Emerging Trend: Robotics as a Service

An early but emerging business model and set of technologies that I have been following for the last few months is Robotics as a Service (RaaS).  It is relatively under the radar from mainstream media publications but I expect that to change over the next few years as it grows.  RaaS can be thought of as an intersection between Softwear as a Service and Internet of Things.

Fundamentally the idea behind RaaS is that robots are an expensive capital expenditure that has to be paid upfront.  RaaS is a developing set of models that allow customers to lease robots or where the RaaS service provider visits the customer on demand with its robots to perform a specific task.  These services would be enabled, programmed, and provisioned via the cloud.  For example, a customer could deploy or remove services from a variety of robots at will.  They could also develop and deploy their own applications into robots.  The robot provider would handle maintenance and troubleshooting while giving the customer the same benefits as SaaS - chiefly on demand flexibility, cost savings, speed, and scalability.

Although early we are starting to see the first live trials of RaaS including:

• Nestle leasing Softbank's Pepper Robot for its Nescafe chain of stores to deliver customer service.  The Pepper Robot was designed specifically to read human emotions and tailor its interactions.  A demo of this is fun to watch.
• Harvest Automation, a Massachusetts startup, offering a robot rental program for its its agriculture robots.  This is an especially good area to test a RaaS business model since farmers needs are seasonal and can be unpredictable depending on weather. 

Some likely big opportunities for RaaS include package delivery via drone or ground robot, agriculture, manufacturing of products that are seasonal, etc.  I expect Amazon's AWS division will begin offering a RaaS product line sometime in the next 5 years.

Coinbase

Overview

Coinbase is a fintech startup focused on allowing retail consumers to buy and sell a number of cryptocurrencies using standard payment methods such as credit card, direct bank deposit, etc.  For those new to Cryptocurrencies and blockchain technologies XEXR has an excellent beginner primer series here.  Coinbase started off with Bitcoin but continues to add other cryptocurrencies such as Etherium to their digital exchange which is called GDAX for Global Digital Asset Exchange.  GDAX is a professional trading platform that complements their retail facing Coinbase platform.  The other side of their business is providing developer APIs and working with merchants to allow consumers to purchase products using cryptocurrencies.

For good reason cryptocurrency exchanges are infamous for being insecure and prone to hacking resulting in massive thefts. Coinbase tries to counter this by  offering insurance coverage for all its customers as well as enhanced security with offline storage for consumer protection.  Many others in the space have since followed their lead and offer similar protections.

The company was founded in June 2012 in Y Combinator's summer 2012 batch and is based in San Francisco.  It was founded by a former Goldman Sachs trader named Fred Ehrsam and Brian Armstrong, an engineer.

Why I like Them

I like them because they are successfully making cryptocurrency purchases easily accessible by the average consumer. When someone is looking to buy their first cryptocurrency in the US, 9 times out of 10 times they are directed to Coinbase by non-affiliated cryptocurrency enthusiasts showing they've developed a respectable brand in the industry.  Coinbase is noticeable among other cryptocurrency exchanges for their ease of use, fast sign up, simplicity, and great user interface.  I've detailed my thoughts on the blockchain in other posts and in general I am bullish on the technology in general, even if I'm not particularly excited about the cryptocurrency application.  However, it is easy to see Coinbase becoming the dominant online exchange and broker for cryptocurrencies that platforms like e*Trade did for stock investing in the 90s.  There are a number of likely exits for the company with acquisition by a larger traditional consumer brokerage firm not at all out of the question if cryptocurrencies continue to become more mainstream.

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

SoftWear Automation

Overview

SoftWear Automation is a startup in Atlanta founded by a Georgia Tech computer vision professor that is developing machine vision and robotics technologies for sewn apparel manufacturers.  Sewn apparel is still made by hand in emerging market countries because of the extreme difficulties in sewing cloth for machines.  Unlike with metals or plastics machine have difficulty in knowing where pieces of fabric are when trying to sew them due to their softness.  However, using SoftWear Automation’s machine vision software and systems manufacturing robots can now sew clothing like shirts and jeans more accurately and faster than humans.  The company has only raised $3M in funding to date. Pricing for a system ranges from $50k - $100k.

The company was founded by a computer vision expert at Georgia Tech named Steve Dickerson who currently acts as chairman. The current CEO is a serial entrepreneur named K.P. Reddy who has 20 years of technology entrepreneurship experience having started several IT and communications companies with successful exits.

The sewn apparel manufacturing industry is a $100B+ industry in the US alone.  In 2016 it is still nearly completely un-automated with the work done by humans with sewing machines.  For context, according to the International Federation of Robots in 2014, of the 230,000,000 industrial manufacturing robots sold globally, only 300 were for apparel manufacturing.  The challenge of machines sewing clothing is a technically hard problem hence why there are so little offerings in this space.

Why I like Them

I like them because their technology is head and shoulders  above what is currently on the market and they are already showing strong customer traction.

They started selling in October 2015 with customers making recurring orders especially among fast fashion and athletic apparel manufacturers. By all reports they have strong word of mouth with inbound calls daily from US and Asian apparel manufacturers interested in testing their products.  A strong proponent of their technology is American Apparel founder and serial apparel entrepreneur Dov Charney publicly stating he is using Softwear Automation’s technology in his new clothing venture.

By solving the extremely challenging technical problem of creating sewn apparel without the need for human hands, the product is an easy sell to garment makers. SoftWear Automation’s systems lower manufacturing costs, allow faster production times, shorter inventory cycles, removes liability from human labor, and allows greater customization of products (critical as apparel companies have been forced to have exponentially more SKUs in the last few years due to consumer demand).

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

SciFutures

Overview

SciFutures is a different kind of startup.  They are literally a company of creatives, and writers that create short or long stories about possible futures to help companies guide their product development and research direction.  They have over 100+ professional science fiction authors they work with to help companies envision the future 10-15 years from now.  Authors are given a short brief and are usually paid several hundred dollars per story.  Basically corporate consulting through science fiction narratives as science fiction is becoming reality faster and faster.

The team is based in Los Angeles, California.

Why I like Them

This is one of the most innovative business models I've heard of this year.  While it might not be the most scalable, talk about an innovative service offering.  And they seem to have achieved massive traction in only a few years with a number of large corporate customers including Visa, Pepsi, Samsung, Ford, and NATO.  The military especially is in the business of worst case scenario planning and SciFutures has a strong customer base from them alone.  Companies not only use the service to understand possible futures but to grasp uses and possibilities with emerging technologies.  There are rumors that products and services dreamed up in SciFutures stories are already starting to hit the market.

SciFutures is very much a specialized, niche business that won't take over the business world anytime soon, but it is a damn cool concept and service offering.

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

Konux

Overview

Konux is an industrial Internet of Things startup based in Munich, Germany.  Their focus in the emerging industrial IoT space is on infrastructure with their first offerings for  rail and subway system monitoring.  They offer a complete solution including cloud analytics, sensors, custom hardware, and AI based predictive forecasting.     

Systems like these give a real time and 'god' like view of public infrastructure that has been unavailable prior to today.  This allows preventive maintenance (i.e. lowering an operator's cost), reduces train delays, and rapid identification of any critical issues for increased safety.

They are a young company started in mid 2014.

Why I like Them

I like industrial IoT startups that seek to take a legacy industry (in Konux's case, rail operators) and seek to digitize it.  There are easily quantifiable cost reductions from this type of product that makes it an easy and sticky sell to industrial customers once they see the value.

In initially focusing on railway operators Konux has chosen a great customer base to focus on since it is large but for many parts of their network still operate using analog technology and manual inspections.  Konux has shown great early success due to their killer feature being the ability to monitor in real time rail switch monitoring, an area legacy technologies had difficulty with.

I also like that they withstood the siren call of Silicon Valley and have kept their company in the center of Europe to be based near their customers.  Europe is light years ahead of the US in terms of rail and public transit and growth will be swifter for Konux staying where they were founded.

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.