In 2022, a supply chain inefficiency in the Suez Canal resulted in millions of dollars in lost sales in Southern California, demonstrating how, in today’s interconnected world, dozens of different entities around the globe need to work in concert to deliver a seamless flow of goods across borders, oceans and beyond.
Fortunately, companies of all sizes are finding innovative solutions to better synchronize complex networks and meet the volatile ebb and flow of demand. Drawing on our expertise in supply chain logistics, Prologis’ goal is to help some of these enterprises* succeed through the Prologis Ventures team. Established in 2016, this venture capital and innovation arm provides Series A through growth-stage funding to co-develop solutions and back emerging companies devoted to transforming the logistics sector.
We caught up with Will O’Donnell—a 20-year Prologis veteran using his tech and real estate experience as the managing partner of Prologis Ventures—to discuss how his team finds the best investments, solves customer pain points and gleans feedback to help supply chains thrive. Below are some key insights from O’Donnell.
How does Prologis Ventures support a broader mission?
Innovation is embedded in the DNA of Prologis, and Ventures is an extension of that. Through Prologis Ventures, we look beyond our real estate roots to identify new business models and technologies that drive value for the company and our customers. Recently, we doubled our efforts on artificial intelligence opportunities.
Where does Prologis Ventures uncover the best opportunities?
Prologis is a neutral third party that provides infrastructure to the supply chain and allows disparate parties to execute commerce more effectively, giving us deep relationships with a wide range of companies. Inherently, we are a company of curious people, and our position allows us to connect the dots across these different parties as we pull together their different perspectives.
We partner closely with our customers to develop a deep understanding of the pain points in logistics and where there may be gaps or friction in the supply chain. By doing this, we can identify the best technology or business models to address the issues.
What is the impact of self-imposed constraints on innovation?
Innovation occurs when you remove constraints, especially self-imposed constraints, paving the way for white space. For example, McDonald’s got an enormous boost when they decided [in 2015] to serve breakfast all day. That was a self-imposed constraint, and they wisely decided to get rid of it.
Experience can help us do our jobs better, but it can also inhibit us from seeing that there may be a better way to do things. That’s where Ventures comes in. We evaluate new technologies and business models to see how they may remove constraints to drive transformational change for our business and industry. We also learn how other industries are innovating and what lessons we can apply.
How do you spot successful companies?
There are many variables that determine whether a company is successful or not. These variables are different depending on the type of investment, but a couple are important across the board. First is the management team. Having the right people in the right place at the right time is critical. Second is the idea the company brings to the table. Is this truly an idea that solves a problem and has scale? Are the business’s underlying unit economics profitable? And what makes this company different from others trying to do similar things? These are the kinds of questions we ask when we search for companies to invest in.
What is the top advice for entrepreneurs and startups?
Simplification is key. People are struggling with problems right now, and they don't necessarily care how your robot works. Startups get very excited about the complexity of their technology, but an operator just wants to know the outcome: Will it save them X amount of time and money? You need to be able to distill your offering to its core value and meaningful outcome for the user.
How important is it to bring a mix of investors to a project?
We believe it’s extremely important to collaborate with other investors. At Prologis, we have deep expertise in supply chain logistics, plus extensive customer connections. Other investors may have expertise in building SaaS [software as a service], building a robust technology architecture or taking a company through the headcount evolution of going from five to 500 people. A trucking company or retailer is going to bring a different perspective to investment than someone who owns the real estate. For me, combining these different viewpoints to build solutions is one of the most interesting parts of what Prologis Ventures does.
Why are diversity and inclusion crucial?
With a diverse workforce, you’re going to have a range of perspectives and ideas that will enable you to move in new directions. The goal is to get new voices in the room. The voice we've traditionally heard is going to reinforce what we've done the last 20 years, not what we need to do for the next 10, and I am proud to say that my team is over 70% female/minority in an industry that is predominantly white male.
What is the importance of collaborating with customers?
We host subject-specific summits, where we bring customers together to have an open dialogue about issues that are important to them. For example, we’ve held summits on automation, freight markets and AI. Our customers are appreciative because we proactively come to them and say, “This is challenging. Let’s have a conversation about how we can develop solutions together.” At the end of the day, our goal is to provide the infrastructure they need to run their respective businesses.
Why is the future exciting?
We’ve been spending a lot of time working toward a net-zero emissions future, both in Ventures and in the company as a whole. We were ranked #2 in the U.S. for installed onsite solar capacity, and we’ve incubated and launched a mobility business to help our customers with their [electric] fleet conversions. There are very few things people can do in their lives that can dramatically impact the quality of existence for humans at scale. I love that I can help make the world a better place for my two daughters through the work I do at Prologis.
* Leaders from several Prologis Venture-backed organizations spoke at Prologis’ 2023 annual GROUNDBREAKERS forum, which centered around AI-powered solutions helping businesses and the people they serve. Learn more about the innovative work of these organizations through a quick recap
