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How robotics maker Berkshire Gray is helping major retailers compete with Amazon

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John Delaney, former Congressman and CEO of Revolution Acceleration Acquisition Corp. (RAAC) , joins Yahoo Finance to discuss his SPAC’s acquisition of robotics maker Berkshire Grey and outlook on economic trends.

Video Transcript

MYLES UDLAND: All right, another hot trend in the markets over the last 18 months or so is, of course, the SPAC boom. We talk about it almost every day here on the program. And former Congressman, three-term Congressman from the state of Maryland, former presidential candidate John Delaney is now the CEO of Revolution Acceleration acquisition. Corp. And they will be entering the robotics as a service space, acquiring Berkshire Grey.

John, great to talk with you this morning. You know, in a prior life before you got into politics, you were part of a couple companies that came public to financial markets. And I'm curious, you know, using that perspective, how you are seeing the SPAC boom play out today, why you got involved, and what interests you about that development in capital markets. And then we can get into some of the stuff at Berkshire specifically.

JOHN DELANEY: Sure. Well, it's great to be back with you at Yahoo Finance, in a different capacity now. I spent a lot of time with you when I was in politics talking economic policy. So prior to running for office, I did start two companies and take them public. So I went through the traditional IPO process twice, which is a terrific process, obviously. But there are certain flaws associated with it.

And I think SPACs are an important innovation in that they give companies really now, I think, three options for accessing the public market. A traditional underwritten public offering, a direct listing, which are growing in popularity, and a SPAC. And the nice thing about a SPAC is you can execute your transaction faster.

And if you're a growth company or a company that has to really explain to investors certain things that you think are important in terms of being able to build your business, in other words, going through projections, a SPAC is a good way of doing that because you're much more limited in terms of your ability to do that in a traditional IPO. So I think of it this way. I think companies, growth companies, all types of companies now have three paths entering the public markets.

And depending upon the situation, one path may be better. But I think SPACs are a very important innovation. They will clearly result in more companies going public. I think that's net positive for our economy in many ways. And it allows public investors to invest in companies, in around of financing for a company, that would have typically been reserved for kind of institutional investors.

So I think it's a very important innovation. And I think it's here to stay.

JULIE HYMAN: John, it's Julie here. As you know, we have seen an explosion in this area late last year and coming into this year. Are all these companies really ready for public markets? That's kind of what I've been wondering through all of this. I mean, looking at Berkshire Grey as just one example, the company has ambitious growth plans, like many of these companies do.

Last year, it earned about $35 million. And yes, the growth trajectory is expected to be large in 2021. But still only $59 million in revenue is what's projected. Like, why not wait if you're Berkshire Grey until you gain a little bit more of that momentum before coming to public markets?

JOHN DELANEY: So Berkshire Grey is a really unique situation. So the company's been around since 2013. It operated mostly in stealth mode because they were developing proprietary robotics technology. They had hundreds of millions of dollars in capital invested in it by some of the leading venture capitalists in the country, Khosla Ventures, NEA.

They came out of stealth mode and started offering their AI-enabled integrated robotic solutions to companies in the supply chain. You know, so their customers are retailers and e-commerce companies and grocers and package-handling and sorting companies. And they're building the robotic systems that are needed for these companies to automate.

And as we all know, Julie, e-commerce has exploded in the last year. And the demands for these companies to fulfill increasing consumer demands is extraordinary. And Amazon has been investing, you know, we think tens of billions in robotics for about a decade and is way ahead of everyone else in the sector.

So what Berkshire Grey does is deliver the solutions that companies need to compete with Amazon. And in the last year alone, their pipeline has grown from 100 million to 1.7 billion in orders with terrific blue chip companies, where their systems are installed. And now those companies are coming back for repeat orders.

So what's going to happen to the supply chain in the United States of America over the next several years is it's going to completely automate. Because we, as consumers, we want 100,000 items delivered same day. And you can't do that unless you automate. So I think Berkshire Grey is very unique.

Entering the public markets right now is really the perfect time for Berkshire Grey because it's raising a huge amount of capital. And it's all primary capital. In other words, there's no selling shareholders, none of the shareholders are selling any stock. The money is going to be used to fuel this global expansion, to fuel the fulfillment of this huge pipeline of orders.

And it's clearly going to establish Berkshire Grey, in our judgment, as the leader in the robotics automation sector. And we think that's an important leadership position for the company to have. So we think this transaction is terrific, and Berkshire Grey is ready to be a public company.

Now, I can't say that about all the SPACs that are out there. There's obviously a lot of SPACs, and a lot of companies are entering the public markets earlier than they had planned. But Berkshire Grey is ready for the public markets.

JULIE HYMAN: Fair enough. And John, on a related note, you know, when we talk about your former life as a congressman and presidential candidate, I'm curious how you think about a company like Berkshire Grey sort of treading the line between innovation and also probably putting some people out of work, right? If you are automating the process at a warehouse, that means it's not people anymore, who are going to be putting and who are going to be packing this stuff, right?

So that's not to say we shouldn't have innovation, obviously. But how do you think about those sort of thorny issues and how to maybe reskill those folks who are not going to be in the warehouse anymore?

JOHN DELANEY: Those are tough issues. And I think you framed it perfectly. That's not-- what you're describing is not really happening so much with Berkshire Grey because of the industry it's serving. So if you look at all of Berkshire Grey's customers, they're all adding jobs at enormous rates.

So this is a situation where the industry is automating to keep up with the demand and still hiring and trying to fill all the hiring needs they have. So none of these companies are laying people off because they're automating. What the automation is doing is allowing them to handle the growth. And importantly, it's putting them at a position to take the workers they can get.

Because again, all these companies are desperately trying to get workers. I talked to all of them as part of our diligence. And they're having an incredible hard time getting workers. And what they'd like to do is bring these workers in, skill train them, and put them in jobs that the workers would probably rather have.

So the jobs that these fulfillment-- automated fulfillment systems are doing, it's very hard for these companies to get these workers. And I think what the companies want to do and what we should want to have happen as a matter of public policy is companies bring in workers, train them, upskill them, and give them better jobs. And we believe that Berkshire Grey's solutions allow that to happen.

And again, the key fact there is all their clients are adding jobs at rapid rates. And they can't find people. So it's a very different situation than you may find in other segments where automation has penetrated.

MYLES UDLAND: And John, before we let you go, do you want to talk a bit more broadly about the economy right now? And certainly, Berkshire Grey's is trying to play in kind of where that growth is. But we still are down about 9 million jobs from where we were in February of 2020. We see a very ambitious package has gotten through the House.

Obviously, you have a lot of contacts on the Hill, people still in policy and so forth. Does the direction of policy right now seem constructive to you? And do you believe that we will indeed see what the Biden administration hopes that package is? Do you believe we'll actually get that into law?

JOHN DELANEY: I do. I believe the COVID relief bill will pass. The Senate and the administration reached a broad deal. You know, Senate Democrats and the administration reached a broad deal. And I believe that deal will effectively become the law.

And then right behind that, what we need is an infrastructure bill. We need a large-scale infrastructure bill, because one of the most effective ways for the government to create good paying middle class jobs is by investing in our infrastructure. And we need more climate-resilient infrastructure, we obviously need to improve our transportation and energy infrastructure.

The crisis around rural broadband in this country is embarrassing. Young people in certain parts of the country can't get the kind of connectivity that we all have, which makes it very hard for them to succeed in today's economy. So an infrastructure bill from the government would put a lot of people to work with good paying jobs and be very pro-growth.

So I think what's really happened on a macro basis is, you know, COVID has accelerated certain important trends in our economy. Things that were going to happen, and we all knew they were going to happen, and they've been brought forward. Like, we talked about e-commerce, the transition to the digital economy is one of those trends. The transition to telemedicine is another one of those trends.

You, know, changing how people live and work and more people working remotely and not having to be necessarily in the big hubs and having opportunities to work in other parts of the country. These are very powerful trends that are creating huge opportunity for some people and causing other Americans to struggle. And we're seeing that, particularly on the heels of COVID.

So what we need is smart public policy to not slow down those trends, because they're ultimately positive, but to help our country and our citizens manage through it, through skills training, through investing in the kind of infrastructure we need to be competitive. And that's what I really think is going on. So I think the Biden administration's focus first on this relief bill, which is absolutely necessary.

People can quibble about exactly what should be in it. But the risk of doing nothing or doing too little is much greater than the risk of perhaps doing a little too much or not getting it exactly right. So what has to happen is that bill has to pass. And then on the heels of that, the administration needs to come forward with an infrastructure bill.

It needs to be smart, it needs to be targeted at where the needs are, which is sustainable infrastructure, rebuilding our energy grid, dealing with issues like rural broadband, which are causing too many Americans to fall behind. And I think that will really help get the economy back on track.

MYLES UDLAND: All right, John Delaney, now with Revolution Acquisition Corp., senior board member at Berkshire Grey, former congressman from Maryland. John, always great to get your thoughts. I know we'll be in touch. Congrats on the new. venture.