George Jagodzinski (00:00):
We spend a lot of time in this industry talking about AI, software chatbots, agents, algorithms, but my guest today is focused on the physical world. He's looking at the robots rebuilding our manufacturing base and automation, solving our global labor crisis. And in age of digital noise, he's hunting for industrial signal.
(00:17):
I'm joined by Oliver Mitchell, a veteran robotics investor and partner at ff Venture Capital. Oliver is also the author of a fantastic book for any leader in this space, the Startup Field Guide in the Age of Robots and AI. Today, we break down why non-sexy industrial tech is the real ROI story and how to spot the difference between what could be a shiny object versus a mission-critical tool. If you want the field guide to the future of industry, this is it. Please welcome, Oliver Mitchell.
(00:43):
Welcome to Evolving Industry, a no BS podcast about business leaders who are successfully weaving technology into their company's DNA to forge a better path forward. If you're looking to actually move the ball forward rather than spinning around in a tornado of buzzwords, you're in the right place. I'm your host, George Jagodzinski.
(01:21):
Oliver, thanks so much for being here.
Oliver Mitchell (01:23):
Thank you, George. This is amazing.
George Jagodzinski (01:25):
I was really excited reading your book. I didn't know there was going to be so many backpacking, back country types of ... There it is, Startup Field Guide in the Age of Robots and AI. Where I wanted to start is, because we work across many different industries, for the audience, what makes robots and AI, what makes those industries different from the others?
Oliver Mitchell (01:46):
And that's really the impetus for me writing the book is that I'm a big fan of Steve Blank, The Startup Owner's Manual, VC and a Stanford Business School professor. And Eric Ries, The Lean Startup approach. But I felt that speaking to entrepreneurs, roboticists and AI data scientists, that there was something missing and that it's easy to scale up a marketplace or a SaaS platform, but we are talking about businesses that require an immense amount of technical and capital support.
(02:23):
Within mechatronics, you need mechanical, electrical, software engineers. And within AI, you need specialized data scientists that can build foundational models, learning models, and be able to execute applied AI within industry. And so there's really a different sales process and really a different go-to-market process. But at the end of the day, there are first principles, and I found that too often as an investor in this space, there were founders that got attracted to shiny objects, got attracted to the technology, but they never asked, "Well, problem, am I really solving?"
(03:00):
And they never went to the toolbox to say, "Well, what is the best tool to solve that problem? No, I want to build an AI company, I want to build a robotics company." But when Mick Mountz went to build Kiva, he did that based upon his experience in Webvan, a huge dotcom bust, the first sort of online grocer because their fulfillment centers were beautifully built and really expensive, but really inefficient. They were taping $20 to every box that went out there, and he said, "There must be a better way. Oh, I know what it is. We need a robot that can move the shelving to the picker."
George Jagodzinski (03:34):
I love that because it's one of those pivot moments. I got my start in the late '90s dotcom and your backyard, over at the Hotel Chelsea in Soho, and back then it was like just march a bunch of kids into an office, get them some foosball and booze and you'll just magically make money somehow. But as you move through there, you do start to learn some lessons and make some pivots. But what I am always curious about in the robotic world, maybe not so much AI, you tell me, but it feels like the pivots are much more expensive, much more difficult.
Oliver Mitchell (04:04):
Potentially, but maybe not. So I think that the first step is customer discovery. And so if you do your customer discovery speaking to 500 potential purchasers, not your mom and your brother and your cousin who works at this company, but really the ultimate decision makers, and you say, "Well, how much are you going to pay for this?" And they say, "You know what? Right chapter, wrong page, you should be doing this." Then you are getting great feedback and you're building that within your feedback loop and evolving your product. And so it's really important to get an MVP very quickly, even a breadboard model very quickly and get it out to customers as quickly as possible to get that feedback. If you do that, you're preserving capital, you're being very frugal and you can scale.
George Jagodzinski (04:54):
Interesting. And I'm curious, what are you seeing from the latest round of founders in this space? What are they like?
Oliver Mitchell (05:01):
Yeah, I mean I think that there's so many great founders out there that are transforming industry. One that I speak about in the book is Nick Radford, who started his career for 12 years at NASA and building humanoids there. He Robonaut, Robonaut 2, launched the ISS and Valkyrie and then left to launch a deep sea robotics company called Nauticus. Took it from his living room to the stock exchange, took that public, and now he's building a humanoid robot.
(05:30):
And while everyone's focused on the home and we see some amazing robot theater from China this week to honor Chinese New Year with Unitree's dancing robots, well, can they weld ships? And so they can't. And so the biggest sort of labor voids out there are in heavy industry, because people don't want to be welders. People want to be influencers, and so this new generation of workers would rather sell belts on Etsy or build up their Gram following, but we need hard things built in this country and our allies do as well.
(06:10):
Here I am in Manhattan opposite me is Brooklyn. In the Brooklyn Navy Yards, we used to build a ship a week. That's insane, a ship a week. We built all of three ships last year in the United States. China built 300. And so Nick Radford saw this problem, saw the economic opportunity, and took his practice skills and his team to build Persona AI, a humanoid robot for heavy industry, for high skilled labor, the first being welding. Those are the type of entrepreneurs that can be really excited that really see that mission-critical problem and are solving things at scale.
George Jagodzinski (06:48):
It's funny with the dancing, because it's so many people are just looking for these fun, sexy forward-looking things that you could do with the robots, but I guess really just because it comes down to those more what makes our industry and our society move at the most fundamental levels, right?
Oliver Mitchell (07:06):
Absolutely. Listen, we spoke about pivots before. I have a portfolio company, Civ Robotics. It started its career as Civ Drone. They started in Israel at the Technion, which is like Israel's MIT, an amazing school. There were graduate students that knew construction, they were civil engineers and said there was a huge bottleneck, because surveyors were retiring and people were not filling those jobs.
(07:31):
And so they built a drone capable of surveying and staking, and they came here to GENIUS New York, an amazing accelerator, four and a half hours north of New York City and Syracuse right next to the FAA test site up there, and they went to industry and said, "Listen, we got the drone." And everyone's like, "Well, you're solving the problem, but we don't want a drone. We need a robot that's going to go out all day long, nine hours a day, do tens of thousands of points. We need a terrestrial robot." "But you all said you love drones." "Yeah, we love drones. We never said we're going to buy drones."
(08:01):
And so they pivoted and listening early to the market, saving their capital, building a terrestrial robot, and now they're going out to solar farms, making industrial solar affordable, turning on 20 gigawatts of power already. And they're expanding their product line. They got CivDot, which marks all the spots where the piles go on the industrial solar farms and they do tens of thousands of points a week. That's something that would take teams of cartographers and surveyors to do, and now they've got CivMove, which actually is a material handler that moves the piles and distributes them around the construction sites. Removing those bottlenecks, solving something mission-critical and making it affordable at half the cost and 10 times the speed.
George Jagodzinski (08:47):
That's interesting. Help me understand that more how that played out though, because you're probably making a lot of capital investments and human capital investments into the drone technology and now all of a sudden you're saying, "Hey, we don't need that anymore. We need the terrain experts." What's that look like? How does that play out?
Oliver Mitchell (09:04):
Once again, don't fall in love with the technology. Really listen to customers, customers, customers, customers and be obsessive about it. By listening to the customers, you find out what they want and you build towards that and you keep that feedback loop open. The customer said, "We need a material handler." That creative CivMove. "We need to make our skid-steer drivers more effective and more precise." That created CivNav. And now they've got a family of products.
(09:33):
Plus One Robotics, my portfolio company in e-commerce fulfillment, they saw a big bottleneck with the large shippers out there, FedEx, DHL, UPS, that they couldn't handle the amount of e-commerce demand, so it wasn't about replacing workers, it was about increasing revenues, augmenting humans with robot for e-commerce fulfillment.
George Jagodzinski (09:55):
I've visited quite a few fulfillment centers out there, and it's a little scary what we're still running on as a country. I mean, you go into some of these distribution centers and there's a giant antiquated belt that's moving around the whole thing. You could smell the transformers and the grease and the oil and all that, and there's no one around that makes that anymore, and if it breaks, you can't get it fixed. And it's like those are the non-sexy things that are out there, a lot of them that need to be replaced and implemented with robotics.
Oliver Mitchell (10:25):
Yeah. And non-sexy is sexy. I've been to Memphis, the busiest Airport in America at night, and I've seen that conveyor belt, the matrix, and I've seen the packages pile up come Christmas, and they got to hire a whole bunch of temp workers just to keep up with that demand. The challenge has been, George, over the past couple of years is that interest rates have been really high, and so those big corporations have slowed their investment in robotics.
(10:52):
FedEx can't close FedEx Field at Memphis Airport, right? They can't just say, "We're going to be taking a two-day pause to update the Airport." They have to build a new automated facility. In order to do that, capital has to be cheap enough to make that financially viable. So it's really exciting with lots of talks about declining interest rates and this investment. Also, I would say this, and I don't want to be political, but this administration seems to be very forward-thinking in their AI strategy and the robotics strategy. It's not just enough to protect users' privacy, but how can we become the center for these technologies right here in this country? When Howard Lutnick, the commerce secretary announced the robotics strategy, a couple of weeks later, Teradyne announced a $500 billion factory in Detroit. That is amazing stuff.
George Jagodzinski (11:44):
Wow. I like the example of FedEx having to stand up something new. I know your book is about the startups field guide, but we work a lot with mid-market, upper-mid-market enterprise, and some of them are laggard, and what I find the best approach to them sometimes is they're just stuck in 60 years of doing things the same way. And so it's not that they can't necessarily shut down a little bit to modernize, it's that no one knows what new looks like yet.
(12:12):
And so I always take the approach of let's essentially stand up a startup in your organization or perhaps in the building next to it just to show the whole company here's how it can be done without all the baggage of the history and all that. And I'm wondering if you think much about you have so much experience across different levels of industry, what stories or what lessons from the startups within this space do you think that the more established companies can learn from?
Oliver Mitchell (12:37):
It's an excellent point. I would modify that they do know what new looks like, they're just too scared and they're not risk-takers to implement it. And if they don't know, they can just type it into ChatGPT and it can give them examples. The data is out there and it's accessible, and it's amazing how accessible and how quick it is.
(12:57):
I'll give you an example. I'm on the board of Cambrian Robotics. We are a 3D AI computer vision company for collaborative robots. Our customers include leading automotive appliance to medical device manufacturers globally, Asia, Europe, the United States. There are companies that have been around, publicly traded companies that have been around for decades that many of our customers use in greater quantities than our technology. Our technology can pick up transparent and translucent objects. Those companies can.
(13:31):
Our companies can do bin picking without being affected by light. So that means door hinges that are shiny objects, their robots can't pick those up, but our robots empowered with Cambrian Robotics can pick them up seamlessly every single time. Our robots can do assembly technology for brake compressors and build things. So we are able to do these complicated tasks at high speed, at high accuracy while these more established players just are a ceiling mount camera that aid the robot with some rudimentary 3D vision.
George Jagodzinski (14:10):
Interesting.
Oliver Mitchell (14:11):
No one's going to get fired for working with a publicly traded company that's worth $30 billion at these big automotive companies, but we are small company. And so they put a lot of hurdles out there with feasibility studies, line studies, and then there's always the infamous reorg in the company. So you got to start all over with the new people that come on board. And then there's all the safety.
(14:34):
I'm not suggesting we throw safety out the window, but there should be incentives going back to the robotic plan that Secretary Lutnick released. He's like, "Let's give incentives for adopting new technologies. Let's give incentives for workers that want to be retrained on these technologies. Let's give incentives for building these technologies domestically." And I think if all those things are aligned, you will see a lot more frictionless sales and less resistance and more risk-takers.
(15:04):
The positive thing to add, George, and I'm reminded, I interviewed in the book Rodney Brooks, the founder of Roomba, but they also founded the PackBot. The PackBot is probably the most successful early defense tech robotic startups out there, and it was used in post-9/11 in Iraq and Afghanistan for neutralizing IEDs. And when they went to do the firmware, they had a very complicated firmware and Rod is saying, "Hey, they're all playing video games, make it like a joystick." And so with that said, is the new generation of engineers and the new generation of purchasing managers will be a lot more attuned to these technologies and it won't be seen as a risk purchase, it will just be seen as an evolutionary purchase.
George Jagodzinski (15:50):
I'm glad that you said that, because when you just said no one gets fired for hiring the $30 billion public company, I know in consulting that's changed. It used to be you don't get fired for hiring IBM, but I feel like that's completely changed and people embrace more targeted boutique firms and all that, and I think I'm curious if you see more broadly also that there is just this more, I hate to even call it risk purchases, but just people more recognize the value of these more up and comers and more boutique type of shops.
Oliver Mitchell (16:23):
Yeah. I mean, I think when the economy is good, the innovation departments have more capital to play with to try out these technologies. The challenge is, as an investor, an active board member and a former founder and advisor to startups, is that the innovation departments are removed from the business units. They're often report to the chief strategy officer or the chief financial officer through the treasury.
(16:50):
And so when they call up the business unit and say, "Hey, we got this great new technology, great new idea." The guy's like, "Hey, I'm still working on if your last great idea, I don't have time for this. I have a P&L that I need to meet." And so you get those bottlenecks.
(17:06):
Even if you have strategic investment, and I'm a big believer of cap table construction and having great financial partners that see through different consecutive growth rounds as well as corporate partners that can help you on supply chain, help you on sales channels and help you on innovation. Even if GM is on the cap table, you're a pimple on GM's balance sheet. A billion-dollar company is still very small compared to what GM does annually.
(17:35):
And so you really have to add that strategic value. And the caution that I give to founders is it's not going to come really from the corporate VC and it's not coming from the innovation department. You have to spend time with your partner there and find out who is the internal validator. It might be the guy whose desk is next to the bathroom or the supply cabinet who everyone goes to as a resource to find out about that technology. That's the person you have to win over.
George Jagodzinski (18:05):
Yeah. Those hidden power structures within the organization. Shifting gears a tiny bit is, Oliver, last we talked, I learned that you've been converted to a humanoid fan. Now, that implies maybe you weren't before and then you became. So I'm curious, what was that journey like and then why have you landed on that?
Oliver Mitchell (18:24):
I quote Rodney Brooks again, and I always ask people, I interview like 30 people in the book and I say, "What are your first principles?" And most people will say high reliability, usability, payback for investors, deep moat, great sales channel. And Rod was like, "The design is critically important. If you make a robot to look like Albert Einstein, everyone's going to say it's stupid."
(18:49):
And you could see his thought there with the Roomba. The Roomba only has one button, clean, in the center of the circular vacuum cleaner. And the payback is almost instantaneous. When it goes underneath your bed and it fills up with dust and it dings, you're like, "Wow, this thing's amazing. For 300, 500 bucks, I never had a vacuum cleaner that cleans so well and I could be watching TV while it's doing it. This is great." You have low expectations going in and high payback going out.
(19:23):
And so I think that a humanoid for a long time, and I still believe this in the home, is these videos that are extremely high produced online on LinkedIn are creating these expectations that will be overly promising this automated life and under delivering. The NEO robot by 1X, no one's saying, "Hey, by the way, it's operated by some guy in India with a VR headset and he's going to be seeing you and your wife during the most intimate moments or your family during your most intimate moments."
(19:57):
I don't know how many people really want to do that. I also don't know the true value. Every apartment is different, every house is different. And to train on all these variables, all these edge cases is a huge task. Look how long it's taking for robotaxis to really become affordable and valuable for those companies that are still in sort of teenage driving mode today. For me to load and unload the dishwasher, I'm pretty good at that. It's like Tetris, I can do it in under two minutes. It's my job in the house. I live in the-
George Jagodzinski (20:29):
Does your wife agree? Does your wife agree you do a good job on it? Because that's the important one.
Oliver Mitchell (20:34):
We've never discussed it, but I don't see her picking up the dishes after dinner. I'm always the one who's doing that, so clearly she does. So I would say that I don't really need a robot for that. Picking up kids' toys, that could take a much longer than a human doing. Even the Roomba, I still have to pick up all the chairs around my dining room table and put them on top of my dining room table for it to go on. I have to prepare the room for the robot.
(20:57):
So I actually think the home, to me, the average home to me is the least exciting and on the most cynical about that. Maybe for elder care, for aging and pace, for social companions. There was a great article that I actually interviewed in this book from Intuition Robotics for ElliQ. There was a front page Sunday, New York Times article on ElliQ. It's a robotic companion. It doesn't move, but it's an AI chatbot that has a hardware aspect to it for aging in place and for dementia patients, and it's improved the quality of life. So I think for elder care, it makes a lot of sense.
(21:38):
Going back to what I said early on is that in industry, it makes a lot of sense. And so when you think about dull, dirty and dangerous, I think about dirty and dangerous a lot, and that's where humanoids can be really valuable. And the world is built for humans, so you don't have to rip it and replace, you could easily plug and play.
George Jagodzinski (21:57):
The argument then is a humanoid, since the factories and manufacturing plants are all kind already set up for a human factor to move through them, and so why not use human centric robot within their humanoid? Is that short-lived? I think about the industrial revolutions, right? And when we move from steam to electric, the factories, they just still were concentrated around where the steam engine used to be for some period of time before would be rethought how everything was done. Do you think that, that humanoid is a long-term play or is that more filling a gap?
Oliver Mitchell (22:30):
I do think it's a long-term play. There are dark factories, but they haven't taken off as much as people thought they would when they were started in the '60s and '70s and into the '80s for automotive welding. I think that there is value in having humans control fleets of robots versus being at a station, and I think humans are immensely creative. Robots can do repetitive tasks extremely well.
(22:58):
I think for backbreaking work like welding and lifting and roughnecking, robots humanoids are well suited, and I do think the workflow will change as we implement more of these technologies. What that workflow will look like, I don't know, but it will change and it'll evolve and we'll figure that out.
(23:18):
So a little thing, battery packs, they have a life about, say four hours, so we're going to need to think about charging stations and robots replacing other robots and the cycle times, and so we're going to think about the real estate around that. But we are still going to need big ships and we're still going to have these big shipyards. These shipyards are made for humans today, and it's very easy to bring in humanoid welders today. How the shipyards will evolve, I don't know, but they probably will.
George Jagodzinski (23:50):
Step one is at least just starting that with humanoids, right?
Oliver Mitchell (23:54):
Yeah. I mean, or we go to step zero and just give up that industry domestically or through our allies, and I think that would be a major misstep. We would lose our superpower status. We need to build things in America. For us to sort of outsource it completely to Asia would be a horrible mistake.
George Jagodzinski (24:17):
Yeah, yeah. As he went through the process of writing this book and recalling all these stories and talking with folks, what surprised you as you went through that process?
Oliver Mitchell (24:26):
That's a great question. I think how open people were and how willing and collaborative they were in sharing their stories. There's a lot of first principles that, as I mentioned before, that are very parallel experiences, but they're all doing different things. And so I've organized the book as a hiking field guide, taking your innovation from napkin drawing all the way to IPO. I've relied on 30 luminaries in this space to be our guide through that journey.
George Jagodzinski (24:58):
What would the equivalent of a ... So picking on the hiking and the camping in back country, what's the bear bag? What's the equivalent of the bear bag within your world?
Oliver Mitchell (25:07):
I mean, to me it'd be cash. What are you doing with a bear bag? I think you're doing a few things. One, it's safety, like protecting yourself from ... If you keep the food in your tent, then the bear could come into your tent and maul you and then eat you and the food. You could keep the food far away from the tent, so then you protect yourself. The bear is focused on the food, but then you don't have any rations and you potentially could harm you and you could starve or just at the very least, cut your journey short and lose the investment that you made in making all that possible.
(25:45):
To me, it is like cash. I mean, the critical ingredient to startups is capital, and capital comes in a few ways. One is raising capital from people like myself. Another way is revenues, right? You got to drive revenues, and so you really have to be customer-focused. If you're technically focused and you lock yourself in a lab to come out with the next one of these, you might not have the cash to bring that to market. And there's many companies that fail with great ideas. They're too far ahead of the parade. They're not in the parade. You really have to insulate yourself from these external market factors, and the best insulation is capital.
George Jagodzinski (26:25):
That makes a lot of sense. As you navigate all of this, and I mean maybe you've already answered this because you talk about really connecting with what is it that the customer and the user really needs, but how do you balance the hype versus the real? Do you have a framework or a mantra or something in how you navigate that?
Oliver Mitchell (26:43):
Absolutely. The single from the noise. I mean, as an investor, I invest in starting a new fund called Arch and Stone Capital to spin out technologies out of the elite forces of the Israeli military. So that's like the Mossad, the Shin Bet, which at the time Unit 8200 and others.
(27:03):
And I'm looking at different startups within defense, within cyber, within AI, within automation. A number of them are very expensive and they have very little sales, and they're based upon sort of market movements. And so I tend to ignore all that. And to me, the grounding principle is go to market and speaking to customers. And even if it's a pre-revenue company, I want some proof of concept validation with some nascent design partners or pilot users before I would invest. And so it's my job to really separate the signal from the noise there.
George Jagodzinski (27:42):
That makes a lot of sense, very pragmatic. Oliver, I could talk with you all day. I like to finish on a fun question, which is, given your amazing career in life, what's the best advice you've ever received?
Oliver Mitchell (27:52):
Spend time with the people that you love. There's a great Warren Buffett interview, and he said like he knows a lot of extremely wealthy people in the world, but the people that are happiest are the people that spend time with their families.
George Jagodzinski (28:07):
Simple but profound. I love it. Thanks, Oliver. Thanks for being here.
Oliver Mitchell (28:11):
Thank you, George. And buy the book.
George Jagodzinski (28:14):
Yes, go buy the book. It's great. It's fantastic. Thank you.
(28:19):
Thanks for listening to Evolving Industry. For more, subscribe and follow us on your favorite podcast platform and pretty please drop us a review. We'd really appreciate it. If you're watching or listening on YouTube, hit that subscribe button and smash the bell button for notifications. If you know someone who's pushing the limits to evolve their business, reach out to the show at Evolvingindustry@Intevity.com or reach out to me, George Jagodzinski on LinkedIn. I love speaking with people getting the hard work done. The business environment is always changing, and you're either keeping up or going extinct. We'll catch you next time, and until then, keep evolving.