Robot Startups Learn How to Grow, Avoid Traps at RoboBusiness
October 02, 2019      

SANTA CLARA, Calif. – RoboBusiness 2019 kicked off yesterday with a half-day workshop session titled “Startup Bootcamp”, where a packed room listened to several speakers about issues that come up during the building of a robotics company.

Hosted by MassRobotics, the session included presentations and panel discussions about topics such as dealing with customers, how to begin the process of starting a robotics company, choosing the right location for the business, and funding options that range from private funding, bootstrap funding, and small business grants from the government.

Across the workshop, speakers hit on several themes for people looking to begin a robotics startup, including:

Cool doesn’t cut it anymore

Daniel Theobald, co-founder and CEO of Vecna Robotics, discussed how in the early days of robotics, companies could just come out with a ‘cool robot’ and it would sell, but those days are over. “Cool can only get you so far,” he said. “We’re really at a point now where cool doesn’t get you much of anywhere without having a true value proposition. Cool can be part of the value proposition, but it can’t just only be that.”

Listen to the customer, up to a point

Many speakers discussed making sure that robot startups listen to customers about their pain points and learn about the problems that they’re having in their businesses. Since many robot companies are started by roboticists and engineers, many times they don’t have a sense of the business or process problems that companies are facing.

Vecna Robotics Daniel Theobald

Daniel Theobald, Vecna Robotics

Theobald said at Vecna, employees will often spend time learning the jobs of people in warehouses to understand the processes and problems that a robotic solution could solve. “The devil is in the details,” said Theobald. “Ultimately it’s the nuance that makes the difference of whether you’re going to be successful or you’re going to fail can really depend on that little teeny thing that you didn’t appreciate before.”

Another speaker at the workshop, Warren Katz from Techstars, stressed the importance of entrepreneurs really knowing the customers that they want to sell to. As part of the accelerator program, Katz requires companies to have calls with 100 different customers, either in person or on the phone, so they can understand what customers are thinking. “During those interviews they’re getting beaten up pretty hard,” said Katz. “It’s really important to have the founders beaten up badly by the customer base, so when they get to the end of it, they’re like, ‘OK, the customers really don’t care how I solve their problem, they just care that I understand their problem.’ You really want to get to a point where a customer is saying to you on the phone, ‘Oh my God, if you can solve this problem, I’ll pay any amount of money.’ “

However, listening to the customer doesn’t always mean “the customer is always right,” as many times customers don’t necessarily know what they want, or they can distract the robotics companies into something that doesn’t make sense economically, speakers said. The best way to work with customers, then, is to make sure that they are a stakeholder in the decision process.

“The best way to do that is to ask for advice,” said Theobald. “Don’t ask them to tell you want to do. But when you say, ‘Hey, I’m having a hard time navigating the bureaucracy of your organization,’ or ‘I’m having a hard time understanding the real issues you’re struggling with, can you help me to understand?’, that changes the whole dynamic and it’s magic.”

“If you can convince them to give you advice, what happens in their head is they are now suddenly invested in your success,” he continued. “This fundamentally changes the roles and positions. You used to be sitting across the table from them, and trying to convince them of something. As soon as you ask them for the advice and the second they give you that advice, they’re on the same side of the table with you. Now they’re an advisor, and they want to help you be successful. It’s an incredibly powerful concept.”

Avoid funding traps

In his presentation, Katz discussed funding issues where companies often get lured into the private venture capital funding cycle and continue to fundraise looking for that next letter (Series A, B, C, etc.), rather than focus on gaining revenue from customers. On the other end of that spectrum, he said he has seen many companies become trapped by the government grant funding cycle, where they keep earning Small Business Innovation Research (SBIR) grants, but never work on building products that can be commercialized.

In the middle part of the spectrum, the bootstrap method where you only take money from customers, can be slightly more successful than some of those other extremes, but there are issues there as well. In discussing his own boostrapped company, Katz said “I relied heavily on customers, where you just take money from your customers and nobody else, and you’re in the basement eating ramen noodles and you’re just making one product at a time to grow your products.”

The goal for most startups to be successful is not to be at either extreme or in the middle with customer-only money but to have a mix of funding options. “Most companies could use a little bit of assistance financially from government grants or from venture capitalists,” said Katz. “But you have to be prudent about it and eventually grow and graduate.”

RoboBusiness continues its conference today and tomorrow with additional conference sessions aimed at robot companies, developers, and business leaders looking to deploy commercial and industrial robotics.