Amazon buys warehouse robotics start-up Kiva Systems for $775 million

By Scott Kirsner, Globe Columnist

First, Amazon.com acquired Diapers.com and Zappos.com, two e-tailers that that rely on robotic systems from Kiva Systems to help run their warehouses more efficiently. On Monday, Amazon decided to acquire Kiva itself, paying $775 million in cash and announcing that Kiva will remain headquartered in North Reading.

Kiva was founded in 2003, and the company had raised just $33 million in funding; its original backer was Bain Capital Ventures of Boston, where partner Ajay Agarwal made the investment and also helped broker an introduction to Staples, an important early customer. Last November, Kiva CEO Mick Mountz told CNN Money that the company's revenues had surpassed $100 million, and that Kiva had 240 employees.

This is Amazon's most significant acquisition of a Massachusetts company ever -- and its first since the late 1990s, when it bought a couple of Cambridge start-ups, including Exchange.com and PlanetAll. (The only bigger purchase Amazon has made in its corporate history was paying $1.2 billion for Zappos.com.)

I wrote last December about a management shake-up at Kiva, involving the quiet departures of five senior executives.

In 2010, I wondered when Amazon might become a Kiva customer, following its purchases of Diapers.com and Zappos.com. From that piece:

[CEO Mick] Mountz says that his company has been in discussions with Amazon for a while, and that "we're both interested in working with each other." As for the Zappos and Quidsi acquisitions, that "just accelerates the conversation with Amazon, if nothing else. Everywhere Amazon looks, they're buying a Kiva system."

One individual close to the discussions between Kiva and Amazon says that the Seattle e-commerce pioneer may want to own a chunk of Kiva before agreeing to work with the company, or buy Kiva outright. Amazon is also apparently interested in having access to the software code that runs Kiva's system and its robots, to better integrate with its order fulfillment processes, which Kiva considers proprietary. (Amazon didn't return calls seeking comment.)

And in 2008, I wrote about Kiva as part of the growing robotics cluster in Massachusetts.

Here's some video I shot at the company's "demonstration warehouse" in 2008: