When did Leaders Stop Owning Their Failures? A project44 story.
As what passes for C-level and decision-makers at project44 scramble to create a narrative in the wake of their 10% layoffs, you have to wonder what's next for the self-proclaimed "rocket ship of logistics technology"?
Having written about Gartner's Magic Quadrant a few days ago, I wasn't expecting to be talking about P44 again so soon. But with their layoff announcement and the rumor mill churning, it's an important topic to cover.
Take Responsibility for Your Failures, or Blame the World?
Having been on what seemed like a sales and marketing frenzy in recent months, with big appearances at TPM, Manifest, and more recently Gartner's Supply Chain Symposium in Orlando, it feels strange to think that p44 is running out of funding. But once you read Jett's communications through their favorite channel Freightwaves, it all starts to make sense.
It was delightful to see p44's founder finally show staff and ex-staff some respect and admit that mistakes were made… Oh, no wait that's not the narrative they've chosen at all. Taking a page out of Freightos' playbook (more on that here), p44's PR team has chosen to blame the industry, venture capitalists, and changing mindsets.
"With increased market volatility, we’ve seen a broader shift in the [venture capital] landscape as investors become more cautious,”
“Investors have shifted from a growth-at-all-costs mindset to focus on the path to profitability and scalable growth."
Let me get this right. Because the market has changed (at least 12 months ago, writing was on the wall before then) and VCs have reacted accordingly, project44 needs to let people go. Sure, but why haven't Shippeo and FourKites given any signs of struggle or potential layoffs coming? Are Matt Elenjickal and Pierre Khoury just that much better than p44 at hiding their respective company's struggles?
The astonishing thing about these quotes is that it has taken p44 until the end of May 2023 to realize something that the industry has been saying since Q4 2022 at least. P44 themselves were aware of the economic uncertainty having let go of 5% of the workforce back in July 2022. Not enough time between then and now to actually build a product and retain customers?
Since that round of 5% layoffs, they've let some more people go, and we're probably looking at close to 18% overall layoffs in a year. The question is, what's the end goal, and what are their outs?
An impossible situation of their own doing?
If you've been following the visibility space over the last 12 or so months, p44's current situation will not come as a surprise. But when did it all start to go so wrong?
During the logistics "Gold Rush" that came with the Covid-19 pandemic, visibility was pushed to the top of everyone's priority list. Once a nice to have or even an afterthought, BCOs were put in a difficult position by unscrupulous forwarders and carriers alike, keen to cash in with rights climbing higher by the day. This created a perfect scenario for the likes of p44, FourKites, and Shippeo, but they weren't really up to the task of delivering what they were selling.
Both FourKites and Shippeo seem to be more cautious now with their approach, and with their marketing strategies. Replacing real-time visibility with supply chain visibility. Focusing on what you can do with the data, rather than the data itself.
P44 chose another path. A louder path. P44 chose to sink spending into marketing, a flashy Champs Elysée office, flights on private jets, Gartner analysts (allegedly), and a failed product revamp which was nothing more than a UI skin for a product that already provided questionable valuable.
Never dialing back, p44 pursued acquisitions and expansions. But never built on any of their big decisions. This appears to be where they really went wrong. At some point, they lost sight of what they were trying to become. Instead of being a product-driven company that would conquer the world, it turned into a sales and marketing-led monster.
There are two things that are certain in logistics technology: it's a highly competitive environment and you cannot succeed without a real product.
project44 had that product within their reach. By their own admission, they had Zettabytes of data. They acquired the likes of Ocean Insights, a company with its own interesting history but that was relatively successful and on a decent track. Backed by some huge names and with a war chest that most founders could only dream of, p44 managed to fail where it mattered most: product.
"Movement" was launched in Apple-esque fashion. A flashy presentation, big promises, customer "interviews". It seems like the industry was behind this amazing new product that would disrupt and reinvent real-time visibility. This product is now referred to as "little v" by p44's CEO, who claims that "big V" is on the way.
Nearly $900 million dollars later, ten years of work, Zettabytes of data, some of the industry's brightest minds, and "big V" is on the way. Jett himself recently said that p44 is only 1% of the way there. How can you admit this publicly? After everything that was required to achieve this 1%? Madness, and a terrible message to convey to customers and investors alike.
A bumpy road ahead with no obvious pathway to success in sight
Let's consider for a moment that p44 has just bought themselves another few months, on top of the 10-12 months of runway they had left. What are they going to be able to realistically achieve in that timeframe?
Unless "Big V" is around the corner and truly is disruptive and industry-defining, they will have to make do with what they have, and try to build on that. According to Eric Johnson's recent JOC article, it looks like customers are not too happy, and things are starting to unravel. So where to from here?
Will they be pushed, like Freightos, into an IPO that nobody really wants? With funds drying up and no sign of further financial relief in sight (darn those selfish VCs for closing the tap after 10 years and no real product!), it could happen.
But right now the most likely outcome is an acquisition. And according to the messages I've been receiving, there are two main contenders: Richard White's WiseTech Global, and Christian Klein's SAP.
Would WiseTech Really Buy P44?
WiseTech acquiring p44 actually makes some sense and is a rational hypothesis. They've recently spent close to $1bn AUD on two north american companies, and having a US land data component added to that would complete the picture.
They've also been periodically talking about its new customer-facing portal called NEO. This BCO-facing solution will be their first real interaction outside of logistics service providers (you can't really count Webtracker, which serves its purpose, but does nothing for customer experience). Acquiring p44 would mean acquiring a BCO customer base, to whom they could sell premium services through NEO. And if they ever get their global customs product figured out, they could easily sell a standalone version to BCOs too.
Or can SAP Squeeze More Value out of P44 Through Their Reach?
On the flip side, SAP already has skin in the p44 game through Sapphire Ventures. How much of the company they own and how much has been sunk into them is a great question. Add to this the premium partnership SAP and p44 share, and SAP's desire to remain relevant in the logistics space after failing multiple huge implementations with the likes of DHL and Panalpina…
They also benefit from their size and could put P44's data to good use in a vast number of projects. Whether that data is good enough or will end up proving a fool's errand is another question, and one that I hope will be answered during a diligence phase, rather than post-acquisition. There's nothing worse than wasting more money on an already costly endeavor.
My personal take is that p44 is far too expensive for what it is, even at the $800mn price point, and that WiseTech would be best served to facilitate integrations to CargoWise for all data providers. They could then sell this as a premium service for those who want it, or let customers use the data provided by the carriers directly with the atrocious lag times through their APIs.
You'd be forgiven for thinking that Maersk or another financially loaded carrier such as CMA CGM would be interested in p44. I too believed this up until recently. The fact is most ocean carriers have shown a lack of innovation and initiative in this space. I'm starting to believe that their approach is to avoid showing as much as they can to give themselves more breathing room. There cannot be any other explanation as to why Maersk would use Tive as part of its new "innovation center" for visibility.
Whatever happens, it looks like project44 is slowly but surely cementing itself as the best candidate for LogTech's future Netflix documentary. As the C-level at project44 continues to steer it, and nearly $900mn of investors' money, into what can only be described as the same brick wall that pushed Freightos into an IPO, we're forced to watch.
Visibility is a space screaming for real innovation. What form will that take? We've seen some companies attempt to build smarter devices or focus on the container security side of things, but they are struggling to gain traction. Is this due to a lack of interest or a lack of desire to fit the bill? Who should pay for better visibility, the BCO, the carrier, or the forwarder?
It looks like the visibility part of our industry is going through a period of change. Change in what the customer expects, and a change of roles and responsibilities. The big question is: will project44 even be around to have its say when the dust is settled?
Hi, I'm Anthony, and I'm a bit of a Logistics and Logistics Tech Nerd. My opinions are my own, and I encourage you to share yours. Let's attempt to make Supply Chains and Logistics a more transparent and high-value place.
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