Amazon is hiring three of the founders from Covariant, a Bay Area startup that develops AI for advanced warehouse robotics systems.
As part of the arrangement, Amazon will receive a non-exclusive license to Covariant’s AI models. The news was announced late Friday, just before the long holiday weekend in the United States.
Covariant will continue to operate on its own, but the three co-founders — former OpenAI researchers Peter Chen, Pieter Abbeel, and Rocky Duan — and about a quarter of the company’s employees are expected to join Amazon.
The deal is similar to one that Amazon struck in June, when it hired the founders of Adept, a well-funded startup building AI agents that automate enterprise workflows. Amazon also reached a licensing deal with Adept, and about a third of Adept’s employees joined Amazon at the time.
Other tech giants are following a similar playbook to bring AI heavyweights into the fold. For example, Microsoft earlier this year hired Mustafa Suleyman, co-founder and former CEO of consumer chatbot startup Inflection AI, along with Inflection co-founder Karén Simonyan and other employees.
These deals are essentially “reverse acquihires,” said Alex Heath, deputy editor at The Verge, in a post in July, describing the combination of hiring and licensing as acquisitions in disguise.
Acquisitions or not, regulators have been paying closer attention to these deals between tech giants and smaller startups. Amazon has reportedly drawn questions from the U.S. Federal Trade Commission related to the Adept deal.
Emeryville, Calif.-based Covariant, founded in 2017, focuses on AI-powered robotics systems, which are based on a platform that it calls the “Covariant Brain.” The company’s technology automates warehouse tasks including order picking and sortation, item induction, and depalletization.
Covariant’s current COO, Ted Stinson, will become CEO of the company. Another Covariant co-founder, Tianhao Zhang, will lead the company along with Stinson, according to a Covariant blog post.
In its marketing materials, Covariant uses one of Amazon’s signature phrases to tout the immediacy of its impact, saying its AI platform delivers value on “Day One.”
Covariant’s customers include healthcare supply manufacturer McKesson, German retail giant Otto Group, and Radial, an e-commerce fulfillment solution company.
Bloomberg News reported in July that Covariant had received “takeover interest” from Amazon, noting that its technology could help Amazon centralize its fulfillment center automation robots through one platform.
Amazon’s move into warehouse robotics started with its acquisition of Kiva Systems about 11 years ago. In subsequent years, the company has rolled out a series of warehouse robots of its own across its operations, seeking to automate the process of moving products and packages through its fulfillment and sortation centers.
In the process, the company has faced increased scrutiny over worker safety as it automates its warehouses and pushes for faster deliveries.
A widely cited 2019 report by the Center for Investigative Journalism showed a higher injury rate at Amazon’s robotic fulfillment centers than at its older facilities at the time, indicating that human workers were struggling to keep up.
Amazon has disputed the notion that robots boost injury rates. Recordable incident rates and lost-time incident rates were 15% and 18% lower, respectively, at Amazon Robotics sites than they were at its non-robotics sites in 2022, according to numbers released by the company last year.
“I want to eliminate the mundane, and the tedious, and the repetitive,” said Ty Brady, the chief technologist for Amazon Robotics, 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 and 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, and joined by Canada Pension Plan Investment Board, Amplify Partners, Gates Frontier Holdings, AIX Ventures, and Northgate Capital. The round reportedly valued Covariant at $625 million.
The company has more than 160 employees, according to LinkedIn. Amazon said about 25% of the Covariant workforce is joining 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 said in a blog post. Amazon noted that will expand its AI and robotics team in the Bay Area as part of the effort.
Financial terms of Amazon’s AI licensing deal with Covariant were not disclosed.
