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State of Entrepreneurship in Robotics

Posted on June 5, 2012 at 8:47 am

Antoine MartinRobotics has long promised that its day would come: robots would be everywhere doing manual chores and servicing people. Or maybe robots would take over the world and people would be subservient to them?

This guest post represents Antoine Martin’s take-aways from an event earlier this month (May 2012) titled The Future of Robotics in Silicon Valley.

As self-employed and (moderately) experienced in both robotics and entrepreneurship, I made the investment to go from Austin to Silicon Valley for this half-day event in order to educate myself, connect with great companies’ founders, and talk to people with an affinity towards robotics.

Motivation for the Event

Xconomy, an organization founded to bring information and insight to business and technology leaders about promising technologies, sponsored this event because robotics is under-represented in Silicon Valley compared to software and other technology-based companies. The event aimed to understand why this is so, to generate interest in robotics, and, ultimately, to grow the robotics industry in Silicon Valley. However the event was general in scope relating to robotics and entrepreneurship and provided great learning, which I outline below.

Take-Aways

  1. Robotics companies are expensive to fund
    a) It is necessary to buy hardware and software in order to develop a robot; b) the workforce is scarce, and c) robotics requires systems engineers with specific skills. This makes bootstrapping very hard, especially compared to software or other companies that need little cash to get started.
  2. Robotics companies take a long time from start to revenue
    The technical development cycle and “time-to-money” is longer with robotics than for traditional companies, making investors less likely to invest. Iterating in software can be done quickly, but involving sensors and actuators inherently take longer. One can license software that works okay, and update the code through automatic download, but a robot that malfunctions takes longer to fix. As robots displace another technology or human labor, prospects take longer to be educated and converted to customers. You see this often with unmanned aerial vehicles (UAV) and unmanned underwater vehicles (UUV). Long sales pipelines spur expensive sales and marketing budgets. Hence a longer product development time and longer time to sales.
  3. Robotics is still in an early stage of industry maturityKiva Systems founder  Mick Mountz at Xconomy
    Automation has been going on for a hundred years. But, in general, the government and academia have fueled the development of robotics for military uses. It has taken iRobot and Kiva Systems to create commercial robotics success stories. iRobot has moved (with some difficulty) from government-sponsored research to selling unmanned ground vehicles (UGV) and then home robots. iRobot’s products span the warfighter to the consumer. Most importantly, iRobot has instilled awareness about and trust towards robots. Kiva Systems has produced great return on investment because Amazon needed to own such an important facet of their operations. These companies – and others – have paved the way for the future of robotics, demonstrating that there are significant opportunities where robotics can solve a particular problem. Industrial robotic company, Adept Technology, proves this by showing that opportunities for robotics to take center stage in food packaging are enormous. Smaller robotics companies were also represented at the conference, highlighting that, while the robotics industry is fragmented with lots of “sub-systems,” there are areas of opportunity opening up all the time. Of course, the challenges are still significant!
  4. Robots need to fill a unique and dedicated need
    Successful robotics companies focus on fulfilling one unique task, doing it well and reliably. iRobot worked on complex space technology before singling out a menial house chore, and the Roomba needed to clean well at an affordable cost.
  5. Robots need to tap into large markets
    Kiva tapped into warehouse logistics, shipping and order fulfillment at a time when online orders were increasing so fast that fulfillment became the bottleneck to growth. Although Kiva robots have a dedicated role of moving shelves, they really address any business that sells products and needs to manage inventory and ship orders.
  6. Robots are the engineer’s dream but the marketer’s nightmare
    Robots are cool but become scary when the coolness is just too much. They can endlessly be improved and employed, and are the ultimate intelligent machines. That engineers and kids love tinkering with robots is enough proof! But, in order to market a product/service/outcome, there needs to be a specific task for which the robot is dedicated. In addition, the cost of the robot needs to be insanely low, and its market well defined. There is tension between the engineers and the marketers, and addressing this is essential to success.
  7. Robots could bring manufacturing back to the US
    Robots have a real economic purpose, and will likely be used in modern manufacturing in Europe and the US. With the rising cost of Chinese labor, robots might allow US companies to build domestically rather than outsource manufacturing because robots are competitive to cheap labor.
  8. The lack of investment is still the most important problem facing robotics today
    Out of the $29B of venture capital money put in companies in 2011 only $160M was invested in robotics (0.5%). This is not a cause but a consequence of why we see so few robotics companies as a whole, and many robotics-crucial technologies stagnate at the research and early development level. The long time-to-profit, fear of hardware models, focus on software and social media, and unclear exit strategies are reasons institutional investors rarely invest in robotics companies. Boston and Pittsburgh are the main US robotics centers, with Boston being where much of the investment money is centered. Of course, MIT and CMU are behind those poles of development for robotics companies. With so much experience in entrepreneurship, investment money, and hi-tech intellectual capital, the Bay area comes in only third!
  9. Low hardware costs means robotics companies will be more competitive
    Hardware and electronics costs have continuously decreased, but only in the last 5 years do we see open source hardware and the costs of computing power being low enough that robotics becomes viable. Where the costs of an embedded computer or electro-optical sensors were a significant part of a robot, now we have arrived at a point where, today, one can develop a robot with a smart-phone, electrical sensors and actuators on a fairly low budget.
  10. Don’t focus on the robot but on the outcome
    Robots are just a tool to do the job. Examples of practical solutions from robotics include: Kiva, which makes warehouse management and shipment of goods more efficient and cost effective; iRobot, which cleans a kitchen floor while the dweller is away; and Willow Garage, which accelerates the development of a robot’s higher functions. At the end of the day, the basic product development principles need to apply: prototype quickly, validate with customers early, iterate often, don’t over-engineer, address the highest pain first, test early and often, and think outside the box. Don’t start with a robot that can do something and then try to find a market – the classic solution in search of a problem.
  11. The robotics industry will be a series of robotics companies fulfilling one niche market at a time
    The robotics industry will grow niche after niche, product after product, and company after company. Although robotics is becoming more and more important and forecast trends are exponential, it will not explode. Industry veterans have seen the same graphs for decades, only to be disappointed by the lack of results. In reality, the market is to be created – not here to be filled quickly. Some of the most important needs will be in healthcare, agriculture and home service, while industrial robots will continue on their steady trends.

My conclusion? It may sound trivial but is worth reiterating: robots can solve a specific problem well and cheaply, and only under those conditions can they succeed.

Antoine Martin is an independent business consultant in unmanned systems (www.uvs-consulting.com). He is interested in educating people and businesses about robotics and in growing their participation in the market. He can be reached at antoine.martin@uvs-consulting.

© Copyright, Antoine Martin, 2012

This post is part of a series published in New Venturist summer of 2012 on robotics and entrepreneurship.