Brian O’Kelley likes to found startups aimed at industries ripe for disruption. After shaking up the advertising industry for 15 years, he wants to do the same for trading and logistics.
O’Kelley is a longtime advertising exec who worked at Right Media before cofounding ad-tech firm AppNexus in 2007. He sold AppNexus to AT&T in June 2018 for a reported $1.6 billion and left the company in February.
Now, he’s launching a new startup called CMDTY to help streamline operations in trading and logistics of physical commodities. The stealth startup has raised $10 million in Series A funding from venture capital firms Venrock and Rucker Park. O’Kelley is co-founding CMDTY with Andrea Aranguren, a physical commodities exec who has worked at Goldman Sachs and IHS Markit.
O’Kelley planned to self-fund CMDTY for a year, but when he mentioned the idea to a few VCs, they showed immediate interest before the startup had a name or pitch deck. One VC even offered to write him a Series A check and give the company a valuation on the spot. Within the next two or three weeks, O’Kelley talked to a few more VCs to get a better feel for funding interest.
“It was crazy — I think I had five term sheets out of seven VCs that I talked to, all with kind of egregious valuations,” he said.
O’Kelley said he plans to hire a diverse team of about 10 to launch CMDTY’s first product in the first quarter of 2020.
“It’s something I use as key criteria for evaluating investors — are they supportive of a founding team that’s committed to diversity?” he said.
Startups are looking to shake up the logistics industry
O’Kelley said he first learned about trading and logistics through a friend who is commodities trader. While a number of tech firms pitch blockchain technology to simplify the commodities industry, O’Kelley’s friend told him that these startups don’t understand the complexities of trading and delivering physical goods like metal, cotton, or cocoa beans.
One challenge blockchain logistics company face is creating industry standards. Organizations like the Blockchain in Transport Alliance (or BiTA) have more than 500 members who are working to create standards for logistics companies and government agencies.
The physical commodities industry also requires heavy stacks of paperwork. For example, a metal trading company trying to move metal from New Orleans first gets goods delivered from a ship coming from Chile. The metal is then put into a warehouse, which requires financing paperwork that goes back and forth with a bank. The trading company then has to fill out more paperwork to sell and ship the metal on a truck.
CMDTY plans to develop logistic software to automate the paperwork for trading companies, producers and factories, and price it based on how much product is being moved.
While blockchain will help in setting up the technical infrastructure, the larger goal is to track physical goods, cut logistic costs, eliminate fraud, and make the trading process as easy as ordering from Amazon, O’Kelley said.
Commodities may seem far removed from the advertising world O’Kelley comes from, but he said both cases involve a large industry trying to modernize outdated practices. He said his experience creating products that help publishers and advertisers sell and buy digital ads is similar to the challenges faced by physical commodity traders that buy, sell and transport raw materials.
“In some ways it hasn’t changed much since trains were introduced in the 1900’s — there is no silver bullet and you can’t just solve it with blockchain,” he said. “It would take a completely different approach technologically and from a business perspective to modernize it.”
O’Kelley wanted to do something outside of advertising
After leaving AT&T, O’Kelley spent some time mentoring founders and investing in companies. He also testified in front of the US Judiciary Committee about privacy and regulation issues in May.
O’Kelley said he wanted to do something outside of advertising and media because innovation was waning and marketers were dealing with the consequences of digital advertising like growing privacy and antitrust concerns. He also wanted to learn a new industry.
“In advertising, people call me to be an expert witness; here I get to call all the experts,” he said.
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