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 mards and software has always been built and sequenced on whatthe newly commoditized hardware is. You are listening to over the Air Iot connecteddevices and the journey, brought to you by vary. In each episode wehave sharp, unfiltered conversations with executives about their IOT journeys, the mistakes theymade, the lessons they learned and what they wish they'd known when they started. Hey, everybody, welcome back to over the air, Iot connected devicesand the journey. Today we're going to be talking about robotics as a servicewith my very good friend Paul Willard, founding partner of GREP VC. Paul, thanks for coming today. Thanks for having me right. So, firstquestion I'm sure a humongous precentage of our audience is asking. We're talking aboutrobotics is a service. Will Get to what it is in a moment,but how did you, Paul Willard, first get interested in this space inthe first place? About eight years ago I was pitched by this company calledZip Line, and ZIP line operates robotic delivery aircraft. They can take inthe beginning they can take two and it's of blood a long distance and dropthem where it's needed and then fly home. And they could get the blood therevery quickly, over any terrain, in all weather. Their launch countrywas Rwanda and when I saw this company I kept seeing a software company.I saw SASS company as a matter of fact, because to me the salewas the autopilot that was actually flying the plane. People were paying to geta delivery. The delivery could have been done before by a man, ahuman pilot. The business model wouldn't work, but technically you could have used remotecontrol human pilots. So it was really the software that I saw.When I talk to other people about it, they kept saying, no, that'san airplane company, it's a hardware company, and I was like no, no, no, I worked for Boeing. I know what a complexhardware company looks like. You know what complex harward margins look like. Thisisn't that. Is it like off the shelf parts slap together? And soI made that investment back when and stayed with the company and I started tolook at and analyze and run with you know, is this a software orservices company, a robotics service company like Sass, or is it a hardwarecompany and I came in very definitively that it is a robotics as a servicecompany. Then I started looking around for more and so I invested in asecond robotics as a service company called cobalt robotics and net. You know,now 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 lineand and I somewhat familiar with ZIP line, in large part because of our friendship, and I followed them closely. But can you talk about some ofthe metrics? I know viewers and homers that you Metris doesn't sound very interesting, but like some of the enormous improvements that they've brought to the blood deliveryworld in Africa. So you know from x to Y. can you justrattle off a few of the more impressive ones? Yeah, you know,when we started out in Rwanda, the numbers that I remember, so theymight not be exactly right but they're close sure are that ten percent of thetime the needed blood product wasn't available. Bloods a tricky one. It hasa seven day shelf life, it's got a be positive, Neck Abo,positive, negative, and there are platelets, whole blood and plasma, so there'sa lot of permutations and they only have a seven day self life.And so before we started I think there was a ten percent outage rate andI think there was also a fifty percent waste rate. So it would hita seven days and never be used and have to be thrown away. HMM. And so after we started, or...

...now that we're going and we havecoverage across the country, the waste has gone either literally or very nearly tozero, and simultaneously the outage rate has gone to zero. Incredible. Andand they've done that while cutting the total blood inventory in the country something likein half. So it is saved so much money in inventory holding costs whilesimultaneously upping the service of a way up. And my favorite stat related to zipline is just that maternal mortality is one of the leading avoidable causes ofdeath in the world really, but certainly in Africa as well, and thereare places in Rwanda right now where the maternal mortality rate is lower than inthe US. Wow, in fact there are there are places that zip lineis serving right now that have had zero maternal deaths since they've been operating,which is quite impressive, incredible and and so you know. But we're likeZIP line is an incredible company for the people that are close to it.But what's near and dear to your heart is you know, obviously robotics isa service. Talk a little bit about what is robotics as a service andhow it came about. Yep, so robotics as a service are rental robotsthat are performing some job to provide value, much like accounting software that you mightuse to keep your books at a company. Sure you pay monthly touse this software. Ongoing cover storage, covers upgrades, it covers all thenormal things, and the same with the robots. So they're performing some serviceon an ongoing basis for company. So they want to be rented, notbought. That's good because enterprise, enterprise products, like to be rented anyway. They like to be OPEX, not CAPEX. Consumers like to buy,but enterprises like to rent, and so they work out that way and theyhave. You know, their business model looks much like Sass because there's thisupfront cost, just like Sass has a customer acquisition cost in the beginning.It's a robotics as the service companies have customer requisition and a bill of materials, if you will, the cost of building the robot and then they rentit and they recover both of those things over time, just like in Sass. What I've come to realize, because I'm on roughly my third generation nowof robotics as a service, early stage startups that I've I'm investing in,and what I've come to appreciate is that actually high margin software has always beenbuilt and sequenced on what the newly commoditized hardware is. So let me letme go back with that to mainframes, building banking software back in the Sand s, because mainframes were commodities enough that they could provide value to thebanks with these perfect calculations. And then, but later, PC's coming in thelate S, web servers coming and boom there's a worldwide web. Suddenlythere's tons of software being built for the World Wide Web. You know,laptops, mobile phones and the things that led to robotics as a service.In my opinion, our mobile phones bringing us sensors and are so reference units, cameras, cutting the cost down to really, really low commodity right liftingmy own batteries coming out a laptops, and then direct really high reliability,lightweight, High Torque, SUP super maintenance free motors coming from Tesla really,and turning those into a widespread commodity product. And you can take that set ofhardware that I just talked about and package it up and build a wholebunch of different software platforms on top of it that can provide value in thereal world. So, going back to Zipline as the example that we've beenusing, you're basically renting drones to provide the service of having a thing droppedat the exact location you're trying to get it too, in this case BloodYep. And if you went to the doctors that this is the providing aservice to, so to speak, and...

...you said, Hey, you wantto buy some robot airplanes and operate them and like figure out how to reachcharge them and you get them to drop things in the right place and adjustfor wind or whatever, they'd be like, what are you talking about? Right? They they just want the blood to show up. So it's itreally is parallel to Sass in that in that respect. Right, right,the what they care about is having the thing delivered reliably on time to aparticular location. They don't really care how teleportation does it whatever, and itjust happens in this case that this delivery mechanism as a service is he isthe most efficient by far away to get that done, and in other casesother robots would be able to provide those services more efficiently than whatever existing solution. Yeah, and we already talked about the cost reduction from reducing inventory andcentralizing inventory to cover you know, your needs, but there are other thingsto covid vaccine needs a super cold freezer. Don't really want to be putting themall over the country, hundreds of them in you'd much rather put afew giant ones in the middle and deliver to a huge radius around that veryquickly, so quickly that you don't have to worry about the spoiling problems andthings like doctor says, Hey, I'm going to start putting vaccines in armsand a half hour you like, boom, here comes the parachute. Right,right, right. So talking just briefly about Paul himself. You know, for those who don't know, I've known Paul for number of years.Paul was the venture capitalist that back the tech company I was at previously,by the way. Fact, like Paul, I always admired your approach. Youwere super helpful in US building that company and driving it to an exit, which I always admired. But what struck me about your fund now isit's so the focus is quite a bit different than you know, what subtractioncapital had at that time, which I would have cared dresses a much morelike traditional SASS approach. I don't know exactly what you guys investing thesis was, but Grub is definitely robotics is a service. Talk about like the journeyto this place for you. And Enterprise software was subtraction capital, by theway, enterprise and so I would view rasts as as a narrow slice ofenterprise 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's because I designed real hardware products as an aerodynamics engineer at Boeing. It's so you got to be careful if you've never done that before,because telling the difference between a hardware company and Rass is really important if youwant to be a successful investor. Sure so. I think it's because Ihad that unique background that I ended up digging into this one slice of enterprisesoftware because it was a place where I felt like I could help add uniquevalue. I was also the CMO at at last seen, and so Iwas pretty deep on just sort of understanding Sass as well, and the combinationof somebody who's super deep in Sass and super deep and hardware, you know, as well as an engineer that turned into a CMO. You just youwon't find many people with sort of that particular set of things all together andit made me want to just dig in. Yeah, I don't know how manyformer Boeing engineers go on to become CMOS. I think that's I thinkthat's probably somewhat we're we're actually going to talk about another former Boeing employee ina minute, but so you know speed about your firm. Obviously, asa longtime UNIX programmer, I know what grap stands for, but can youtalk a little bit about the name and what that that translates to? Yeah, you'vet so drafts and inside name it is a UNIX command. It's oneof the first UNIX commands you typically learn because it's a search UNIX commanded.Let's just search, typically inside of files, but you can grap other things too, and so it's it's sort of an inside joke. I always admirethe name lowercase capital because it's it's sort...

...of putting investment in its proper place, like we're not we're not doing the work here, you know, andso I wanted to super generic name search. Yeah, we do that. Wesearch for companies, but one that appeals particularly to technical founders, verytechnical founders, which is the kind that I like to invest in. Right. Yeah, I anticipate that when you guys are up running we're going tosee a lot of super technical founders. Do you think that's accurate? Yeah, yeah, for sure. Speaking of technical and Boeing, I was doingthe the interview prep for, or the pre interview with our next guest,the most recent former CEO of Boeing, Dennis Molenberg, and we discovered thatwe both know Paul Willard. So I know how I know Dennis. Howdo you know Dennis Smallberg? Dennis and I are actually a lumness of thesame college, Iowa State University. Little known fact, but computational fluid dynamics, modeling airflow around something in a computer. It wasn't invented it Iwa State University, but for all intents and purposes it was productionalize there and everybody learnedto do it from there. And both Dennis and I went there at thesame time. Actually, he was getting his master's though, and I wasgetting my Undergrad. We both ended up at Boeing. We you know,Dennis is great. Dennis's wife is great, Dennis his cousin is great. He'sa Boeing to hate him if you're listening. I mean he's just great. He's like the real deal sort of Iowa, practical, just sincere person, and we used to play basketball together after work together, so in theBoeing intermural leagues. And then, you know, he ended up a manageron the Joint Strike Fighter program which was a vtol airplane that he and Iboth worked on while I was at Boeing back when as well. And Yeah, we work together with Iowa State University as alumnus and so yeah, weI greatly appreciate my long time knowledge of an association with Dennis. You guysare from a background perspective about as different as two people could be. Soyou've got like Mr Legacy, bowing guy in turn to CEO before retiring.And then you've got, you know, Paul Willard, who's been everywhere doneall kinds of huge things in tech. You do you find that when youguys get together, you still got plenty of common ground to talk about?Oh yeah, I mean we started the same right because we both grew upnot in any sort of big city environments and we both got are dynamics engineeringdegrees. Will both go very deep on Arrow with anybody who wants to andenjoy doing it very, very genuinely enjoy doing it, sure, and westill enjoy doing it today, where I think we're on a couple advisory boardsfor startups together. I think we've invested in the same company a couple timesnow to you, sometimes even by accident, like without knowing the other one wasthere, which is funny. Yeah, I thought that. I think that'sI've got that here on the docket to bring up as well. Butso coming back to robotics as a service for a second, everybody at homeis like, you know, this thing has totally derailed, but that's allright, folks were bringing it back. So you looking at the space,you've been in robotics service for a minute now for people out there that areeither tasked, they're either, you know, at a startup that they're trying toget going or there it may be a larger enterprise and they've got aninitiative that they're trying to develop. What's something that you wish people would stopdoing? You know, you just want to scream, guys, no more, don't do this in more so, I think about the pitches that I'veheard too many times that you worry about things being a waste of not justyour time but the this talented, smart person that is telling you about itstime. Really, I'm sure you don't want to waste your time, youknow. And the things that I see...

...are, I mean, most Commons. It's always related to the hardware. Can't do what you think it canand it won't be able to in the next two years. So therefore astartup isn't going to work. There's a version of it that that, likeaerodynamics, is not on Moore's law right either. A battery, neither.Neither batteries, by the way, the best version of a concord that youcould build today, like boom, the supersonic air plane, which I'm aninvestor in. So Um aerodynamically, you know, it's probably five percent betterthan the one design in the S. somewhere in that ballpark at least,because that's that's the limit and it's not getting any better. It's not likenow there's nothing left, there's no room left in Arrow. So so ifyou think that you need a lift to drag ratio that's off the charts comparedeverything else you startups not going to work. Same on batteries. I use ahalflife. You know, more's law. Compute speed doubling at the same costevery year, and I use a halflife on batteries. So battery capacitydoubling at the same cost of seven year worst. My hardcore battery friends tellme I'm a little bit aggressive. It is probably more like nine years,but somewhere in that Ballpark, you know. And so if you're working on acompany that needs a battery with double the capacity in order to be successfulin your MVP, which better be sort of one or two years off,that you're going to have a problem. And then finally, same thing withsome hardware. You know, I don't know the best example on this,but sometimes you'll be trying to get something out of hardware that it can't typicallydo today. And you're saying, Oh, I know the best example of this, robot arms. I'm going to get some grief for saying this,but I'm gonna say it anyway. I don't care. But robot arms,say, five years ago people were saying we're going to use this arm todo this and the arms are going to be super cheap in like a year, and they aren't. They're still you still got to spend twenty thirty grandfor a nice arm, right. And so if your business model is goingto need a two thousand dollar arm and you're expecting that in two years,you're in trouble. Now. One day that won't be true, right.And I keep watching for the for the day when I think a twozero armis two years away, because then all of a sudden I'm going to startlooking around and I'm going to go, okay, who can make the mostvalue with an arm? Right, and we'll start. Then we'll start lookingfor arm arm robots, so to speak. Interesting so like the the thing thatyou see most often. I mean you, I came from an energystorage background a few years ago and in fact, one of our guests herein a few weeks is well was the head of flying cars at Uber.That business unit has been acquired. I expected he's going to have a probablya very similar view. You know that, like electric you're only able to cramso much energy into a unit of space and that you know it's notlike computing power where there's a lot of room for upward improvement. Is thissomething that you see a lot? No, he's you see it all the timeand I'm I think I was on a panel with him on a stageat a flying stuff conference a couple of years ago. Okay, and gotand I got booed because I said Letty, lion batteries are not going to getus there like the vital airplanes. They're just they're not going to havethe operational range for a long time. So if you have investors and you'rewilling to work on something that's not going to see the light of day forten years, yeah, fine. But if you're saying we're going to havean MVP up ready to use in two years and land on the top ofa building, was like, not only is the autopilot problem and certifying anautonomous plane but the batteries are so far past critical in terms of what youneed to get out of them that you can't afford to throw a two hundredpounds of pilot allowance in. And that's why you're driving the autopilot. I'mlike, it's just your it's a tailspin, your backwards before where you start.You know right. But I will...

...say since then I found it.I did find the magic material that's going to make V toll airplanes work.I just recently. I just recently found it and it's literally two years awayright now. Is this something that you can talk about today? Yeah,sure, I don't think it's ever been talked about before. Interestingly, butthe company's called fuel x and they impregnate aluminum with hydrogen, and so youcan take this aluminum and you add the hydrogen in. It's a big,messy process that only a few people in the world can do, and theywork at Fuel X. and then you have aluminum hydride, alhthree. Whenyou melt aluminium hydride, it releases the hydrogen back out. So before it'smelted you've got this fuel bar, if you will. It's actually a powder, but same, same, and you can shoot a 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 a great thing for airplanes. We've never had a feel like thatbefore. Right. And hydrogen can power fuel cells and the weight density fora hydrogen powered fuel cell is way better than liking of my own battery.In fact it's better enough to make the toll airplanes work. So it's interesting. It's so I think I was right. And it's not going to be lithiumion batteries. It's going to be hydrogen. And some people are tryingto use gaseous hydrogen or liquid hydrogen and like the last time that that wastried in aviation was the Hindenburg and it hasn't been tried since because of theINN and Burg. It's just it's just too reactive. You know, forviewers at home that don't recall, the HINDENBURG ended poorly. But you know, just like one note on the chemistry that you're talking about. So aluminiumhydride, both aluminum and especially, of course, hydrogen are very close tothe top of lightest elements that you would see for people at home look lookingat their periodic table, trying to understand how this would compare with lithium.So there would be some like pretty supreme weight differentials, I would think,and that's probably what you're referring to right. Yeah, it works well and somepeople are trying to use gasius hydrogen and the trouble is it takes uptoo much space and an airplane eventually, like if you have to, ifyou have to make a super guppy, super fat few slides airplane in orderto hold enough hydrogen to power at the drag is going to kill you andyou start to spin backwards on that. Conveniently, the aluminium hydride has aboutas much aluminum weight as the steel weight in a steel tank that holds thegas. So you're not going backwards there. In fact it might even be alittle bit lighter. So you're coming out equivalent in a lot less space. So for people at home, and and that this is what I lovethe most about you, Paul, we are twenty minutes past any topic thatwe covered in our pre interview and we are completely off script and it's greatand I hope people at home feel the same way. So let me askyou. I've got two more questions here back two things I actually wrote down. So we talked about like some things that you think, Hey, look, guys, stop doing this, no more ideas like this. If youneed a step function improvement from batteries, that ain't coming in the lifetime ofyour startup. What are some things like flip the script talk a little bitabout like Paul has had some big hits in his career. What do youthink you're looking for in terms of companies that you want to invest in inthis next chapter? You know, it's funny people ask me there's all thetime and the truth is I am not an idea person and I never reallyhave been. What I'm good at is recognizing good ideas when somebody tells meone and figuring out how best to execute them. It's so as an inlike I feel like an investor, is the perfect job for me, becauseI have people bring me ideas all day long and I just all I haveto do is say, Oh, wow,...

...that's a really great one. Allthat tech is within two years and now there's a real market there.There's not too much friction in the market. You could actually sell it. That'sa great idea and as soon as I get that light bulb in myhead I immediately shift gears to how can I help you figure out how toexecute on that, and it becomes a collaborative process. But but at nopoint in time do I have an idem I had where I go, I'mlooking for someone who does X. I love it. It's and and likewhat a great spot to be. You know, you're like the person trying. I mean this is what you were for my company. You're coming inand saying, look, you've got the next huge idea, let's figure outhow to execute on this and make it a reality. And I see inin, you know, my world at very we see so many great ideascome in and it really comes down to execution. You know, that's whereso many people go wrong, is on the execution. Assume you see thatin your world as well? Oh yeah, that's an old adage and venture worldis that ideas are cheap and execution is everything. Totally. It's alsowhy I greatly prefer operator investors, because if you haven't been in the trenchesexecuting next to the best execution people in the world, you're gonna have ahard time recognizing them totally. So all right, let's talk about last question. This is it. So, you know, nobody cares about anything morethan the thing that they most want to see. Personally, you're getting intorobotics as a service. What's a robot that you personally want to see morethan anything else? The robot that I wait that I've been waiting for,and you know, I've been reluctant to talk about it much because I don'tknow if it's something I could invest in or not. But the one thatI want is basically a solar power Rumba, you know, that will that willwander around my vineyard and cut all the weeds manually by hand, rightnext to the ground and just leave them laying there and not cut the vines, not cut the grapevines, and then, you know, I'm already organic,but I don't have to mow anymore. Just set it loose in the springand let it just walk around. Solar power, so you don't haveto plug it in, just keep it inside the fence. It's good togo. So and of course, you know, we are very big fansof the folks at Monarch Motors who are developing, I believe, the firstin the world electric tractor and this sounds like a monarch motors like follow onproduct. Is this something that I know that you know pervine in the teamover there? Well, does this? Is this something that you see thoseguys rolling out anytime soon? I could see them doing it like that.Tractors, as nicely sized as it is, is not as small as what's envisionedin my head, you know, like down right down to room assize. But if the if the tractor would do it, it would do itat a huge scale. So I could see a tractor doing the same thingfor really big vineyards. You know, my friends at Kendell Jackson could probablyuse the tractor autonomously doing that thing, which is great. I bet thefolks at Kendall Jackson have had a very good pandemic, I've from what Iunderstand about alcohol all sales. It's been a good time to be in thatbusiness. Well, Paul, I really appreciate your time. This has beengreat. Thanks for coming on the show 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 your plate.The right team of Engineers and project managers can change a pivotal moment for yourbusiness into your competitive edge varies. Close Knit crew of ambitious problem solvers,continuous improvers and curious builders know how to turn your ideas into a reality ontime and up to your standards, with a focus on mitigating risk and maximizingopportunity, will help you build an Iot solution that you can hang your haton. Let's bring your Iot idea to...

...life. Learn more at very possiblecom. You've been listening to over the Air Iot connected devices and the journey.If you enjoyed today's episode, make sure to hit subscribe in your favorite podcastplayer and give us a rating. Have a question or an idea for futureepisode? Send it to podcast at very possiblecom see you next time.

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