gautam. Pras here. So you guys worked with Walmart initially, I believe in Arkansas, right, at the facility. How did that deal come about? And what did you guys do they're going to get to where you are now.

GAUTAM NARANG: Yeah. So we started commercialization since summer of 2019. The approach has always been differentiated compared to some of the other applications in the EV industry. To my knowledge, there is no other company that is providing this kind of service, which is Class 3 to Class 6 trucks, targeting this middle mile segment of the supply chain, which, at a high level, is between long haul trucking, which is highway-only, and B2C deliveries on the customer's doorstep.

So the way we look at our partnerships is we provide something that enables high frequency deliveries, high frequency store replenishment for our customers. And this kind of differentiated value proposition is unique. That has allowed us to gather these long-term partnerships not just with the Walmart, but with Georgia-Pacific, KBX, multiple other retailers, e-commerce companies, CPG, and distributors.

BRAD SMITH: As we hear more from these companies around where they're trying to cut certain costs, some of the operations per mile certainly come into the conversation as well. How much, exactly, is this going to be able to take some of those operating costs down over time?

GAUTAM NARANG: Yeah. So long-term, the aim is to help save up to 30% in the operating cost. But more than that, it's all about increasing capacity, increasing that high frequency replenishment rate. So when we think about our value proposition, yes, cost savings is one of the propositions that we offer long-term.

In the more near-term future, we are helping address the labor shortage, helping increase this capacity, increase the rate at which the stores are being replenished. And we are doing that in a capital efficient way.

JULIE HYMAN: Gautam, it's Julie here. I want to ask about what you're seeing funding wise, because we are seeing, both in the public and private markets, a pretty significant pullback in funding, right-- in your industry and more broadly-- in startups. What are you guys seeing out there? Are you seeing any kind of tightening of purse strings among folks who are funding you?

GAUTAM NARANG: So Gatik has been very well capitalized. Today, we have a very strong balance sheet. The company has raised over $115 million. We have investors that believe in the vision of the company long-term. And to differentiate our approach, it's very different from, let's say, what some of the other companies in our space has taken.

It's a very capital efficient approach, where we focus on iterative route by route go-to-market, versus a zero to one step function, where these companies have to solve for the technology to be sold more broadly before they can commercialize. We have been commercializing since the last three years.

And this capital efficient approach towards autonomy, towards go-to-market is something that is resonating well with the investors. So over the last, I would say, few months and the last couple of years, we have seen strong investor interest. And you know, today, as I mentioned, the company is in a very strong position to execute on the vision for the next few years.

PRAS SUBRAMANIAN: Hey, Gautam-- so what's next for the company beyond Dallas and Sam's Club? Is there more plans for growth? And also how do you address concerns about safety and people concerned about cars without drivers in their neighborhoods.

GAUTAM NARANG: Yeah. So today, Gatik has 100% safety record. We have been live in five different markets. We are expanding our footprint. So this year and next year, it's all about scaling and growth. We're trying to get as many trucks as we can on the road through our partnership with the OEM partners, like Isuzu and others.

And our technology was validated last year when we took the driver out in a safe manner on one of our commercial routes-- this was with Walmart in Arkansas. The plan is to do that at multiple other sites with different customers this year and next. So again, we are the first and the only company that has been able to do that successfully in a commercial capacity.