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Robotics VCs on what’s real, what’s coming, and what to keep in mind

Last week, at TechCrunch’s robotics event at UC Berkeley, we sat down with four VCs who are making a range of bets on robotics companies, from drone technologies to robots whose immediate applications aren’t yet clear. Featuring Peter Barrett of stadium intercontinental, Helen Liang of FoundersX Ventures, Eric Migicovsky of Y Combinator and Andy Wheeler of GV (pictured above), we covered a lot of terrain (no pun intended), including whether last-mile delivery robots make sense and how much robots should be expected to do without human being intervention.

We also discussed climate change and how it factors into their bets, and why the many independent enterprises focused on creating fully automated vehicles may need to do much more to empower the cities in which they plan to operate. You can find excerpts of our talk below. And for access to the full transcript, become a member of more Crunch. Learn more and attempt it for free.


TC: How do you think about investing in the here and now, versus the future (which is complicated for VCs, given that quest funds need to produce returns within a ten-year window, typically):

PB: One of the challenges with investing in robotics is that robotics companies do tend to take a lot longer to mature than your average enterprise SaaS company. There are some classes of investments that we know the technology works; it’s just an ask of commercializing it and bringing it to mart, and Canvas [a stadium-backed company that makes autonomous warehouse carts and was just acquired by Amazon] did an extraordinary job of finding a mart that existed and had technology in hand that would unravel that problem.

There’s other stuff like the astonishing work that the folks are doing at Agility [Robotics] with a biped that can operate for many hours in unstructured human being environments that today is really, candidly, a research android, and to come its long-term aspirations, there’s a whole other set of technologies that we’ll need to develop as the company matures.

We think about blending the stuff that’s very impactful but is going to take a long moment because it’s fundamentally a brand-new science and technology that needs to be created, [with] immediate applications of technologies that are proven today, that we’re deploying against real markets.

AW: As for whether we attempt to build a portfolio where there are exits at distinct levels, generally, when I’m looking to invest in a robotics thing, I understand that the timeframes can be fairly long, and so what we’re looking for are things that really are going to be very enormous opportunities — that can generate billion-dollar-plus exits.

TC: a growing number of tiny last-mile delivery robots has attracted funding. Helen, your compact is an investor in one of these startups, Robby. What’s the appeal?

HL: We look at where we see a pain point in the mart. During our faction meetings on Fridays, we always use DoorDash. It feels awkward when we order a $100 meal, and the delivery person has driven a long path. We’ll give him a $15, but it’s still [tricky for that person] in terms of economics. If you have a central station for the food delivery, and robots can handle that last-mile delivery, we think that’s a more cost-effective come.

Robby has partnered with PepsiCo [to delivering snacks to students attending the University of the Pacific in Stockton, Ca.] that makes it more like a vending device, and we think that’s a fascinating mart, too. We’ll see how swift adoption will happen.

EM: YC is an investor in Robby as well, and we think of this as kind of the excellent instance of how hackers can get into a fairly complex industry. When you look at some robotics and specifically autonomous vehicles, you see extremely enormous investments going into some of the some of the enormous players, but then at the same moment, you see groups and hackers that are able to use off-the-shelf technology to unravel real problems that affect businesses or people, and build services or products that that are precious. We’ve seen this over and over.

You don’t have to be looking for an enormous VC investment to contest in the space. It is feasible to stay frugal stay nimble and build something on a tiny scale to demonstrate that you found a problem that people are willing to pay cash to unravel. Then, if you’re interested, [you can] chase larger VC investment or not. It’s kind of open right now.

TC: VCs we’ve talked with in the past have suggested that in robotics, they often see cool ideas for which there isn’t necessarily a mart or enormous mart need. Is this also your experience?

PB: This is a common pattern where there was some mechanism, some capability of the android, some feat of dexterity or something [and founders think, ‘That’s really cool, I’m going to make a company out of it.’ But we think about it in terms of, what do you want from the robots? What’s the outcome that everybody agrees is worthwhile? And then, how do you find and build companies to earn those goals?

One thing we’re struggling with right now is that there’s no real hardware or program platforms. You think about 10 years hence [and] the kinds of things we’ll be investing in, [and it’s] robotics applications that are aggregates of neural networks and some explicit program bound together in some form that can be delivered, so an enormous enterprise can use an application and not have everybody commence from first principles. Because right now, when you built a robotics application, you make all the hardware, you make all the program. All the intellectual and actual capital [cash] gets dissipated, construction and rebuilding those same things. So robotics applications over moment will be investable, much more like the path we invest in program, and that will allow smaller units of creativity to produce helpful products.

TC: Andy, how long do you think it’s going to take until we get there?

AW: I think I think we’re making we’re making steady progress on that front. To your earlier ask, this space has a lot of folks that are construction technology a bit in search of a problem. That’s a common thing in startups generally. I would encourage everybody who’s looking to build a startup in the space is to really find a burning business problem. In the course of solving those [problems], people will build these platforms that Peter was talking about, and we’ll eventually get there in terms of [founders] just having to focus on the application layer.

TC: There are so many buckets: delivery robots, self-driving trucks. Both relate in ways to the overarching problem for our age, which is climate change. How much do you factor climate change into the investing decisions that you make?

PB: When we look at applications and robotics in agricultural, a lot of [our questions are] around how do you deal with a minimum carbon footprint, [and] how you replace workers who are missing. And dealing with climate change will be increasingly be a central thought in what we want from our robots. [After all] what we want from them is the ability to maintain or enhance the lifestyles we have without further unwinding the environment.

TC: We talked backstage, and you think we are over-indexing on autonomy as the reply.

PB: When we think about autonomy, it’s not clear how autonomy helps cities. . . There are absolutely applications for autonomy, [including] on a farm or in a logistics environment. I think we still really don’t know how to do stage 5 [which is finish automation, requiring zero human being assistance]. And I don’t think we know whether it’s exponentially rigid or asymptotically. I think it’s decades before there’s any significant stage 5.

[In the meantime, if] we cared about safety, we’d install roundabouts or lower the blood liquor maximum and not attempt and make a sentient automobile that drives on the roadway the path we do, right?

I’d much rather see having the city collaborate with the vehicles and instrument the city to collaborate with clever vehicles for the benefit of everybody who lives there. But that’s not stage 5 autonomy as the path we think of it

EM: It’s slightly fascinating that autonomous vehicles, specifically the single passenger automobile, evolved in America, because it’s one of the countries that has the least public convey per capita. And that that’s one of the things that the industry has to acknowledge — that there are other options that can be blended into the convey solutions for cities.

It seems like it might be happening because it’s something that a single can take somewhat regulate over. You can’t own a bus, but you can own or [rent] a self-driving automobile.

PB: Or [an electric] scooter or a bike, right. The future of mobility is going to be a blending of all of these things. But not taking benefit of a logistics platform in a city means you’re kind of doing it the rigid path, trying to make an android to have all the human being priors required to steer safely. And it’s just not clear that we know how to do that yet.

TC: Andy, GV is an enormous investor in Uber. What what’s your cognition? Does the city need to be a kind of central brain in order for these independent enterprises to work effectively?

AW: I don’t think it’s a strict requirement at all. We’ve seen properity with with self-driving trials where the city is not super involved from an infrastructure perspective, I do think it makes it a lot easier if that’s the case, though.

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