It takes the military to spawn robotics

Sometimes a company is founded because it stumbles upon a niche that it can fill better than any other company. Such a company is RE2. Founded by Jorgen Pedersen as a contract engineering house to fill a need for unmanned systems engineering expertise within Carnegie Mellon’s National Robotics Engineering Center (NREC), RE2 (RESquared) is now an expert company in mobile manipulation systems for defense. A lot of robotics companies started with defense applications. Some, like iRobot, have moved to other applications. RE2 has stayed in defense because it’s really good at what it does – robotic arms.

Arm manipulation is a niche within defense, but it’s a large niche. Manipulation is a big part of robotics in general. As a cost effective and expert provider of robotic arms into a market where large sales are possible (DoD), RE2 has the potential to grow significantly. With superior technology in mobile manipulation, RE2 will also find non-defense applications, an effort which has begun although today it’s a small part of the existing business.

It began with an SBIR.  RE2 is a success story for the Small Business Innovative Research program. Founded in 2001, RE2 remained a contract engineering firm until 2005. The company won its first DoD SBIR in 2006 to develop a small robotic arm for unmanned ground vehicles. The Phase I and Phase II awards, totaling $850K, set the course for the future of RE2. The military was keenly interested in the RE2 approach because existing robotic arms weren’t very strong or precise. CEO Jorgen Pedersen puts it, “That was enough for us to focus on and realize that we could solve those problems. Then later we realized the arms needed to be faster, more modular, and less expensive. We fulfilled on those capabilities too.”

Those first SBIRs allowed the company to become a recognized expert in mobile manipulation. SBIRs also allowed the company to grow over a several year period from six to 18. Since then it has won dozens of SBIRs that have helped fund the development of its superior robotic technology and provide jobs for many top-level engineers. Today, RE2 numbers 60 and is growing by about 20 every year.

Market opportunity.  In keeping with others that I have interviewed for this series, who proclaim that their businesses are not about robotics but about solving marketplace problems, Jorgen is adamant that, “Even on the military side, it’s still not about the robotics. We are helping to save lives. What is the price of a human life? What is the amount of money that the military will invest to train and protect the most valuable resource, people? If we can help disarm the improvised explosive device (IED) on the road, that’s a no-brainer. And that’s a market need!”

In the last couple of years RE2 has transitioned from an R&D company to shipping product. Jorgen proudly tells me, “Our first SBIR technology is now in Afghanistan used by the US Air Force. We supplied 147 portions of arms.” RE2 has learned how to produce products for the military, but last year they had their first sale of an entire robotic system to an OEM. They shipped 115 robotic arms which were integrated into other products. This has caused a shift in the market for RE2, as Jorgen explains: “Other customers found out about our OEM strategy and now we ship to the end customer too.”

ROI.  RE2 never had any outside investment. It never needed it, given the string of SBIRs. But Jorgen doesn’t believe that the awards represent money without a return: “We have provided the DoD with a $6.5M in revenues return so far from their $850K investment in our first SBIR. On the SBIR commercialization index, we are 90 out of 100 because they know that we have a 90% chance of commercializing technology over anyone else.”

Thoughts on robotics.  Like the other robotics entrepreneurs on NewVenturist, Jorgen is clear that it’s not about cool robotics where you then figure out who to sell it too. He advocates using robotics to solve problems where the technology maps to the need: “If you want to make a viable business it can’t be a tech push; it has to be a tech pull – a toothache for which you have the solution.” He gives examples of companies profiled in NewVenturist such as RedZone: “Eric took over the contract engineering and the toothache for municipalities. It’s brilliant to sell them the data. Red Zone is a service company that happens to own some robots. It’s not about the robot. It’s about the value.”

He believes that this attitude is new regarding robotics: “What we are seeing is that we have sustainable businesses that build robots.” Jorgen cites the acceleration of viable robotics companies from the September 11, 2001 catastrophe: “9-11 was bad but it was a catalyst for ground robotics. In 2002 there were four robots deployed. By 2004, it had gone to12. By 2005, 163, and by 2006, 2000 robots, an order of magnitude jump each year. 7000 robots were deployed by 2010.” Jorgen sees that trend continuing as robots are demystified and integrated into products and services.

The future.  RE2 has transformative technology. A strong leader, Jorgen is constantly refining the strategic plan. He plans to “keep spiraling up and strengthening what we do.” RE2 will continue its steeply sloped growth trajectory, employing more and more people and increasing capacity and capabilities. Some people complain that too much of robotics technologies reside in the military; I think that we can point to RE2 and say “thank you” to the federal government for the SBIR program!

This post is sponsored by Innovation Accelerator, the private side of a public-private partnership with the National Science Foundation to make America more competitive through innovation. This post is part of a series on robotics and entrepreneurship being published in New Venturist Summer, 2012.