Former Tesla supply chain leaders create Atomic, an AI inventory solution

Tesla famously struggled to scale up production of the Model 3 sedan in 2018 — so much so that CEO Elon Musk said his company was weeks away from collapsing. That near-death experience helped spawn a whole new company called Atomic that’s built around using AI to streamline supply chains.

Co-founded by former Tesla employees Michael Rossiter and Neal Suidan, Atomic was created inside DVx Ventures, the firm run by former Tesla president Jon McNeill. Rossiter is also a partner at DVx, which has led a $3 million seed round for Atomic, with Seattle-based Madrona Ventures joining.

“Michael and Neil experienced this pain firsthand as leaders at Tesla in the supply chain, and I saw that work firsthand — because they worked for me,” McNeill said in an interview with TechCrunch.

Atomic plans to deploy its agentic AI with customers to make inventory planning faster and easier. It’s already been working with pilot customers. In one case, the customer was able to cut inventory levels in half while maintaining a 99% in-stock rate.

Being able to strike a balance like that frees up working capital that a business can use in other places, while also reducing risk, McNeill said.

“If you have too much capital tied up in inventory, you could really harm the business. And if you have too little, where you don’t have the right things in stock when the customer is ready to purchase, then you’re costing yourself big time,” he said.

More broadly, Atomic’s early customers have been in the consumer packaged goods, food and beverage, and apparel industries. The company claims it has helped those customers reduce inventory costs by 20% to 50%.

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With so much uncertainty in the world right now, there’s big demand for solutions like Atomic’s because existing ones aren’t built for this kind of volatility, Suidan said in an interview.

Currently, “planners will, like, lock themselves in a room for a week trying to put together different scenarios, present those back to the leadership, and get a question they weren’t anticipating,” Suidan said. Then they “have to go back to these documents, spend a few days, and it’s becomes this process that can be all consuming for them, because they don’t have the tools available to manage the uncertainty with confidence.”

Atomic’s software pulls information from those same source documents but lets inventory planners and supply chain team members quickly simulate multiple scenarios — something that would normally take hours or days.

Rossiter and Suidan pride themselves on being able to get up and running with a customer quickly, and with adaptability.

“You can’t be writing a custom application for every customer. You need a flexible data model that’s generalized, that can apply to everyone, because then you can be up and running really, really quickly,” Suidan said. “And you need to give precision control to the planner so that they feel true ownership over the plan, and they can explain it inside and out, and can pull all the levers in the plan. And if you can combine those two things, which has been our total focus, then you solve the problem for the planner.”

Many Tesla employees have gone on to found their own startups, including former CTO JB Straubel (Redwood Materials) and, most recently, former SVP Drew Baglino (Heron).

But Atomic is different. Instead of just taking skills learned at Tesla and applying them to new problems, Suidan and Rossiter are building Atomic around a philosophy they developed together at the automaker.

“They built the end-to-end supply chain orchestration system from scratch” at Tesla, McNeill said.

Suidan said the value of what they built at Tesla was just as much about the solution as it was changing the process.

“The way the business was planned when we started was a dozen different teams working in isolation, passing these spreadsheets around, trying to tie it together once a week to present executives some summary of a plan, and then spending most of the rest of the week, chasing our tail, trying to figure out why one part didn’t work or the other part didn’t work,” Suidan said. “Our jobs became to build a system that could thrive and drive this company, keep its dynamism, keep its ability to hit these business targets.”

Suidan said the planning system they built inside Tesla resulted in a “complete transformation” in the day-to-day operations. While Rossiter left Tesla shortly after the ramp-up of the Model 3, Suidan stuck around until 2022.

In 2023 Suidan said the two put their heads together and asked: “How could this kind of transformation work for everybody, all businesses?” And they set out to create Atomic inside DVx.

In typical Tesla fashion, they really are aiming that high. “Our ambition, our vision, is to support every company that sells physical goods,” Rossiter said.