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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 is that actually, high mards and software has always been built and sequenced on what the newly commoditized hardware is. You are listening to over the Air Iot connected devices and the journey, brought to you by vary. In each episode we have sharp, unfiltered conversations with executives about their IOT journeys, the mistakes they made, the lessons they learned and what they wish they'd known when they started. Hey, everybody, welcome back to over the air, Iot connected devices and the journey. Today we're going to be talking about robotics as a service with my very good friend Paul Willard, founding partner of GREP VC. Paul, thanks for coming today. Thanks for having me right. So, first question I'm sure a humongous precentage of our audience is asking. We're talking about robotics is a service. Will Get to what it is in a moment, but how did you, Paul Willard, first get interested in this space in the first place? About eight years ago I was pitched by this company called Zip Line, and ZIP line operates robotic delivery aircraft. They can take in the beginning they can take two and it's of blood a long distance and drop them where it's needed and then fly home. And they could get the blood there very quickly, over any terrain, in all weather. Their launch country was 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 sale was the autopilot that was actually flying the plane. People were paying to get a delivery. The delivery could have been done before by a man, a human pilot. The business model wouldn't work, but technically you could have used remote control human pilots. So it was really the software that I saw. When I talk to other people about it, they kept saying, no, that's an airplane company, it's a hardware company, and I was like no, no, no, I worked for Boeing. I know what a complex hardware company looks like. You know what complex harward margins look like. This isn't that. Is it like off the shelf parts slap together? And so I made that investment back when and stayed with the company and I started to look at and analyze and run with you know, is this a software or services company, a robotics service company like Sass, or is it a hardware company and I came in very definitively that it is a robotics as a service company. Then I started looking around for more and so I invested in a second 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 line and 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 of the 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 delivery world in Africa. So you know from x to Y. can you just rattle off a few of the more impressive ones? Yeah, you know, when we started out in Rwanda, the numbers that I remember, so they might not be exactly right but they're close sure are that ten percent of the time the needed blood product wasn't available. Bloods a tricky one. It has a seven day shelf life, it's got a be positive, Neck Abo, positive, negative, and there are platelets, whole blood and plasma, so there's a 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 and I think there was also a fifty percent waste rate. So it would hit a 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 have coverage across the country, the waste has gone either literally or very nearly to zero, and simultaneously the outage rate has gone to zero. Incredible. And and they've done that while cutting the total blood inventory in the country something like in half. So it is saved so much money in inventory holding costs while simultaneously upping the service of a way up. And my favorite stat related to zip line is just that maternal mortality is one of the leading avoidable causes of death in the world really, but certainly in Africa as well, and there are places in Rwanda right now where the maternal mortality rate is lower than in the US. Wow, in fact there are there are places that zip line is 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 like ZIP 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 is a service. Talk a little bit about what is robotics as a service and how it came about. Yep, so robotics as a service are rental robots that are performing some job to provide value, much like accounting software that you might use to keep your books at a company. Sure you pay monthly to use this software. Ongoing cover storage, covers upgrades, it covers all the normal things, and the same with the robots. So they're performing some service on an ongoing basis for company. So they want to be rented, not bought. 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 they have. You know, their business model looks much like Sass because there's this upfront 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 rent it 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 now of 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 been built and sequenced on what the newly commoditized hardware is. So let me let me go back with that to mainframes, building banking software back in the S and s, because mainframes were commodities enough that they could provide value to the banks with these perfect calculations. And then, but later, PC's coming in the late S, web servers coming and boom there's a worldwide web. Suddenly there'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 lifting my 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 of hardware that I just talked about and package it up and build a whole bunch of different software platforms on top of it that can provide value in the real world. So, going back to Zipline as the example that we've been using, you're basically renting drones to provide the service of having a thing dropped at the exact location you're trying to get it too, in this case Blood Yep. And if you went to the doctors that this is the providing a service to, so to speak, and...

...you said, Hey, you want to buy some robot airplanes and operate them and like figure out how to reach charge them and you get them to drop things in the right place and adjust for 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 it really 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 a particular location. They don't really care how teleportation does it whatever, and it just happens in this case that this delivery mechanism as a service is he is the most efficient by far away to get that done, and in other cases other 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 and centralizing inventory to cover you know, your needs, but there are other things to covid vaccine needs a super cold freezer. Don't really want to be putting them all over the country, hundreds of them in you'd much rather put a few giant ones in the middle and deliver to a huge radius around that very quickly, so quickly that you don't have to worry about the spoiling problems and things like doctor says, Hey, I'm going to start putting vaccines in arms and 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. You were 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 is it's so the focus is quite a bit different than you know, what subtraction capital had at that time, which I would have cared dresses a much more like 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 journey to this place for you. And Enterprise software was subtraction capital, by the way, enterprise and so I would view rasts 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'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 you want to be a successful investor. Sure so. I think it's because I had that unique background that I ended up digging into this one slice of enterprise software because it was a place where I felt like I could help add unique value. I was also the CMO at at last seen, and so I was pretty deep on just sort of understanding Sass as well, and the combination of 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 you won't find many people with sort of that particular set of things all together and it made me want to just dig in. Yeah, I don't know how many former Boeing engineers go on to become CMOS. I think that's I think that's probably somewhat we're we're actually going to talk about another former Boeing employee in a minute, but so you know speed about your firm. Obviously, as a longtime UNIX programmer, I know what grap stands for, but can you talk 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 one of 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 admire the 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, and so I wanted to super generic name search. Yeah, we do that. We search for companies, but one that appeals particularly to technical founders, very technical 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 to see a lot of super technical founders. Do you think 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 next guest, the most recent former CEO of Boeing, Dennis Molenberg, and we discovered that we both know Paul Willard. So I know how I know Dennis. How do you know Dennis Smallberg? Dennis and I are actually a lumness of the same 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 learned to do it from there. And both Dennis and I went there at the same time. Actually, he was getting his master's though, and I was getting 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's a 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 the Boeing intermural leagues. And then, you know, he ended up a manager on the Joint Strike Fighter program which was a vtol airplane that he and I both 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, we I greatly appreciate my long time knowledge of an association with Dennis. You guys are from a background perspective about as different as two people could be. So you'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 done all kinds of huge things in tech. You do you find that when you guys 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 up not in any sort of big city environments and we both got are dynamics engineering degrees. Will both go very deep on Arrow with anybody who wants to and enjoy doing it very, very genuinely enjoy doing it, sure, and we still enjoy doing it today, where I think we're on a couple advisory boards for startups together. I think we've invested in the same company a couple times now to you, sometimes even by accident, like without knowing the other one was there, which is funny. Yeah, I thought that. I think that's I've got that here on the docket to bring up as well. But so coming back to robotics as a service for a second, everybody at home is like, you know, this thing has totally derailed, but that's all right, 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 are either tasked, they're either, you know, at a startup that they're trying to get going or there it may be a larger enterprise and they've got an initiative that they're trying to develop. What's something that you wish people would stop doing? You know, you just want to scream, guys, no more, don't do this in more so, I think about the pitches that I've heard too many times that you worry about things being a waste of not just your time but the this talented, smart person that is telling you about its time. Really, I'm sure you don't want to waste your time, you know. 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 can and it won't be able to in the next two years. So therefore a startup isn't going to work. There's a version of it that that, like aerodynamics, is not on Moore's law right either. A battery, neither. Neither batteries, by the way, the best version of a concord that you could build today, like boom, the supersonic air plane, which I'm an investor in. So Um aerodynamically, you know, it's probably five percent better than 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 like now there's nothing left, there's no room left in Arrow. So so if you think that you need a lift to drag ratio that's off the charts compared everything else you startups not going to work. Same on batteries. I use a halflife. You know, more's law. Compute speed doubling at the same cost every year, and I use a halflife on batteries. So battery capacity doubling at the same cost of seven year worst. My hardcore battery friends tell me 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 a company that needs a battery with double the capacity in order to be successful in 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 with some 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 typically do 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 to do 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 grand for a nice arm, right. And so if your business model is going to 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 arm is two years away, because then all of a sudden I'm going to start looking around and I'm going to go, okay, who can make the most value with an arm? Right, and we'll start. Then we'll start looking for arm arm robots, so to speak. Interesting so like the the thing that you see most often. I mean you, I came from an energy storage background a few years ago and in fact, one of our guests here in 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 probably a very similar view. You know that, like electric you're only able to cram so much energy into a unit of space and that you know it's not like computing power where there's a lot of room for upward improvement. Is this something that you see a lot? No, he's you see it all the time and I'm I think I was on a panel with him on a stage at a flying stuff conference a couple of years ago. Okay, and got and I got booed because I said Letty, lion batteries are not going to get us there like the vital airplanes. They're just they're not going to have the operational range for a long time. So if you have investors and you're willing to work on something that's not going to see the light of day for ten years, yeah, fine. But if you're saying we're going to have an MVP up ready to use in two years and land on the top of a building, was like, not only is the autopilot problem and certifying an autonomous plane but the batteries are so far past critical in terms of what you need to get out of them that you can't afford to throw a two hundred pounds of pilot allowance in. And that's why you're driving the autopilot. I'm like, 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 away right now. Is this something that you can talk about today? Yeah, sure, I don't think it's ever been talked about before. Interestingly, but the company's called fuel x and they impregnate aluminum with hydrogen, and so you can 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 they work at Fuel X. and then you have aluminum hydride, alhthree. When you melt aluminium hydride, it releases the hydrogen back out. So before it's melted 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. It like 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 that before. Right. And hydrogen can power fuel cells and the weight density for a 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 lithium ion batteries. It's going to be hydrogen. And some people are trying to use gaseous hydrogen or liquid hydrogen and like the last time that that was tried in aviation was the Hindenburg and it hasn't been tried since because of the INN and Burg. It's just it's just too reactive. You know, for viewers 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 aluminium hydride, both aluminum and especially, of course, hydrogen are very close to the top of lightest elements that you would see for people at home look looking at 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 some people are trying to use gasius hydrogen and the trouble is it takes up too much space and an airplane eventually, like if you have to, if you have to make a super guppy, super fat few slides airplane in order to hold enough hydrogen to power at the drag is going to kill you and you start to spin backwards on that. Conveniently, the aluminium hydride has about as much aluminum weight as the steel weight in a steel tank that holds the gas. So you're not going backwards there. In fact it might even be a little 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 love the most about you, Paul, we are twenty minutes past any topic that we covered in our pre interview and we are completely off script 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 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 you need a step function improvement from batteries, that ain't coming in the lifetime of your startup. What are some things like flip the script talk a little bit about like Paul has had some big hits in his career. What do you think you're looking for in terms of companies that you want to invest in in this next chapter? You know, it's funny people ask me there's all the time and the truth is I am not an idea person and I never really have been. What I'm good at is recognizing good ideas when somebody tells me one and figuring out how best to execute them. It's so as an in like I feel like an investor, is the perfect job for me, because I have people bring me ideas all day long and I just all I have to do is say, Oh, wow,...

...that's a really great one. All that 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's a great idea and as soon as I get that light bulb in my head I immediately shift gears to how can I help you figure out how to execute on that, and it becomes a collaborative process. But but at no point in time do I have an idem I had where I go, I'm looking for someone who does X. I love it. It's 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 my company. 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 I see in in, you know, my world at very we see so many great ideas come in and it really comes down to execution. You know, that's where so many people go wrong, is on the execution. Assume you see that in your world as well? Oh yeah, that's an old adage and venture world is that ideas are cheap and execution is everything. Totally. It's also why I greatly prefer operator investors, because if you haven't been in the trenches executing next to the best execution people in the world, you're gonna have a hard time recognizing them totally. So all right, let's talk about last question. This is it. So, you know, nobody cares about anything more than the thing that they most want to see. Personally, you're getting into robotics as a service. What's a robot that you personally want to see more than 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't know if it's something I could invest in or not. But the one that I want is basically a solar power Rumba, you know, that will that will wander around my vineyard and cut all the weeds manually by hand, right next 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 spring and let it just walk around. Solar power, so you don't have to plug it in, just keep it inside the fence. It's good to go. So and of course, you know, we are very big fans of the folks at Monarch Motors who are developing, I believe, the first in the world electric tractor and this sounds like a monarch motors like follow on product. Is this something that I know that you know pervine in the team over there? Well, does this? Is this something that you see those guys 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 envisioned in my head, you know, like down right down to room assize. But if the if the tractor would do it, it would do it at a huge scale. So I could see a tractor doing the same thing for really big vineyards. You know, my friends at Kendell Jackson could probably use the tractor autonomously doing that thing, which is great. I bet the folks at Kendall Jackson have had a very good pandemic, I've from what I understand about alcohol all 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 the show and yeah, appreciate it. Man, thanks for everything. Thank you right, you shouldn't have to worry about IOT projects 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 your business 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 on time and up to your standards, with a focus on mitigating risk and maximizing opportunity, will help you build an Iot solution that you can hang your hat on. 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 podcast player and give us a rating. Have a question or an idea for future episode? Send it to podcast at very possiblecom see you next time.

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