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Jim Carlisle is a managing director at Thomas H. Lee Partners. Prior to joining Thomas H. Lee Partners, Carlisle worked at Goldman, Sachs & Co. in the Financial Institutions Group.
Carlisle is currently a director of Autostore, Auction.com, Brooks Automation, Fortna, House of Design, KINEXON and Material Handling Systems. His prior directorships include Achievement Technologies, Agencyport Software, iHeartMedia, Clear Channel Outdoor Holdings, Front Line Management Companies, Ten-X Commercial and Univision Communications.
Carlisle holds a B.S.E., summa cum laude, in operations research from Princeton University and an M.B.A. from Harvard Business School.
Carlisle serves as a member of the Board of Directors of The Massachusetts Eye and Ear Infirmary and is an active contributor to the National Park Foundation.
David Maloney, Editorial Director, DC Velocity 00:01
Investors eyes supply chain companies. New research into women and supply chain leadership. And Walmart makes new investments in automation.
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast.
Hi, I'm Dave Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Yale Materials Handling. This isn't yesterday's warehouse. Today's challenges require smart, connected lift trucks and solutions like robotics, advanced power options, and Yale Reliant, an industry-leading suite of operator-assist technologies. For more information, visit Yale.com.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insights into the top stories of this week. But to begin today: the past year has certainly shown to the rest of the world the importance of supply chains. Also taking notice is the investor community. What makes companies within our industry attractive to investment firms? To find out, here's Ben with today's guest.
Ben.
Ben Ames, Senior News Editor, DC Velocity 01:16
Thanks, Dave. Yeah, the logistics sector has seen a real surge of investment funding in recent years, and the money seems to be backing everything, from the smallest tech startups to established players. But while supply chain professionals may have expertise in topics like transportation and material handling, of course, most of us are not experts in finance. So our guest today is Jim Carlisle from Thomas H. Lee Partners. That's a Boston-based private equity firm. Jim has been at T.H. Lee for more than 20 years, and today, he heads up the firm's technology and business solutions vertical nd its $900 million automation fund. The firm has been busy, of course. They've made a long string of investments in the sector, including just last month, when they combined two companies in their portfolio, the material handling solutions provider MHS Global and the supply chain systems design and integration firm Fortna, into a single company. And in fact, Jim now serves as chairman of the board of that new combined company. Jim, thank you so much for making some time and joining our podcast today.
Jim Carlisle, Managing Director, Head of Technology & Business Solutions Vertical, Thomas H. Lee Partners 02:23
Thank you, I'm happy to be on.
Ben Ames, Senior News Editor, DC Velocity 02:25
So, off the top here, just to give our listeners some context, it might be helpful to describe the types of investments that your firm makes and what your objectives are for companies in which you invest.
Jim Carlisle, Managing Director, Head of Technology & Business Solutions Vertical, Thomas H. Lee Partners 02:37
Great. So, through each of THL's $900 million automation fund and our $5.6 billion flagship fund, we can make smaller growth, equity-oriented investments — think $25 million-size deals — to larger growth equity or small control transactions — maybe those are $50 or $75 million investments — to very large control transactions, which can represent up to multiple billions of equity invested in a single company. When we invest, our objective is to accelerate growth. It's really to help a team improve their business. And so we've invested a ton over the years at being good partners to management teams, adding value through domain expertise, the specific areas that we focus, like automation and logistics, as well as our firm's operating resources, which can partner with management teams, hopefully to help them accelerate growth.
Ben Ames, Senior News Editor, DC Velocity 03:30
Boy, I'm struck by some of those numbers. I'm in complete agreement that "very large" would encompass that multiple-billions number, but looking at smaller, in the 25 millions and large, in the 50 to 75 million, really puts it into some context there. When logistics firms are looking to raise money anywhere along that spectrum, you know, we hear a lot of words here, a lot of vocabulary. What are the differences, sort of, between, you hear about venture capital and private equity and corporate acquisitions, and even going public? How do those compare?
Jim Carlisle, Managing Director, Head of Technology & Business Solutions Vertical, Thomas H. Lee Partners 04:06
Yeah, sure. So, you know, in the simplest form, different financing sources may work better for different company life stages, and venture capital is often associated with the earliest investments that go into a company, typically designed to take a business from an idea to a product to a marketplace. Growth equity, which is a new category, I'll add just to you know, create a bit more confusion, is minority capital that's designed to help a company accelerate growth after that company's product, software, service has already been established with customers. Private equity is usually a change and control transaction, so early shareholders have an opportunity to sell their shares in the company, sometimes with rollover ownership, depending on the situation. For private equity, and I'll expand a bit since that's our primary business, you know, having a single shareholder can bring great benefit to a company because of the focus. Management doesn't have to deal with competing agendas from multiple shareholders on a board, and even more, at the outset, management can select an investment partner that may be purpose-built for the mission that they have at hand over the next handful of years. Corporate acquisitions are for companies that see value in being part of a larger whole rather than maybe competing independently. Maybe a corporate acquirer has a channel through which they can sell their product. And of course, you know, corporate acquisitions also represent an opportunity for early shareholders to sell their positions. IPOs represent a choice to diversify a shareholder base while accessing an alternative source of funding. Public companies have a different set of responsibilities than private companies, and obviously, very different board dynamics. Hopefully, that gives you an overview, quickly, of the different categories of investment that companies can see.
Ben Ames, Senior News Editor, DC Velocity 06:02
Yeah, that's great, thank you, and it also really underlines how important it is to focus on where a company is in its journey, there, so it's, they're very different strategies, I guess for for bringing on, continuing its growth on that. Do some of those goals also changed, like another thing, just in covering the industry that you often see, when funds are raised, is the different rounds. You get seed rounds, and series A, B, C. They don't often seem to go beyond E, although I think I saw Series F maybe yesterday. And how does that come into play?
Jim Carlisle, Managing Director, Head of Technology & Business Solutions Vertical, Thomas H. Lee Partners 06:38
So early-stage investors often want rapid growth, typically followed by incremental funding for the business at, you know, hopefully higher valuations. Venture capitalists typically have large portfolios of investments. Not all of those investments necessarily have to work, but those that do can be home runs. Growth-equity and private-equity-owned companies, you know, may sell to another investor, they may sell to a corporate, they may go public. But in those portfolios, success is typically expected from every single investment. Stepping back, though, I'd argue that the exit from either an early-stage investor, a growth equity player, or private equity firm, exit is really more of an output metric than anything else. Of course, equity value appreciation is everyone's goal, but as investors, we need to work with management teams for a richer, more specific set of goals: What are the inputs for that specific business that drive success? And if we can get those things right, then equity value appreciation and exit will typically follow.
Ben Ames, Senior News Editor, DC Velocity 07:50
Thank you. That makes sense. So, following up on that a little bit, for, you know, particular firms that might be in our area here, do you have advice, I guess, or some do's and don'ts for logistics firms, you know, that are looking to raise funds?
Jim Carlisle, Managing Director, Head of Technology & Business Solutions Vertical, Thomas H. Lee Partners 08:03
Yeah, sure, you know, do, I would say, find a real partner. Develop alignment with that investor, and then use the investment as a catalyst. And really specifically, I argue that an entrepreneur or a management team should find the capabilities that match with the needs of that particular company, whether it's go-to-market or technology investment or organizational design needs. And don't, well, I'd, you know, don't call anybody but us. No, I'm only kidding. I think don't, I'd say don't become too distracted with the financing process. The goal shouldn't be a successful financing. The goal is the success of your business over the long term.
Ben Ames, Senior News Editor, DC Velocity 08:45
Yeah, it makes sense there. And then maybe to back up a little, we've all been studying a lot of the macro conditions that we've been seeing across — well, across the globe and across the economy — the pandemic, of course; inflation more recently; labor crunch seems [to] never go away. You know, how do those, you know, come into play with some of the conversation that we've been having so far?
Jim Carlisle, Managing Director, Head of Technology & Business Solutions Vertical, Thomas H. Lee Partners 09:09
Well, automation and logistics have seen increased investment as a result of each of those three macro conditions that you cited. You know, companies are seeing a demand increase due to pandemic-driven e-commerce growth, as an example. We're certainly seeing supply chain or manufacturing challenges created by wage inflation and labor shortages. You know, and for each of those things, the solution is technology. So, you know, as investors, we're trying to find the businesses that, you know, can help their customers navigate those choppy waters, looking for solutions to some of those problems, and then on top of that, looking for ways where we can help the companies in which we invest create opportunity amid the disruption that those macro conditions are creating.
Ben Ames, Senior News Editor, DC Velocity 09:59
Makes good sense. Makes good sense. Great. Well, I was really able to learn a lot from our talk here today, Jim. I appreciate your coming on the show with us.
Jim Carlisle, Managing Director, Head of Technology & Business Solutions Vertical, Thomas H. Lee Partners 10:08
Great. I've enjoyed the time with you and appreciate you having me on.
Ben Ames, Senior News Editor, DC Velocity 10:12
Thank you. Our guest here on the podcast today has been Jim Carlisle from T.H. Lee. Dave, back to you.
David Maloney, Editorial Director, DC Velocity 10:19
Thank you, Jim and Ben. Now let's take a look at some of the other supply chain news from the week. And Victoria, you wrote this week about new research into women in leadership roles of our supply chains. Can you share some details?
Victoria Kickham, Senior Editor, DC Velocity 10:32
Absolutely, Dave, happy to. So, more women are occupying senior-level positions in the supply chain these days, and that is according to the annual Women in Supply Chain survey, which is conducted by Gartner and the industry organization called AWESOME, which stands for Achieving Women's Excellence in Supply Chain Operations, Management, and Education. The report was published a little bit earlier this month. The group surveyed 116 companies, based primarily in North America and Europe, and they found that women continued to advance to leadership roles across the supply chain, but they also found that overall, women's representation in the field declined a bit over the past year. And just to put some numbers to it, the survey found that 19% of women occupy C-level positions, up from 15% last year; 34% are what you call first-line managers or supervisors, and that's up from 33% last year; and just to give you a comparison, 21% of women occupy VP-level roles, that's down from 23% last year. Overall, women comprise 39% of the total supply chain workforce in 2022. And that's down slightly from 41% last year, according to the survey. Another interesting point: the survey found that many women are leaving the profession midcareer, primarily due to a lack of advancement opportunities, compensation concerns, and the need for greater flexibility.
David Maloney, Editorial Director, DC Velocity 12:00
Victoria, does the research dig any further into why some women are leaving the industry?
Victoria Kickham, Senior Editor, DC Velocity 12:06
Yes, it does. As you may expect, external forces are putting pressure on many organization[s] when it comes to advancing women. According to the survey, 43% of supply chain leaders said the pandemic has had a negative effect when it comes to retaining and progressing women over the past year, and that's up considerably compared to last year. Just 11% reported a negative impact in the survey last year, so that's a really big change. More than half of end-user organizations surveyed said that retaining midcareer women is a growing challenge, with an additional 19% saying it is a significant challenge — again, according to this year's survey results. I mentioned earlier that some of the reasons women are leaving — or some of the reasons women are leaving — and the survey has some numbers behind that as well. 75% cited a lack of advancement opportunities, followed by compensation at 43%, a lack of career development at 31%, and a lack of flexibility around another 29-30%. There's also a fourth issue driving this. Almost a quarter of the organizations surveyed said that women have left midcareer because of increased domestic work and care responsibilities. That's something that has long been an issue in the workforce in general, but one that has certainly been a challenge for many people over the past two years with all of the issues and challenges of the pandemic. This survey, [I] just wanted to say is really chock full of interesting statistics and information. The groups have been publishing this for many years, and it provides a look at the data historically, so I think it's really worth checking out, and readers can access it, access the report by checking out our story, and Gartner and AWESOME, they also offer access to a free webinar that discusses the results in detail.
David Maloney, Editorial Director, DC Velocity 13:50
That's great, great information. Thank you, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 13:53
You're welcome.
David Maloney, Editorial Director, DC Velocity 13:54
And Ben, you wrote this week about new automation heading to Walmart's distribution centers. Can you share some details?
Ben Ames, Senior News Editor, DC Velocity 14:02
Yeah, and of course, you know, people don't get much bigger than Walmart. This involves some of the variables that we were talking about with our guests, of course, in terms of the labor shortage and some of the extreme economic conditions. We've been writing often in recent months about the development of robots to fix some of those challenges, particularly in fulfillment jobs and warehouses. And you know, we've seen a huge bloom in different startups and different types of robots to do that. Recently, I wrote about the acceleration of the adoption of those, where they've sped up from doing small pilots just to try it out to doing large implementations off the bat, and we've really seen a big example of that this week. So, Walmart said that it was expanding what had already been a really large robotic installation into one that spans its entire network in the U.S. The vendor involved here is a Massachusetts company called Symbotic LLC, and just last year, Walmart announced that it was installing Symbotics robots and software in 25 of its 42 regional DCs. That's nationwide, so, a little more than half. They didn't reveal how much money was going to be involved in that deal, although Symbotic said later, in 2021, that it planned to go public, in part based on that momentum. But at the time, many people in the industry were a little surprised at the move, because there were some much better-known robot vendors on the market that Walmart could have chosen. So what are Walmart's goals with this rollout, Ben, and can Symbotic provide all of that for them? Exactly. I saw this as as a way to get into some of what Walmart was trying to do to address these challenges. So, what Walmart said is that it wants to get products onto the shelves of its almost 5,000 stores more quickly — those are retail stores, in the U.S. — including faster responsiveness to store orders, higher capacity in the DC, and greater inventory accuracy. So, those are some pretty common strategies in automated logistics. To get there, it turns out that these two companies, Walmart and Symbotic, they've been working closely together for years, actually. Walmart first installed these autonomous "Symbot" robots, they're called, in one of its Florida DCs back in 2017, and they've been working on improving them together for, I guess that's five years, ever since. So today, the platform uses a combination of artificial intelligence software, mobile shuttles, and grasping arms, so a little bit of everything, and they work, the strategy here is to build customized pallet loads of presorted inventory. So, each pallet is built for a specific store, or even a specific aisle in that store. Again, they didn't share the size of this new deal, and we should say that Symbotic has not gone public yet, or we would ultimately know, but we can read between the lines. Symbotic said this week that it now has a backlog of more than $11 billion in committed sales, and that's up from its previous level of about $5 billion, just back in March. So, again, just reading between the lines, that's an increase of about $6 billion, presumably linked to these 17 additional Walmart DCs that it's now going to populate.
David Maloney, Editorial Director, DC Velocity 17:13
Yeah, well, it's just more proof of how automation is impacting the retail industry now. Thanks, Ben.
Ben Ames, Senior News Editor, DC Velocity 17:20
Glad to do it.
David Maloney, Editorial Director, DC Velocity 17:21
We encourage listeners to go to DC Velocity.com for more on these and other supply chain stories. And also check out the podcast Notes section for some direct links on the topics that we discussed today.
And again, our thanks to Jim Carlisle of T.H. Lee for being our guest. We welcome your comments on this topic and our other stories. You can email us at podcast@dcvelocity.com.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded each Friday.
And speaking of subscribing, we encourage you to check out our new sister podcast series, Supply Chain in the Fast Lane. It's coproduced by the Council of Supply Chain Management Professionals and Supply Chain Quarterly. Subscribe to Supply Chain in the Fast Lane wherever you get your podcasts.
And a reminder that Logistics Matters is sponsored by Yale. Modern warehouse challenges require modern lift truck solutions, from robotics and zero-emission power options to Yale Reliant, an industry-leading operator-assist system. Visit Yale.com for more information.
We'll be back again next week with another edition of Logistics Matters when we will discuss the importance of supplier collaboration. Be sure to join us. Until then, have a great Memorial Day weekend.
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