What is Robotics-as-a-Service (RaaS)?

ABOUT THIS EPISODE

We’ve all heard of Software-as-a-Service (SaaS) and, of course, the hardware needed for that software to work.


But what happens when SaaS and complex hardware are combined? Paul Willard, a founding partner at grep -vc, refers to this as RaaS or Robotics-as-a-Service.

In this episode of Over the Air, Paul tells Ryan about…


- What RaaS is and why it’s valuable

- How his rare background makes him the perfect RaaS investor

- What he looks for in founders

- The robot he can’t wait for someone to build

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And what I've come to appreciate isthat actually high margin, software has always been built and sequenced on whatthe newly commoditize hardware is. You are listening to over the Air Iotconnected devices and the journey brought to you by vary in each episode. We have sharpunfiltered conversations with executives about their IOT journeys,the mistakes they made the lessons they learned and what they wish they'd knownwhen they started hey everybody welcome back to over theair ioft connected devices and the journey today we're going to be talkingabout robotics as a service, with my very good friend Paul Willard foundingpartner of Grep VC. All thanks for coming today. Thanks for having me Ragn,so first question, I'm sure a humungous percentage of our audienceis askingwe're talking about robotics as a service will get to what it is in amoment. But how did you Paul Willard first get interested in this space inthe first place about eight years ago I was pitched by his company calledzipline and Ziplim operates, robotic delivery aircraft they can take in thebeginning. They could take two units of blood, a long distance and drop themwhere it's needed and then fly home, and they could get the blood there veryquickly over any terrain in all weather, their launch country was Ruanda, andwhen I saw this company I kept seeing a software company. I saw SAS company asa matter of fact, because to me the sale was the autopilot that wasactually flying the plane. People were paying to get a delivery h. Thedelivery could have been done before by man, a human pilot, the business modelwouldn't work, but technically you could have used remote control humanpilots. So it was really the software that I saw when I talked to otherpeople about it. They kept saying no, that's an airplane company, it's ahardware company and I was like no N. No, I worked for Boeing. I know what acomplex hardware company looks like know. What complex, Harword marginslook like this, isn't that is it like off the shelf part slap together, andso I made that investment back when and stayed with the company, and Istarted to look at and analyze and run with. You know: Is this a software or aservices company, robotic service company like fast or is it a hardwarecompany and it came in very definitively that it is a robotics as aservice company? Then I started looking around for more and so I' invested in asecond robotic as a service company called cobalt, robotics and n. You knownow, I'm seeing more and more and I've invested in several others since then,but that's where it that's where it originally came from was from zip line,and I somewhat familiar with a blind in large part because of our friendshipand I followed them closely. But can you talk about some of the the metrics?I know viewers and Hommers Tat, Ou metrics doesn't sound very interesting,but like some of the the enormous improvements that they've brought tothe blood delivery world in Africa, so you know from x to Y, can you justrattle off a few of the the more impressive ones yeah? You know when westarted out in Rolanda the numbers that I remember so they might not be exactlyright, but they're close sure are that ten percent of the time the a neededblood product wasn't available, blood's a tricky one. It has a seven day shelflife. It's got a B, positive, Neckabo, positive negative and there areplatelets whole blood and plasma. So there's a lot of permutations and theyonly have a seven day self life, and so before we started. I think there was aten percent outid rate and I think there was also a fifty percent wasterate, so it would hit us seven days and never be used and have to be thrownaway hmand. So after we started or not...

...now that we're going and we havecoverage across the country, the waste has gone either literally or very.Nearly to zero and simultaneously, the outes rate has gone to zero, incredibleand and they've done that, while cuttingthe total blood inventory in the country, something like in half so issaved so much money. An inventory holding costs while simultaneouslyupping the service of a way up, and my favorite stat related to zip line isjust that. Maternal mortality is one of the leading avoidable causes of deathin the world, really, but certainly in Africa as well, and there are places inRowanda right now where the maternal mortality rate is lower than in the USwow. In fact, there are. There are places that Zip Lind is serving rightnow that have had zero maternal deaths since they've been operating, which isquite impressive, incredible and- and so you know, but we're like zipline isan incredible company for the people that are close to it. But what's nearEndeard to your heart, is you know? Obviously robotics is a service talk alittle bit about what is robotics is a service and how it came about yeap, sorobotics is a service, are rental robots that are performing some job toprovide value much like accounting software that youmight use to keep your books at a company. Sure you pay monthly to usethis software ongoing cover storage covers upgrades. It covers all thenormal things and the same with the robots, so they're performing someservice on an ongoing basis for a company, so they want to be rented, notbought. That's good, because enterprise enterprise products like to be rentedanyway, they like to be opbeks, not capbeks, consumers like to buy but and ourprizes like to rent. So they work out that way and they have you know theirbusiness model looks much like Sass, because there's this upfront cost justlike Sass, has a customer acquisition cost. In the beginning, it's a roboticsas the service companies have customer recquisition and a bill of materials.If you will the cost of building the robot and then they rent it and theyrecover both of those things over time. Just like in Sass what I've come torealize, because I'm on roughly my third generation now of robotics is aservice early stage startups that I'm investingin and what I've come to appreciate is that actually high margin, software hasalways been built and sequenced on what the newly commoditized hardware is. Solet me let me go back with that to mainframes building banking softwareback in the NEN S and s because main frames were comoditize enough, thatthey could provide value to the banks with these perfect calculations andthen, but later PC's coming in the late S, web servers coming and boom there'sa worldwide webh. Suddenly, there's tons of software being built for theworldwide WELB. You know laptops mobile phones and the things that led torobotics is a service. In my opinion, our mobile phones bringing us sensorsand there so reference units cameras cutting the cost down to really reallylow commodity right, lithing, my own batteries coming out of laptops andthen direct, really high reliability, light weight, high torqe SuperMaintenance, free motors coming from Tessa really and turning those into awidespriad commodity product, and you can take that set of hardware that Ihad just talked about and package it up and build a whole bunch of differentsoftware platforms. On top of it, they can provide value in the real world. Sogoing back to Zipline as the example that we've been using you're, basicallyrenting drones, to provide the service of having a thing dropped at the exactlocation you're trying to get it to, in this case, Blood Yep. And if you wentto the doctors that this is e, providing a service to so to speak. Andyou said: Hey, you want to buy some...

...robot airplanes and operate them and,like figure out how to recharge them and get them to drop things in theright place and adjust for wind or whatever they be like. What are youtalking about right? They just want the blood to show up is so it's. It reallyis parallel Astass in that that respect right right, what they care about ishaving the thing delivered reliably on time to a particular location. Theydon't really care how teleportation doesn't whatever, and it just happensin this case- that this delivery mechanism, as a surfice DIS, is themost efficient by far away to get that done and in other cases, other robotswould be able to provide those services more efficiently than whatever existingsolution yeah, and we already talked about the cost reduction from reducinginventory and centralizing inventory to cover. You know your needs, but thereare other things too. COVID vaccine needs a super cold freezer, don'treally want to be putting them all over the country, hundreds of the en you'dmuch rather put a few giant ones in the middle and deliver to a huge radiusaround that very quickly so quickly that you don't have to worry about thespoiling problems and things like doctor says: Hey, I'm going to startputting vaccines in arms and a half hour. You like boom here comes theparachute right right right, so talking just briefly about Paulhimself. You know for those who don't know of no paule for number of years,Paul was the venture capitalistat back the Tech Company. I was at previouslyby the way FA like Paul. I always admired your approach. You were superhelpful in US building that company and driving it to an exit which I alwaysadmired. But what struck me about your fund now is it's so the focus is quitea bit different than you know what subtraction capital had at that time,which I would have characterized as a much more like traditional SASSapproach. I don't know exactly what you guys investing thesis was, but Grub isdefinitely robotics. Is a service talk about like the journey to this place,for you, eneurprice software was sabtraction capital by the wayEnterpros, and so I would view ratts as as a narrow slice of enterprise.Software also got it. It does have this hardware component in it, though, so,although I can think of it like enterprise software, I think that'sbecause I designed real hardware products as an aronamics engineer atBoeing it. So you got to be careful if you've never done that before, becausetelling the difference between a hardware, company and rats is reallyimportant. If you want to be a successful investor RSO. I think it'sbecause I had that unique background that I ended up digging into this oneslice of enterprise software, because it was a place where I felt like Icould help add unique value. I was also the cmot at lastion, and so I waspretty deep on just sort of understanding Sass as well, and thecombination of somebody who's super deep in Sass and super deep in hardware.You know, as well as an engineer that turned into a Cmo you just you, won'tfind many people with sort of that particular set of things altogether andit may me want to just dig in yeah. I don't know how many former Boeingengineers go on to become CMOS. I think that's, I think. That's probably somewe're actually going to talk about another former bowing employee in aminute, but so you know speak about your firm, obviously as a longtime UNIXprogrammer. I know what grip stands for, but can you talk a little bit about thename and what that that translates to yeah you vet, so drefts an inside name. It is a UNIX command. It's one of thefirst uniue commands. You typically learn because it's a search, UNIX,commanded, let's just search typically, is inside of files, but you can graupother things too, and so it's it's sort of an inside joke. I always admire thename lower case capital because it's...

...it's sort of putting n investment inits proper place like we're, not we're not doing the work here you know, and so I wanted a super generic namesearch yeah. We do that we search for companies, but one that appealsparticularly to technical founders, very technical founders, which is thekind that I like to invest in right yeah. I anticipate that when you guysare uprunning we're going to see a lot of super technical founders, do youthink that's accurate yeah, yeah for sure, speaking of technical and Boeing,I was doing the the interview prep for or the pre interview with our nextguest, the most recent former CEO of Boeing Dennis Mollenburg, and wediscovered that we both know Paul Willer. So I know how I know Dennis howdo you know Dennis Mollenberg Dennis and I are actually alumnous of the samecollege- Iowa State University, little known fact, but computationalflud dynamics modeling airflow around something in a computer. It wasn'tinvanted at Iwa State University, but for all intents and purposes it wasproductionalized there and everybody learned to do it from there and bothdenits and I went there at the same time. Actually he was getting hismasters, though, and I was getting my Undergrad. We both ended up at Boeing.We, you know Dennis is great. Denis's wifeis great. Denis's cousin is great. He's a Boeing to hate him. If you'relistening, I mean he's just great he's like thereal deal sort of Iowa, practical, just sincere person, and we used to playbasketball together after work together, storted in Te Bowing intermural leagues, and then you know he ended up a manageron the Joint Strike Fighter Program, which was a vitol airplane that he andI both worked on. Well, I was at Boeing back when as well and yeah, we worktogether with Iwa State University, a as alumnus and so yeah. We H, I greatly appreciate my longtime knowledge of an association with Dennis.You guys are from a background perspective about as different as twopeople could be so. You've got like Mr Legacy, Boeing Guy, inturn to CEObefore retiring and then you've got you know, Paul Willard who's beeneverywhere done. All kinds of you know huge things in tech do ou. Do you findthat when you guys get together, you've still got plenty of common ground totalk about? Oh yeah, I mean we started the same right because we both grew upnot in any sort of big city environment, and we both got arodynamics engineeringdegrees. Will both go very deep on Erro with anybody who wants to and enjoydoing it, ver very genuinely enjoy doing it ure and we still enjoy doingit today. Whe're, I think we're on a couple advisory boards for startupstogether. I think we've invested in the same company a couple times now too,sometimes even by accident like without knowing the other one was there, whichis funny yeah that that I think that's I've gotthat here on the the docket to bring up as well, but so coming back to roboticsas a service for a second everybody at home is like you know, this thing istotally derailed, but that's all right, folks, fere bringing it back. So youlooking at thes space you've been in robotic service for a minute now forpeople out there that are either tasked they're either. You know at a startupthat they're trying to get going er there. Maybe a larger enterprise andthey've got an initiative that they're trying to develop what something thatyou wish people would stop doing. You know you just want to scream guys. Nomore don't do this anymore, so I think about the pitches that I've heard toomany times that you worry about things being a waste of not just your time, but the thistalented, smart person that is telling you about his time really or you don'twant to waste your time. You know and the things that I see are...

I mean most comnit's always related tothe hardware, can't do what you think it can and it won't be able to in thenext two years. So therefore, a startup isn't going to work, there's a versionof it that that, like aerodynamics, is not on Moors law right.Neither of battery neither O neither batteries by the way, the best version of a concord that youcould build today like boom the Super Sonic car plan, which I'm an Investoranso terodynamically. You know it's probablyfive percent better than the one design in th somewhere in that ball park, atleast because that's that's the limit and it's not getting any better. It'snot like! I now now, there's nothing left, there's no room left in Arrow. SoSo, if you think that you need a lift to drag ratio, that's off the chartscompared to everything else. You start ups not going to work same on batteries.I use a half life. Ou Know Mors La compute speed, doubling at the samecost every year, and I use a half life on Batteris the battery capacity,doubling at the same cost of seven years. My hardcore battery friends tellme I'm a little bit aggressive, there's, probably more like nine years, butsomewhere in that ball park you know, and so, if you're working on a acompany that needs a battery with double the capacity in order to besuccessful in your MVP, which better be ssort of one or two years off, butyou're going to have a problem and then finally same thing with some hardware. You know I don't know the best exampleon this, but sometimes you'll be trying to get something Ou, a hardware thatthat can't typically do today and you're Sayi. Oh, I know the bestexample of this robot arms. I'm going to get some grieffor saying this, but I'm Goin to say it anyway. I don't care, but robot arms say five years ago,people were saying we're going to use this arm to do this and the arms aregoing to be super cheap in like a year and they aren't they're. Still. Youstill got to spend twenty thirty grand for a nice arm right, and so, if yourbusiness model is going to need a twothusand dollar arm and you'reexpecting that in two years, you're in trouble now one day that won't be trueright and I keep watching for the for the day when I think a two thousanddollar arm is two years away, because nhow all of a suddn I'm going to startlooking around and I'm going to go okay. Who can make the most value with an armright and we'll start, then we'll start looking for ourm arm, rol lots so tospeak interesting. So, like th, the thing that you see most often I meanyou. I came from an energy storage background a few years ago and and infact one of our guests here in a few weeks is well- was the head of flyingcars at Ouver that business unit has been acquired. I expect that he's goingto have a probably a very similar view. You know that, like electric you'reonly able to cram so much energy into a unit of space and that you know it'snot like computing power, where there's a lot of room for upward improvement is Thir,something that you see a lot know you see it all the time and I I think I wason a panel with him on a stage at a flying stuff conference tha a coupleyears ago, okay and got- and I got booed because I said lets se y onbatteries are not going to get us there, like the vetal airplanes, they're, justthey're not going to have the operation Arange for a long time. So if you haveinvestors and youare willing to work on something, that's not going to see thelight of day for ten years, yeah fine! But if you're saying we're going tohave an MP up, ready to use in two years and land on the top of aBuildingi like not only is the autopilot of problem and certifying anautonomous plane, but the batteries are so far past critical in terms of whatyou need to get out of them that you can't afford to throw two hundredpounds of pilot allowance in and that's why you're driving the autopilot I'like it's just it's a tailspin you'r backwards beforeyou start. You know right right, but I...

...will say since then I found I did findthe magic material that's going to make vetol airplanes work. I just recently.I just recently found it and it's literally two years away right now. Is this something that you can talkabout today? Yeah Sir, I don't think it's ever been talkedabout before, interestingly, but the companies called fuelax and theyimpregnate aluminum with hydrogen, and so you can take this aluminum and youadd the hydrogen in it's a big messy process. Thet only a few people in theworld can do and they work at fuelex. And then you have aluminum hydride alhthree when you melt aluminum hydride itreleases the hydrogen backout. So before it's melted, you've got thisfuel bar. If you will it's actually a powder but same sane, and you can shoota bullet at it, you can slam it in the ground at four hundred miles an hour itlike it, won't blow up or catch fire or go sort of chain reactive, which is agreat thing for airplanes. We've never had a feel like that before right andHydrosan compower fuel cells and the weight density for a hydrogen poweredfuel cell is way better than a Lythio Myon. Battery, in fact, is betterenough to make the tollairplanes work so interesting. It's so I think I wasright and it's not going to be Withyiu myown batteries, it's going to behydrogen and some people are trying to use gaseous hydrogen or liquid hydersin and like the last time that that was tried in aviation was the Hindenbergand it hasn't been tried since because of the Enniberk, it's just it's justtoo reactive. You know for viewers at home, don't rekall. TheHINDENBURG ended fortly, but you know just like one noteon the chemistry that you're talking about so aluminum hydride both aluminumand especially, of course, hydrogen are very close to the top of lightestelements that you would see for people at home. Looking at their periodictable trying to understand how this would compare with lythium. So therewould be some like pretty supreme weight differentials. I would think,and that's probably what you're referring to yeah yeah it works well,and some people are trying to use gaseous hydrogen and the trouble is ittakes up too much space in an airplane, eventually like if you have to, if youhave to make a super guppy Super Fat, few slide airplane in order O holdenough hydrogen to power it. The drag is going to kill you and you start tospin backwards on that. Conveniently the aluminum hydride has about as muchaluminum weight as the steel weight in a steel tank that holds the gas, soyou're not going backwards there. In fact, it might even be a little bitlighter so you're coming out equivalent in a lot less space. So for people athome and hat this is what I love the most about you Paul. We are twentyminutes past, any topic that we cover in our pre interview and we arecompletely offtrim and it's great and I hope people at home feel the same way.So let me ask you: I've got two more questions here back to things Iactually wrote down, so we talked about like some things that you think heylook guys, stop doing this. No more ideas like this. If you need a step,function, improvement from batteries that ain't coming in the lifetime ofyour startup. What are some thing like flip? The script talk a little bitabout like Paul, has had some big hints in his career. What do you think you'relooking for in terms of companies that you want to invest in in this nextchapter? You know it's funny. People ask me this all the time and the truthis. I am not an idea person and I never really have been. What I'm good at isrecognizing good ideas when somebody tells me one and figuring out how bestto execute them. It's so as an inlike, I feel, like aninvestor, is the perfect job for me, because I have people bring me ideasall day long and I just all I have to do is say: Oh Wow, that's a reallygreat one. All that tech is within two...

...years of now, there's a real market.There there's not too much frixin in the market. You could actually sell it.That's a great idea, and and as soon as I get that light bulb in my head, Iimmediately shift gears to. How can I help you figure out how to execute onthat and it becomes a collaborative processbut but at at no point in time do that I have an idea in my head where I go,I'm looking for someone who does I love it and and like what a great spot to be.You know you're, like the person trying I mean this is what you were for mycompany you're coming in and saying look you've got the next huge idea,let's figure out how to execute on this and make it a reality, and- and I seein you know my world at very- we see so many great ideas come in and it reallycomes down to execution. You know that's where so many people go wrong ison the execution assume you see that in your world as well- Oh yeah, that's anold adage, dventure world is that ideas are cheap and execution. Is Everythingtoly? It's also why I greatly prefer operator investors, because, if youhaven't been in the trenches executing next to the best execution people inthe world, you're Goin to have a hard time recognizing them totally. So allright. Let's talk about last question. This is it so you know nobody caresabout anything more than the thing that they most want to see. Personallyyou're getting into robotic is a service. What's a robot that youpersonally want to see more than anything else, the roup that I wait,that I've been waiting for, and you know I've been reluctant to talk aboutit. Much because I don't know if it's something I could invest it or not, butthe one that I want is basically a solar power Roumba. You know a that.Will that will wander around my vineyard and cut all the weeds manuallyby hand right next to the ground and just leave them laying there and notcut the vines, not cut the grape finds, and then you know I'm already organic,but I don't have to mow anymore, just set it loose in the spring and let itjust walk around solar power, so you don't have to plug it in just keep itinside the fence. It's good to go so, and of course, you know we are very bigfans of the folks at Monarch Motors who are developing. I believe the first inthe world electric tractor- and this sounds like a monarch motors likefollow on product- is this something that I know that you know Pevine in theteam? Over there well is this: Is this something that you see those guysrolling out anytime soon? I could see them doing it like that tractor s asnicely sized as it is, is not as small as what's envision in my head. You knowlike down right down Tho Romasize, but if the, if the tractor would do it, itwould do it at a huge scale. So I could see a tractor doing the same thing forreally big venyars. You know my friends at Kennal Jackson could probably usethe tractor autonomously doing that thing, which is great. I bet the folksthat Kendall Jackson have had a very good pandemic. I from what I understandabout alcohol sales. It's been a good time to be in that business. Well, Paul.I really appreciate your time. This has been great thanks for coming on theshow and yeah appreciate it. Man, thanks for everything. Thank you right. You shouldn't have to worry about IOTprojects dragging on or unreliable vendors. You've got enough on yourplate. The right team of Engineers and project managers can change a pilotalmoment for your business into your competitive edge. Various close knitcrew of ambitious problem, solvers, continuous improvers and curiousbuilders know how to turn your ideas into a reality on time and up to yourstandards, with a focus on mitigating risk and maximizing opportunity willhelp you build an Iot solution that you can hang your hat on. Let's bring yourIot idea to life, learn more it very...

...possiblecom. You've been listening to over the AirIot connected devices and the journey. If you enjoy today's episode, make sureto hit subscribe in your favorite podcast player and give us a rating.Have a question or an idea for a future episode. Send it to podcast at verypossiblecom. SEE YOU NEXT TIME.

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