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Two startup guys who are taking on Amazon

Dhruv Saxena and Divey Gulati spent a lot of time standing in line at the Willis Tower post office in 2013. Boyhood friends fresh out of grad school, the two had launched a side project called SnailMailPics that mailed printed copies of cellphone photos that customers ordered via text message. Technology made the whole operation simple, except for that last step at the post office.

So the two engineers began brainstorming a better way. They came up with​ ShipBob. “When engineers encounter problems in their personal lives, they try to create solutions,” says Saxena, ShipBob’s CEO. “We knew there had to be a better way.”

Solving the substantial logistics hurdles faced by mom-and-pop internet retailers is no small engineering challenge. Yet four years later, Saxena and Gulati seem well on their way: In June, their West Side company received $17.5 million in venture capital, led by Bain Capital.

ShipBob helps small businesses ship products at Amazon-like speeds by using fulfillment centers in major cities—Chicago, Los Angeles and New York are its first three markets—along with an algorithm that helps the company figure out what to stock in those facilities and what to house in cheaper regional warehouses where it leases space. The result is a system that enables outfits like Chicago-based healthy snack maker JimmyBar Natural Foods to better compete with online giants. “We help small businesses replicate the Amazon Prime infrastructure for their own customers,” says COO Gulati.

Saxena and Gulati, both 29, met as 2-year-olds in New Delhi and later hatched a plan to study engineering together at Purdue University—until Gulati pulled a last-minute switch and chose the University of Illinois at Urbana-Champaign. They stayed at their respective campuses to earn graduate degrees; Saxena received a master’s in electrical engineering in 2011, and Gulati got an MBA in 2013. Both found work in Chicago, Saxena as a software developer at Purdue and then InContext Solutions and Gulati as a consultant at Deloitte.

ShipBob was admitted to the summer 2014 class of Silicon Valley startup accelerator Y Combinator. They raised $5 million altogether in 2015 and 2016, prior to this summer’s larger investment. The partners will use the money to build a network of fulfillment centers, each of which would employ about 50.

“The reality is that Amazon’s fulfillment is great for the orders you’re taking on Amazon. For most brands—and the boutique brands especially—Amazon is only one channel of many,” says Ajay Agarwal, a Bain Capital partner in Palo Alto, Calif.

ShipBob doesn’t disclose revenue but the founders say it has been rising 500 percent annually and expects to grow from 60 employees to 90 in Chicago by year-end. One downside of success is that the startup no longer counts as a hobby. To be more than co-founders, Saxena, Gulati and their wives get together monthly outside of work, often grilling at Gulati’s Lincoln Park townhouse.

 

Originally featured on Crain’s Chicago.