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Amazon is bringing on board three founders from Covariant, a startup based in the Bay Area that specializes in AI for advanced warehouse robotics systems.
In a deal announced late Friday before the holiday weekend, Amazon will gain a non-exclusive license to Covariant’s AI models.
While Covariant will continue its operations, three co-founders — former OpenAI researchers Peter Chen, Pieter Abbeel, and Rocky Duan — along with approximately a quarter of the company’s employees, are expected to join Amazon.
This agreement follows a similar transaction Amazon made in June when it hired the founders of Adept, a well-funded startup that builds AI agents for automating enterprise workflows. Like Covariant, Amazon also reached a licensing deal with Adept, and about a third of Adept’s employees joined Amazon at that time.
Other tech giants are employing a similar strategy to incorporate AI expertise. For instance, Microsoft recently hired Mustafa Suleyman, one of the co-founders and the former CEO of consumer chatbot startup Inflection AI, along with Inflection co-founder Karén Simonyan and other staff members.
These sorts of deals are termed as “reverse acquihires,” explained Alex Heath, deputy editor at The Verge, in a July post. This combination of hiring and licensing acts as a form of acquisition in disguise.
Whether classified as acquisitions or not, such deals are drawing increased regulatory scrutiny. The U.S. Federal Trade Commission has reportedly queried Amazon about its deal with Adept.
Founded in 2017 and based in Emeryville, Calif., Covariant specializes in AI-powered robotics systems built on a platform called the “Covariant Brain.” This technology automates various warehouse tasks like order picking, sortation, item induction, and depalletization.
Ted Stinson, Covariant’s current COO, will become the new CEO. Fellow co-founder Tianhao Zhang will also continue with the company to lead alongside Stinson, as noted in a Covariant blog post.
In its promotional materials, Covariant uses one of Amazon’s hallmark phrases, emphasizing that its AI platform delivers value right from “Day One.”
Customers of Covariant include healthcare supply manufacturer McKesson, German retail giant Otto Group, and Radial, an e-commerce fulfillment solutions provider.
In July, Bloomberg News reported that Amazon had shown “takeover interest” in Covariant, suggesting its technology could centralize Amazon’s fulfillment center automation robots through one platform.
Amazon’s entry into warehouse robotics dates back to its acquisition of Kiva Systems over a decade ago. Since then, the company has rolled out various warehouse robots aimed at automating product and package movement in its fulfillment and sortation centers.
This push for automation has also brought scrutiny regarding worker safety. A 2019 report by the Center for Investigative Journalism revealed higher injury rates at Amazon’s robotic fulfillment centers compared to its older facilities, suggesting human workers were struggling to keep pace.
Amazon contests the claim that robots elevate injury rates. According to 2022 data released by the company, the recordable incident rates and lost-time incident rates were 15% and 18% lower, respectively, at Amazon’s robotics sites compared to non-robotics sites.
“I want to eliminate the mundane, the tedious, and the repetitive,” said Ty Brady, Amazon Robotics’ chief technologist, in a 2023 interview with GeekWire. “I want to make things safer inside our fulfillment centers. I don’t want folks to have to lift heavy boxes, crouch down on their knees, or reach over their shoulders. And if we can have robotic systems to do that, that’s a win for everybody.”
Covariant has raised $222 million, including $75 million in a Series C round in April 2023, led by Radical Ventures and Index Ventures, with participation from the Canada Pension Plan Investment Board, Amplify Partners, Gates Frontier Holdings, AIX Ventures, and Northgate Capital. The funding round valued Covariant at $625 million.
Covariant has over 160 employees, according to LinkedIn. Amazon reported that around 25% of Covariant’s workforce will join its Fulfillment Technologies & Robotics team.
“Covariant’s models will help drive new ways to generalize how our robotic systems learn and provide dynamic opportunities for how we use automation to make our operations safer and better deliver for customers,” Amazon stated in a blog post. Amazon also noted that it would expand its AI and robotics team in the Bay Area as part of the collaboration.
The financial terms of the Amazon-Covariant AI licensing deal were not disclosed.
