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Book excerpt: What makes a great startup idea? Lessons from a veteran entrepreneur

Editor’s note: The following is an excerpt from a new book written by Shirish Nadkarni, a Seattle tech veteran who co-founded Livemocha (acquired by RosettaStone) and TeamOn (acquired by BlackBerry). You think you have come up with a brilliant idea…

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Shirish Nadkarni.

Editor’s note: The following is an excerpt from a new book written by Shirish Nadkarni, a Seattle tech veteran who co-founded Livemocha (acquired by RosettaStone) and TeamOn (acquired by BlackBerry).

You think you have come up with a brilliant idea for your startup. You have spoken to your friends and colleagues, and they think that the idea has merit. You have even done the preliminary market research and spoken to many potential customers, and feedback has been positive.

But how do you really know that it will form the basis for a great company? Figuring this out is no easy task. After all, VCs are paid millions of dollars in management fees, and even then, for the most successful investors, only one out of ten picks is a major hit.

To consider whether a startup idea has the potential to become a hit, it is important to consider the idea from a number of different strategic perspectives discussed below.

Incumbents are hard to beat on their own turf

Most markets you will target have existing players and market leaders that have been around for years. Incumbents are extremely hard to beat unless there is a major transformation in the industry that you can exploit first. Incumbents typically have a strong industry reputation, a host of features, a fine-tuned sales engine, and customer lock-ins that make it difficult for customers to consider a new player in the market.

Everyone today is familiar with the success of Microsoft Office. What people don’t know is how difficult it was for Microsoft to gain a leadership position in the office productivity space before Windows became a popular platform.

Before the advent of Windows, WordPerfect and Lotus 1-2-3 were the de facto market leaders on the MS-DOS operating system. Microsoft had its own MS-DOS-based offerings called Microsoft Word and Microsoft Multiplan. However, Microsoft had very little success beating WordPerfect and Lotus 1-2-3. Users were just too used to the keystroke-based user interfaces of WordPerfect and Lotus 1-2-3 and were locked into the macros that they created in Lotus 1-2-3.

Once Windows 3.0 came on the scene in 1990 and started becoming popular, things shifted in Microsoft’s favor.

WordPerfect and Lotus made the mistake of simply porting their applications from MS-DOS to Windows, which meant that the applications didn’t perform well on Windows. Not surprisingly, Microsoft built new word processing and spreadsheet apps from the ground up that were designed to take advantage of the capabilities offered by Windows. Next, Microsoft made the brilliant move to package these applications along with Microsoft PowerPoint into a bundle called Microsoft Office and made it cheaper than purchasing each application individually.

Over time, Microsoft made sure that all the applications had consistent user interfaces and that it was easy to share data across these applications. It was no surprise that, as Windows became more popular, the market share leadership shifted to Microsoft Office as users wanted the best and most comprehensive suite of applications for Windows.

Global industry transformations

The best opportunities for disruption happen when the industry you are targeting is undergoing a dramatic transformation. At that time, incumbents are typically slow to move because they have existing investments and business models that they are unwilling to disrupt.

Microsoft, for example, failed to recognize how its hold on the PC industry would be disrupted first by the internet and later by mobile devices. It took a very expensive acquisition of Hotmail for Microsoft to get into the game with MSN.com, and it was soon eclipsed again by major players like Google and Facebook.

On the mobile front, Microsoft invested initially in its Pocket PC platform but failed to see the shift to mobile by early players like Research In Motion (RIM) with its iconic BlackBerry device. Later, Apple and Android completely upended the mobile market with their touch-based interfaces and application platforms. By the time that Windows mobile came on the scene, it was too late for Microsoft, and it never got beyond a 1 to 2% market share in the mobile market.

With TeamOn, my plan was to ride the wave of SaaS applications with the shift from IT-installed on-prem (on premises) solutions to applications that operated in the cloud. In the 2000 timeframe, when broadband internet was becoming more widespread among business users, SaaS-based applications provided performance similar to that of locally installed client-server applications. SaaS-based applications offered numerous benefits over on-prem applications — companies didn’t have to hire an expensive IT staff to install and upgrade the applications and back-up user data. It was also possible to access applications from any location with internet access — users were not limited to accessing an application only from within a corporate network.

Livemocha’s homepage in 2013.

When Livemocha was launched, the entire world was going through a globalization phenomenon with dramatic outsourcing of manufacturing and knowledge worker jobs. Global trade was also showing significant growth as tariffs and trade barriers were coming down. Worldwide travel between various regions was increasing significantly as employees at multinational corporations had to travel internationally to coordinate their activities with their employees, customers, and vendors. These transformations were all responsible for the significant interest in foreign language learning, especially English, throughout the world.

While the trend toward globalization was accelerating, a number of social networks began emerging and capturing end-user attention. Facebook and Twitter launched in the early 2000 timeframe, popularizing the notion of social networking. As a result, people started feeling more comfortable interacting with other like-minded people on the internet. A number of special community-focused social networks also emerged to leverage the trend toward social networking.

With Livemocha, we decided to disrupt the traditional CD- ROM-based learning model popularized by Rosetta Stone by offering a web-based social language-learning tool. Unlike Rosetta Stone, the offering was initially free. Later, we introduced a premium version that offered a more advanced set of learning courses with conversational video and grammar content.

It took a long time for Rosetta Stone to respond to Livemocha as it was wedded to the traditional CD-ROM model, which sold at a high price backed by expensive TV advertising. Because it was a public company, it was on the hook to meet quarterly goals and didn’t have the luxury of making a freemium offering like Livemocha.

COVID-19 impact

Looking ahead, the COVID-19 crisis is creating another global transformation in the way we work together, how commerce is conducted, and how experiences are delivered. In a matter of weeks, companies with white-collar office workers were forced to an all remote work situation. Use of virtual collaboration tools like Zoom accelerated dramatically and companies found that employees can be equally productive working from home. The use of workplace automation and collaboration tools like Slack, Microsoft Teams, Smartsheet, Asana, and others also increased significantly.

As a result, many companies like Twitter and Zillow indicated that they will let their workers work remotely on an indefinite basis. Given the prevalence of remote work, I fully expect that new collaboration tools will emerge that will allow employees to be more productive working from home.

As the COVID-19 crisis has dampened consumer demand, many companies have also experienced significant impact to their revenues. There is, therefore, significant pressure on companies to correspondingly reduce their expenses and make their workforces more efficient. As a result, there’s increased interest in digital transformation as a way for companies to create “Digital First” work from anywhere experiences with increased automation. Companies like UIPath, which provide tools for robotic process automation (RPA), have seen a dramatic increase in sales as RPA has become a key tool to reduce costs involved in repetitive office tasks.

Retail commerce is another area that is being disrupted because of the COVID-19 crisis. There has been a dramatic shift from physical retail sales to online e-commerce as shoppers are cautious about shopping at malls. Demand for delivery services like Instacart and DoorDash has also exploded.

These changes are going to create new opportunities for startups to deliver innovative products that satisfy the need for people to conduct commerce online as opposed to in person. A number of online-first consumer brands like Warby Parker, Allbirds, and Madison Reed have emerged in the last few years and have successfully captured consumers’ imagination. I expect that the category of online-only consumer brands will explode as people become more comfortable consummating their purchases online.

Technology platform shifts

Over the last three decades, we have seen new technology platforms emerge that have created tremendous opportunities for startups. We had the emergence of the PC platform in the 80s, followed by the internet platform in the 90s. Finally, mobile emerged as the broadest platform for computing in the early 2000s, enabling more than 4.5 billion users worldwide to gain access to the internet.

Each of these new technology platforms has allowed a whole new generation of companies to emerge and become massive players in the industry. Microsoft rode the PC platform wave, followed by Google and Amazon, which rode the internet wave, and, finally, Facebook and Apple rode the move to mobile.

A number of new companies emerged that disrupted existing market leaders that did not adapt fast enough to the emerging new platforms. Amazon disrupted Barnes & Noble before becoming a general purpose e-commerce platform. Netflix disrupted Blockbuster, and now it is disrupting traditional cable companies, which are losing subscribers by the millions as they cut the cord. In fact, neither of my adult kids has a cable TV subscription. Instead, they rely on Netflix, Amazon Prime, and Hulu to access made-for-TV content.

Over the last few years, we are seeing a significant opportunity for new startup creation with the emergence of artificial intelligence and machine learning (AI/ML) technology. The advent of cheap GPU-based computing power and AI/ML services offered by all the major cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud Platform has enabled a whole new generation of AI/ML-based startups to emerge and disrupt existing players in their market. Startups need access to a large amount of labeled data to build machine learning models that make useful predictions for specific use cases. The most successful startups are the ones that have gained early access to proprietary data that they can utilize to fine-tune their models.

KenSci is a Seattle-based company that is leveraging AI/ML technology in the healthcare space. The company was started by Dr. Ankur Teredesai, a computer science professor at the University of Washington, and Samir Manjure, the company’s CEO. KenSci’s risk prediction platform for healthcare is engineered to ingest, transform, and integrate disparate sources of healthcare data, including EHR, claims, admin/finance, and streaming. KenSci uses machine learning to recognize patterns in large volumes of data, helping healthcare systems view the granular details of the patient’s history and predict future risks for optimal care. For example, KenSci makes risk of readmission and end of life predictions to help health- care providers avoid adverse changes in their patients’ health. (Editor’s note: KenSci announced its acquisition to Tegria this week)

Network effects

According to Wikipedia, “A network effect (also called network externality or demand-side economies of scale) is the effect described in economics and business that an additional user of a good or service has on the value of that product to others. When a network effect is present, the value of a product or service increases according to the number of others using it.”

We have seen many examples of how powerful network effects can be in creating unstoppable, winner-take-all juggernauts. eBay was an early example in the auctions market. Many later entrants like Yahoo failed to take on eBay because of the network effect it had established. Facebook and Airbnb are more recent examples where the value of the network has grown exponentially as more users joined their network.

In my case, with Livemocha, we saw our social networking capabilities create network effects that powered our growth to 15 million members in only a matter of a few years. As a result of our powerful network effects, we saw virtually no competitors that adopted our approach to language learning.

As you think through your idea, it will be useful to think about opportunities to create network effects as we did with Livemocha. Marketplaces and social networking apps are typically natural candidates for creating network effects. However, even enterprise apps have the potential for creating network effects.

Slack is a good example of a solution that has a network effect as more users get on to its platform within a large corporate environment. App Annie is another example of a solution that has created a network effect since it offers benchmarking features for app developers. As more apps utilize App Annie to track their usage, App Annie can provide more data on how an app compares with other apps in the same category.

Network effects are not insurmountable, as Facebook has seen. It was disrupted first by Instagram, which offered filters for photo sharing, and later by Snapchat, which offered the concept of ephemeral messaging to win the minds and hearts of teenagers. Fortunately, Facebook acquired Instagram as well as WhatsApp but failed in its effort to acquire Snapchat. Once you become an established player, you have to be on the lookout for young, hungry startups that are looking to disrupt you.

Virality

The term viral marketing was invented by Tim Draper, general partner at Draper Fisher Jurvetson, in the context of Hotmail. Tim introduced the idea by asking the Hotmail team to add a signature “Get your free email at Hotmail” to every email that a Hotmail user sent out. It was responsible for the dramatic growth of Hotmail following its launch in 1996. Hotmail’s rapid growth was one of the key reasons that Microsoft decided to acquire Hotmail in 1997.

Having a viral aspect to your application can dramatically reduce your overall cost of acquisition and drive rapid customer growth. It can be even more effective if your application is inherently viral. By “inherently viral,” I mean an application that causes its users to actively recruit other users.

Hotmail was not an inherently viral application. It got free advertising every time someone sent out an email from a Hotmail account. However, the recipient didn’t need to have Hotmail installed in order to receive email from a sender using Hotmail.

Skype, on the other hand, was an inherently viral application because both parties to a Skype call have to be on Skype to make the call. As a result, an initiator of a Skype call is likely to recruit the other party to use Skype.

However, virality can die off because of technology changes. Skype, for example, has been displaced by WhatsApp, which originally started as a text messaging app. Since introducing video calling features in 2016, WhatsApp has become the de facto audio/video calling app for consumers all over the world.

Enterprise applications can also have viral characteristics. Slack is a great example of a viral application. Its users are motivated to recruit other users so that everyone can communicate easily using Slack. As you think about your startup idea, make sure to think about whether you have an inherently viral application or if you can include viral elements in it. Introducing virality will make it much more possible for your idea to become successful and reduce your overall cost for customer acquisition.

Aspirins, not vitamins

Once you have evaluated your idea from a strategic perspective using the attributes discussed above, it is important to understand how big a pain point you are addressing. As most VCs would say, they are looking to fund aspirins, not vitamins. Ideally, you are addressing a pounding headache where customers are knocking down your door to gain access to your solution. In addition, make sure that your solution is materially better than existing solutions in the market.

Slack is a great example of an “aspirin” solution that addressed the big problem caused by email overload that was destroying productivity for employees, especially in large enterprises. An email inbox is a serial list of communications of all kinds that a person has to wade through to find and act on email messages that are directly relevant to their work.

Unlike email, which is a one-to-many communication channel, Slack has a team-oriented communication architecture. With Slack, you can set up channels for specific projects. Communication and updates relevant to these projects can be routed into specific channels that team members can browse at their convenience. This can significantly reduce the communication that would normally go over email, thus allowing the use of email for more direct one-to-one communication.

Slack also makes it easy to have real-time conversations with any teammate. With direct messaging, it’s easy to grab someone’s attention when you need a quick response. Slack has made it very simple for corporations large and small to adopt its solution by making it free to get started. Slack was a dramatic improvement over email, which contributed to its rapid growth into a multibillion-dollar company.

In the consumer space, Livemocha was successful because it addressed the pressing need of people all around the world to learn English. In most developing countries, strong English-language proficiency can make a big difference in people’s livelihood, allowing them to gain access to better paying jobs. Language education in brick-and-mortar schools can be quite expensive in these countries, which created the demand for inexpensive language-learning tools over the internet. In addition, most English-language learners didn’t have access to native English speakers to develop English speaking proficiency.

Livemocha became very popular because language learners could connect with native English speakers and improve their English speaking skills. In addition, like Slack, Livemocha was free to get started, and consumers had to pay only to gain access to video and grammar content and certified tutors on its platform.

Taken from From Startup to Exit by Shirish Nadkarni. Copyright © 2021 by Shirish Nadkarni. Used by permission of HarperCollins Leadership.

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Infosys Recognized as the Top Service Provider Across Nordics in the Whitelane Research and PA Consulting IT Sourcing Study 2023

Infosys Recognized as the Top Service Provider Across Nordics in the Whitelane Research and PA Consulting IT Sourcing Study 2023
PR Newswire
STOCKHOLM, March 31, 2023

Infosys achieves a notable rise in overall ranking in the Nordics with a customer…

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March 31, 2023

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Infosys Recognized as the Top Service Provider Across Nordics in the Whitelane Research and PA Consulting IT Sourcing Study 2023

PR Newswire

STOCKHOLM, March 31, 2023

Infosys achieves a notable rise in overall ranking in the Nordics with a customer satisfaction score of 81 percent as compared to the industry average of 73 percent

STOCKHOLM, March 31, 2023 /PRNewswire/ -- Infosys (NSE: INFY) (BSE: INFY) (NYSE: INFY), a global leader in next-generation digital services and consulting, today announced that it has been recognized as one of the top service providers in the Nordics, achieving the highest awarded score in Whitelane Research and PA Consulting's 2023 IT Sourcing Study. The report ranked Infosys as the number one service provider and an 'Exceptional Performer' in the categories of Digital Transformation, Application Services, and Cloud & Infrastructure Hosting Services. Infosys also ranked number one in overall General Satisfaction and Service Delivery.

For the report, Whitelane Research and PA Consulting, the innovation and transformation consultancy, surveyed nearly 400 CXOs and key decision-makers from top IT spending organizations in the Nordics and evaluated over 750 unique IT sourcing relationships and more than 1,400 cloud sourcing relationships. These service providers were assessed based on their service delivery, client relationships, commercial leverage, and transformation capabilities.

Some of Infosys' key differentiating factors highlighted in the report are:

  • Infosys ranked as a top provider in the Nordics across key performance indicators on service delivery quality, account management quality, price level and transformative innovation.
  • Infosys' ranked above the industry average by 8 percent year-on-year, making it one of the top system integrators in the Nordics.
  • Infosys is positioned as a "Strong Performer" in Security Services and scored significantly above average on account management.

Arne Erik Berntzen, Group CIO of Posten Norge, said: "Infosys has been integral in helping Posten Norge transform its IT Service Management capabilities. As Posten's partner since 2021, Infosys picked up the IT Service Management function from the incumbent, successfully transforming it through a brand-new implementation of ServiceNow, redesigning IT service management to suit the next-generation development processes and resulting in a significant improvement of the overall customer experience. I congratulate Infosys for achieving the top ranking in the 2023 Nordic IT Sourcing Study."

Antti Koskelin, SVP & CIO at KONE, said: "Infosys has been our trusted partner in our digitalization journey since 2017 and have helped us in establishing best-in-class services blueprint and rolling-in our enterprise IT landscape over the last few years. Digital transformations need partners to constantly learn, give ideas that work and be flexible to share risks and rewards with us, and Infosys has done just that. I am delighted that Infosys has been positioned No. 1 in Whitelane's 2023 Nordic Survey. This is definitely a reflection of their capabilities."

Jef Loos, Head of Research Europe, Whitelane Research, said, "In today's dynamic IT market, client demand is ever evolving, and staying ahead of the curve requires a strategic blend of optimized offerings and trusted client relationships. Infosys' impressive ranking in Whitelane's Nordic IT Sourcing Study is a testament to their unwavering commitment to fulfilling client demands effectively. Through their innovative solutions and exceptional customer service, Infosys has established itself as a leader in the industry, paving the way for a brighter and more successful future for all."

Hemant Lamba, Executive Vice President & Global Head – Strategic Sales, Infosys said, "Our ranking as one of the top service providers across the Nordics in the Whitelane Research and PA Consulting 2023 IT Sourcing Study, endorses our commitment to this important market. This is a significant milestone in our regional strategy, and the recognition revalidates our commitment towards driving customer success and excellence in delivering innovative IT services. Through our geographical presence in the Nordics, we will continue to drive business innovation and IT transformation in the region, backed by a strong partner network. We look forward to continuing investing in this market to foster client confidence and further enhance delivery."

About Infosys

Infosys is a global leader in next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential and create the next opportunity for people, businesses and communities. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer clients, in more than 50 countries, as they navigate their digital transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile digital at scale and drive continuous improvement with always-on learning through the transfer of digital skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive workplace.

Visit www.infosys.com to see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next.

Safe Harbor

Certain statements in this release concerning our future growth prospects, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders are forward-looking statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India and the US, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2022. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.

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Asking the right dumb questions

You’ll have to forgive the truncated newsletter this week. Turns out I brought more back from Chicago than a couple of robot stress balls (the one piece…

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March 31, 2023

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You’ll have to forgive the truncated newsletter this week. Turns out I brought more back from Chicago than a couple of robot stress balls (the one piece of swag I will gladly accept). I was telling someone ahead of the ProMat trip that I’ve returned to 2019 travel levels this year. One bit I’d forgotten was the frequency and severity of convention colds — “con crud,” as my comics friends used to call it.

I’ve been mostly housebound for the last few days, dealing with this special brand of Chicago-style deep-dish viral infection. The past three years have no doubt hobbled my immune system, but after catching COVID-19 three times, it’s frankly refreshing to have a classic, good old-fashioned head cold. Sometimes you want the band you see live to play the hits, you know? I’m rediscovering the transformative properties of honey in a cup of tea.

The good news for me is that (and, hopefully, you) is I’ve got a trio of interviews from ProMat that I’ve been wanting to share in Actuator. As I said last week, the trip was really insightful. At one of the after-show events, someone asked me how one gets into tech journalism. It’s something I’ve been asked from time to time, and I always have the same answer. There are two paths in. One is as a technologist; the other is as a journalist.

It’s obvious on the face of it. But the point is that people tend to enter the field in one of two distinct ways. Either they love writing or they’re really into tech. I was the former. I moved to New York City to write about music. It’s something I still do, but it’s never fully paid the bills. The good news for me is I sincerely believe it’s easier to learn about technology than it is to learn how to be a good writer.

I suspect the world of robotics startups is similarly bifurcated. You enter as either a robotics expert or someone with a deep knowledge of the field that’s being automated. I often think about the time iRobot CEO Colin Angle told me that, in order to become a successful roboticist, he first had to become a vacuum salesman. He and his fellow co-founders got into the world through the robotics side. And then there’s Locus robotics, which began as a logistics company that started building robots out of necessity.

Both approaches are valid, and I’m not entirely sure one is better than the other, assuming you’re willing to surround yourself with assertive people who possess deep knowledge in areas where you fall short. I don’t know if I entirely buy the old adage that there’s no such thing as a dumb question, but I do believe that dumb questions are necessary, and you need to get comfortable asking them. You also need to find a group of people you’re comfortable asking. Smart people know the right dumb questions to ask.

Covering robotics has been a similar journey for me. I learned as much about supply chain/logistics as the robots that serve them at last week’s event. That’s been an extremely edifying aspect of writing about the space. In robotics, no one really gets to be a pure roboticist anymore.

Q&A with Rick Faulk

Image Credits: Locus Robotics

I’m gonna kick things off this week with highlights from a trio of ProMat interviews. First up is Locus Robotics CEO, Rick Faulk. The full interview is here.

TC: You potentially have the foundation to automate the entire process.

RF: We absolutely do that today. It’s not a dream.

Lights out?

It’s not lights out. Lights out might happen 10 years from now, but the ROI is not there to do it today. It may be there down the road. We’ve got advanced product groups working on some things that are looking at how to get more labor out of the equation. Our strategy is to minimize labor over time. We’re doing integrations with Berkshire Grey and others to minimize labor. To get to a dark building is going to be years away.

Have you explored front-of-house — retail or restaurants?

We have a lot of calls about restaurants. Our strategy is to focus. There are 135,000 warehouses out there that have to be automated. Less than 5% are automated today. I was in Japan recently, and my meal was filled by a robot. I look around and say, “Hey, we could do that.” But it’s a different market.

What is the safety protocol? If a robot and I are walking toward each other on the floor, will it stop first?

It will stop or they’ll navigate around. It’s unbelievably smart. If you saw what happened on the back end — it’s dynamically planning paths in real time. Each robot is talking to other robots. This robot will tell this robot over here, “You can’t get through here, so go around.” If there’s an accident, we’ll go around it.

They’re all creating a large, cloud-based map together in real time.

That’s exactly what it is.

When was the company founded?

[In] 2014. We actually spun out of a company called Quiet Logistics. It was a 3PL. We were fully automated with Kiva. Amazon bought Kiva in 2012, and said, “We’re going to take the product off the market.” We looked for another robot and couldn’t find one, so we decided to build one.

The form factors are similar.

Their form factor is basically the bottom. It goes under a shelf and brings the shelf back to the station to do a pick. The great thing about our solution is we can go into a brownfield building. They’re great and they work, but it will also take four times the number of robots to do the same work our robots do.

Amazon keeps coming up in my conversations in the space as a motivator for warehouses to adopt technologies to remain competitive. But there’s an even deeper connection here.

Amazon is actually our best marketing organization. They’re setting the bar for SLAs (service-level agreements). Every single one of these 3PLs walking around here [has] to do same- or next-day delivery, because that’s what’s being demanded by their clients.

Do the systems’ style require in-person deployment?

The interesting thing during COVID is we actually deployed a site over FaceTime.

Someone walked around the warehouse with a phone?

Yeah. It’s not our preferred method. They probably actually did a better job than we did. It was terrific.

As far as efficiency, that could make a lot of sense, moving forward.

Yeah. It does still require humans to go in, do the installation and training — that sort of thing. I think it will be a while before we get away from that. But it’s not hard to do. We take folks off the street, train them and in a month they know how to deploy.

Where are they manufactured?

We manufacture them in Boston, believe it or not. We have contract manufacturers manufacturing some components, like the base and the mast. And then we integrate them together in Boston. We do the final assembly and then do all the shipments.

As you expand sales globally, are there plans to open additional manufacturing sites?

We will eventually. Right now we’re doing some assemblies in Amsterdam. We’re doing all refurbishments for Europe in Amsterdam. […] There’s a big sustainability story, too. Sustainability is really important to big clients like DHL. Ours is an inherently green model. We have over 12,000 robots in the field. You can count the number of robots we’ve scrapped on two hands. Everything gets recycled to the field. A robot will come back after three or four years and we’ll rewrap it. We may have to swap out a camera, a light or something. And then it goes back into service under a RaaS model.

What happened in the cases where they had to be scrapped?

They got hit by forklifts and they were unrepairable. I mean crushed.

Any additional fundraising on the horizon?

We’ve raised about $430 million, went through our Series F. Next leg in our financing will be an IPO. Probably. We have the numbers to do it now. The market conditions are not right to do it, for all the reasons you know.

Do you have a rough timeline?

It will be next year, but the markets have got to recover. We don’t control that.

Q&A with Jerome Dubois

Image Credits: 6 River Systems

Next up, fittingly, is Jerome Dubois, the co-founder of Locus’ chief competitor, 6 River Systems (now a part of Shopify). Full interview here.

TC: Why was [the Shopify acquisition] the right move? Had you considered IPO’ing or moving in a different direction?

JD: In 2019, when we were raising money, we were doing well. But Shopify presents itself and says, “Hey, we’re interested in investing in the space. We want to build out a logistics network. We need technology like yours to make it happen. We’ve got the right team; you know about the space. Let’s see if this works out.”

What we’ve been able to do is leverage a tremendous amount of investment from Shopify to grow the company. We were about 120 employees at 30 sites. We’re at 420 employees now and over 110 sites globally.

Amazon buys Kiva and cuts off third-party access to their robots. That must have been a discussion you had with Shopify.

Up front. “If that’s what the plan is, we’re not interested.” We had a strong positive trajectory; we had strong investors. Everyone was really bullish on it. That’s not what it’s been. It’s been the opposite. We’ve been run independently from Shopify. We continue to invest and grow the business.

From a business perspective, I understand Amazon’s decision to cut off access and give itself a leg up. What’s in it for Shopify if anyone can still deploy your robots?

Shopify’s mantra is very different from Amazon. I’m responsible for Shopify’s logistics. Shopify is the brand behind the brand, so they have a relationship with merchants and the customers. They want to own a relationship with the merchant. It’s about building the right tools and making it easier for the merchant to succeed. Supply chain is a huge issue for lots of merchants. To sell the first thing, they have to fulfill the first thing, so Shopify is making it easier for them to print off a shipping label.

Now, if you’ve got to do 100 shipping letters a day, you’re not going to do that by yourself. You want us to fulfill it for you, and Shopify built out a fulfillment network using a lot of third parties, and our technology is the backbone of the warehouse.

Watching you — Locus or Fetch — you’re more or less maintaining a form factor. Obviously, Amazon is diversifying. For many of these customers, I imagine the ideal robot is something that’s not only mobile and autonomous, but also actually does the picking itself. Is this something you’re exploring?

Most of the AMR (autonomous mobile robot) scene has gotten to a point where the hardware is commoditized. The robots are generally pretty reliable. Some are maybe higher quality than others, but what matters the most is the workflows that are being enacted by these robots. The big thing that’s differentiating Locus and us is, we actually come in with predefined workflows that do a specific kind of work. It’s not just a generic robot that comes in and does stuff. So you can integrate it into your workflow very quickly, because it knows you want to do a batch pick and sortation. It knows that you want to do discreet order picking. Those are all workflows that have been predefined and prefilled in the solution.

With respect to the solving of the grabbing and picking, I’ve been on the record for a long time saying it’s a really hard problem. I’m not sure picking in e-comm or out of the bin is the right place for that solution. If you think about the infrastructure that’s required to solve going into an aisle and grabbing a pink shirt versus a blue shirt in a dark aisle using robots, it doesn’t work very well, currently. That’s why goods-to-person makes more sense in that environment. If you try to use arms, a Kiva-like solution or a shuttle-type solution, where the inventory is being brought to a station and the lighting is there, then I think arms are going to be effective there.

Are these the kinds of problems you invest R&D in?

Not the picking side. In the world of total addressable market — the industry as a whole, between Locus, us, Fetch and others — is at maybe 5% penetration. I think there’s plenty of opportunity for us to go and implement a lot of our technology in other places. I also think the logical expansion is around the case and pallet operations.

Interoperability is an interesting conversation. No one makes robots for every use case. If you want to get near full autonomous, you’re going to have a lot of different robots.

We are not going to be a fit for 100% of the picks in the building. For the 20% that we’re not doing, you still leverage all the goodness of our management consoles, our training and that kind of stuff, and you can extend out with [the mobile fulfillment application]. And it’s not just picking. It’s receiving, it’s put away and whatever else. It’s the first step for us, in terms of proving wall-to-wall capabilities.

What does interoperability look like beyond that?

We do system interoperability today. We interface with automation systems all the time out in the field. That’s an important part of interoperability. We’re passing important messages on how big a box we need to build and in what sequence it needs to be built.

When you’re independent, you’re focused on getting to portability. Does that pressure change when you’re acquired by a Shopify?

I think the difference with Shopify is, it allows us to think more long-term in terms of doing the right thing without having the pressure of investors. That was one of the benefits. We are delivering lots of longer-term software bets.

Q&A with Peter Chen

Covariant

Image Credits: Covariant

Lastly, since I’ve chatted with co-founder Pieter Abbeel a number of times over the years, it felt right to have a formal conversation with Covariant CEO Peter Chen. Full interview here.

TC: A lot of researchers are taking a lot of different approaches to learning. What’s different about yours?

PC: A lot of the founding team was from OpenAI — like three of the four co-founders. If you look at what OpenAI has done in the last three to four years to the language space, it’s basically taking a foundation model approach to language. Before the recent ChatGPT, there were a lot of natural language processing AIs out there. Search, translate, sentiment detection, spam detection — there were loads of natural language AIs out there. The approach before GPT is, for each use case, you train a specific AI to it, using a smaller subset of data. Look at the results now, and GPT basically abolishes the field of translation, and it’s not even trained to translation. The foundation model approach is basically, instead of using small amounts of data that’s specific to one situation or train a model that’s specific to one circumstance, let’s train a large foundation-generalized model on a lot more data, so the AI is more generalized.

You’re focused on picking and placing, but are you also laying the foundation for future applications?

Definitely. The grasping capability or pick and place capability is definitely the first general capability that we’re giving the robots. But if you look behind the scenes, there’s a lot of 3D understanding or object understanding. There are a lot of cognitive primitives that are generalizable to future robotic applications. That being said, grasping or picking is such a vast space we can work on this for a while.

You go after picking and placing first because there’s a clear need for it.

There’s clear need, and there’s also a clear lack of technology for it. The interesting thing is, if you came by this show 10 years ago, you would have been able to find picking robots. They just wouldn’t work. The industry has struggled with this for a very long time. People said this couldn’t work without AI, so people tried niche AI and off-the-shelf AI, and they didn’t work.

Your systems are feeding into a central database and every pick is informing machines how to pick in the future.

Yeah. The funny thing is that almost every item we touch passes through a warehouse at some point. It’s almost a central clearing place of everything in the physical world. When you start by building AI for warehouses, it’s a great foundation for AI that goes out of warehouses. Say you take an apple out of the field and bring it to an agricultural plant — it’s seen an apple before. It’s seen strawberries before.

That’s a one-to-one. I pick an apple in a fulfillment center, so I can pick an apple in a field. More abstractly, how can these learnings be applied to other facets of life?

If we want to take a step back from Covariant specifically, and think about where the technology trend is going, we’re seeing an interesting convergence of AI, software and mechatronics. Traditionally, these three fields are somewhat separate from each other. Mechatronics is what you’ll find when you come to this show. It’s about repeatable movement. If you talk to the salespeople, they tell you about reliability, how this machine can do the same thing over and over again.

The really amazing evolution we have seen from Silicon Valley in the last 15 to 20 years is in software. People have cracked the code on how to build really complex and highly intelligent looking software. All of these apps we’re using [are] really people harnessing the capabilities of software. Now we are at the front seat of AI, with all of the amazing advances. When you ask me what’s beyond warehouses, where I see this really going is the convergence of these three trends to build highly autonomous physical machines in the world. You need the convergence of all of the technologies.

You mentioned ChatGPT coming in and blindsiding people making translation software. That’s something that happens in technology. Are you afraid of a GPT coming in and effectively blindsiding the work that Covariant is doing?

That’s a good question for a lot of people, but I think we had an unfair advantage in that we started with pretty much the same belief that OpenAI had with building foundational models. General AI is a better approach than building niche AI. That’s what we have been doing for the last five years. I would say that we are in a very good position, and we are very glad OpenAI demonstrated that this philosophy works really well. We’re very excited to do that in the world of robotics.

News of the week

Image Credits: Berkshire Grey

The big news of the week quietly slipped out the day after ProMat drew to a close. Berkshire Grey, which had a strong presence at the event, announced on Friday a merger agreement that finds SoftBank Group acquiring all outstanding capital stock it didn’t already own. The all-cash deal is valued at around $375 million.

The post-SPAC life hasn’t been easy for the company, in spite of a generally booming market for logistics automation. Locus CEO Rick Faulk told me above that the company plans to IPO next year, after the market settles down. The category is still a young one, and there remains an open question around how many big players will be able to support themselves. For example, 6 River Systems and Fetch have both been acquired, by Shopify and Zebra, respectively.

“After a thoughtful review of value creation opportunities available to Berkshire Grey, we are pleased to have reached this agreement with SoftBank, which we believe offers significant value to our stockholders,” CEO Tom Wagner said in a release. “SoftBank is a great partner and this merger will strengthen our ability to serve customers with our disruptive AI robotics technology as they seek to become more efficient in their operations and maintain a competitive edge.”

Unlike the Kiva deal that set much of this category in motion a decade ago, SoftBank maintains that it’s bullish about offering BG’s product to existing and new customers. Says managing partner, Vikas J. Parekh:

As a long-time partner and investor in Berkshire Grey, we have a shared vision for robotics and automation. Berkshire Grey is a pioneer in transformative, AI-enabled robotic technologies that address use cases in retail, eCommerce, grocery, 3PL, and package handling companies. We look forward to partnering with Berkshire Grey to accelerate their growth and deliver ongoing excellence for customers.

Container ships at dock

Image Credits: John Lamb / Getty Images

A healthy Series A this week from Venti Technologies. The Singapore/U.S. firm, whose name translates to “large Starbucks cup,” raised $28.8 million, led by LG Technology Ventures. The startup is building autonomous systems for warehouses, ports and the like.

“If you have a big logistics facility where you run vehicles, the largest cost is human capital: drivers,” co-founder and CEO Heidi Wyle tells TechCrunch. “Our customers are telling us that they expect to save over 50% of their operations costs with self-driving vehicles. Think they will have huge savings.”

Neubility

Image Credits: Neubility / Neubility

This week in fun pivots, Neubility is making the shift from adorable last-mile delivery robots to security bots. This isn’t the company’s first pivot, either. Kate notes that it’s now done so five times since its founding. Fifth time’s the charm, right?

Neubility currently has 50 robots out in the world, a number it plans to raise significantly, with as many as 400 by year’s end. That will be helped along by the $2.6 million recently tacked onto its existing $26 million Series A.

Model-Prime emerged out of stealth this week with a $2.3 million seed round, bringing its total raise to $3.3 million. The funding was led by Eniac Ventures and featured Endeavors and Quiet Capital. The small Pittsburgh-based firm was founded by veterans of the self-driving world, Arun Venkatadri and Jeanine Gritzer, who were seeking a way to create reusable data logs for robotics companies.

The startup says its tech, “handles important tasks like pulling the metadata, automated tagging, and making logs searchable. The vision is to make the robotics industry more like web apps, or mobile apps, where it now seems silly to build your own data solution when you could just use Datadog or Snowflake instead.”

Image Credits: Saildrone

Saildrone, meanwhile, is showcasing Voyager, a 33-foot uncrewed water vehicle. The system sports cameras, radar and an acoustic system designed to map a body of water down to 900 feet. The company has been testing the boat out in the world since last February and is set to begin full-scale production at a rate of a boat a week.

Image Credits: MIT

Finally, some research out of MIT. Robust MADER is a new version of MADER, which the team introduced in 2020 to help drones avoid in-air collisions.

“MADER worked great in simulations, but it hadn’t been tested in hardware. So, we built a bunch of drones and started flying them,” says grad student Kota Kondo. “The drones need to talk to each other to share trajectories, but once you start flying, you realize pretty quickly that there are always communication delays that introduce some failures.”

The new version adds in a delay before setting out on a new trajectory. That added time will allow it to receive and process information from fellow drones and adjust as needed. Kondo adds, “If you want to fly safer, you have to be careful, so it is reasonable that if you don’t want to collide with an obstacle, it will take you more time to get to your destination. If you collide with something, no matter how fast you go, it doesn’t really matter because you won’t reach your destination.”

Fair enough.

Image Credits: Bryce Durbin/TechCrunch

 

Here you go, way too fast. Don’t slow down, you’re gonna crash. Na-na-na-na-na-na-na-na-na. (Subscribe to Actuator!)

 

 

Asking the right dumb questions by Brian Heater originally published on TechCrunch

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Waymo retires its self-driving Chrysler Pacifica minivan

More than five years ago, a newly minted Waymo took the wraps off of what would become its first commercialized autonomous vehicle: a Chrysler Pacifica…

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March 31, 2023

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More than five years ago, a newly minted Waymo took the wraps off of what would become its first commercialized autonomous vehicle: a Chrysler Pacifica Hybrid minivan loaded with sensors and software.

Now, the minivan, a symbol of the early and hypey AV days, is headed for retirement as Waymo transitions its fleet to the all-electric Jaguar I-Pace vehicles equipped with its fifth-generation self-driving system.

When the Chrysler Pacifica Hybrid AV was first revealed, it might not have been what people expected from the former Google self-driving project turned Alphabet-owned business. The design wasn’t ripped from the pages of a graphic sci-fi novel and it was hardly flashy. But the white minivan — highlighted with the same blue and green accent colors found on the Waymo logo — embodied the company’s aim. Waymo wanted a friendly looking vehicle people would feel comfortable using.

The partnership with established manufacturer Fiat Chrysler — now Stellantis — also derisked an already risky frontier tech pursuit. Under the deal, Fiat Chrysler would handle the manufacturing and provide Waymo with minivans that built in redundancies designed for autonomous driving.

Waymo never got close to the 62,000-minivan order it agreed to in 2018 as part of an expanded partnership with Fiat Chrysler. But the minivan did become a critical part of its commercialization plan and over its lifespan the fleet provided tens of thousands of rides to the public, according to the company. (Waymo has never revealed detailed figures of its minivan fleet beyond that its total global fleet is somewhere around 700 vehicles.)

“It’s bittersweet to see it go,” Chris Ludwick, product management director at Waymo who has been at the company since 2012, told TechCrunch. “But I’m also happy for this next chapter.”

A bit of history

Waymo revealed the Chrysler Pacifica Hybrid in December 2016 and then provided more technical and business model details a month later at the 2017 North American International Auto Show. The first look at the minivan in December came just five days after Google’s self-driving project officially announced that it was a business with a new name and slightly tweaked mission.

At the time, little was known about what the Google self-driving project — also known as Chauffeur — intended to do beyond a stated goal to commercialize self-driving cars. The Google self-driving project had developed a custom low-speed vehicle without a steering wheel called the Firefly, but that cute gumdrop-shaped car never made it to commercial robotaxi status.

Waymo Firefly and Chrysler Pacifica autonomous vehicles. Image Credits: Waymo

The lowly minivan seemed to represent a more grounded realistic vision toward the goal. By spring 2017, the company had launched an early rider program that let real people in the Phoenix area (who had been vetted and signed an NDA) use an app to hail a self-driving Chrysler Pacifica minivan with a human safety operator behind the wheel.

Waymo eventually opened up the service to the public — no NDA required — and grew its service area to Phoenix suburbs Chandler, Tempe, Ahwatukee and Mesa. Waymo repeated that process as it took the important step of removing the human safety operator from behind the wheel, launching driverless rides in 2019 and eventually a driverless robotaxi service in 2020 that was open to the public.

Minivan proving ground

Image Credits: Waymo

The minivan’s initial reveal represented the moment when “Chauffeur” became Waymo and less of a science project, he noted. But there was still considerable work to be done.

The Chrysler Pacifica was the ultimate commercial proving ground, according to anecdotes from Ludwick, who recounted the progress of moving from autonomous driving 10 miles in one day, then 100 miles, and then a 100 miles everyday.

For instance, the company discovered that families were far more enthusiastic to use the minivan than it assumed. The minivan also helped develop the company’s AV operations playbook, including how to park vehicles in between rides and where to locate depots for maintenance and charging.

The minivan also became a testbed for how to operate a driverless fleet during the COVID-19 pandemic. Prior to COVID, the fleet in Phoenix was a mix of driverless vehicles and those with human safety operators behind the wheel.

“In three months we turned it fully driverless and figured out how to disinfect the vehicles between each ride,” he said.

All-electric chapter

Waymo jaguar ipace autonomous vehicle

Image Credits: Waymo

The next chapter for Waymo is focused on its all-electric Jaguar I-Pace vehicles, which will be pulled into the service area in the Phoenix suburbs of Chandler and Tempe that the minivan covered. The Jaguar I-Pace is currently the go-to driverless vehicle for robotaxi rides in downtown Phoenix and to the Phoenix International Sky Harbor Airport. The 24/7 service runs on a five-mile stretch between downtown Phoenix and an airport shuttle stop, specifically, the 44th Street Sky Train station.

On Thursday, the White House gave a shout-out to Waymo (along with other companies) for its commitment to an all-electric fleet as part of the White House EV Acceleration Challenge.

Waymo intends to deploy the all-electric Jaguar I-Pace across all of its ride-hailing service territories this spring now that the minivan has been retired. The nod to Waymo was part of a larger announcement from the Biden administration around public and private sector investments into EVs as part of its goal of having 50% of all new vehicle sales be electric by 2030.

The next task for Waymo may be its most challenging: The company has to figure out how to grow the service, charge its all-electric fleet efficiently and eventually turn a profit.

But Ludwick believes the company is well positioned thanks, in part, to the Chrysler Pacifica.

“When I look at what the Pacifica got us, it’s a lot,” he said, noting that the vehicle had to travel at higher speeds and make unprotected left turns.

Waymo retires its self-driving Chrysler Pacifica minivan by Kirsten Korosec originally published on TechCrunch

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