In 2019, the robotics company Jibo filed for bankruptcy. Notably, Time magazine named Jibo’s eponymous social bot one of the best innovations of 2017. Failure to raise funding in time led to Jibo’s inglorious demise as well.
In April of that year, San Francisco-based robotics startup Anki closed up store, filing for bankruptcy. During its nine-year existence, the company developed such popular robot toys as Overdrive, Cozmo and Vector. CEO Boris Sofman blamed last-minute financial difficulties for the company’s closure.
Both Anki and Jibo were promising startups. Although Google-owned Schaft, Rethink Robotics and Mayfield Robotics showed great potential, they too eventually closed. If history is to be believed, robotics as a business is hard to sustain.
In 2020, a charming video of robots dancing to the 1962 hit “Do You Love Me” appeared on the Internet. The video featured robots from Boston Dynamics. The company is hugely popular for its nimble and smart service robots.
In recent years, however, Boston Dynamics has suffered major losses. In the fiscal year that ended in March 2020, the company posted a net loss of $103 million, a 60 percent increase over the year before. Later, automobile giant Hyundai came to the rescue of tBoston Dynamics and bought a controlling stake in the company.
So what explains the sad fate of some robotics pioneer companies?
Fresh Consulting analyzed significant case studies from Rethink Robotics to iRobot for its report “Why Robotics Companies Fail” and presented it on June 11 at a panel discussion moderated by James Dietrich of Fresh Consulting, with guest speakers Aaron Prater, senior advisor to the technology research and planning group at FedEx Express; Andra Kay, managing director of Silicon Valley Robotics and advisor on startup gas pedals, and Eric Klein, partner and founder of Lemnos Labs.
In a lively discussion, the speakers talked about what key success or failure factors were most likely in their experiences. Eric Klein says, “We are entering a golden era for applied robotics. It’s never been easier or cheaper from a technology standpoint to build robotics companies. But in terms of venture capital, there are still business barriers, especially in understanding customer economics.”
With his extensive experience at FedEx with robotics companies, Aaron Prater agrees that knowing and understanding the customer is the biggest reason startups fail. “One of the things we pay a lot of attention to at FedEx is making sure the technology fits the right use case. How well do you know your customer’s problems and needs?”
The struggle of robotics companies to keep their heads above water, as opposed to thriving AI companies, is a truly contrasting example. In the past 12 months, AI-focused startups have raised a total of $73.4 billion. In the same time period (through March 11, 2021), robotics startups have raised $6.3 billion, a paltry sum by comparison.
Andra Kay believes the lack of business fundamentals is the most critical mistake a young company faces. SM. SM. NEWS
First ride on Hyperloop, Apple chips in M1 and other top news this week Developing hardware is hard, and robotics is even harder. Developing robots requires knowledge and skills spanning several areas, including software, mechanics, electronics, electro-mechanics, and complex assembly. Getting machines to perform simple actions such as climbing stairs or moving around a room without encountering obstacles can be quite a challenge. This is one reason why most robots are limited to limited, repetitive tasks, as in the case of stationary industrial robots and semi-autonomous robots. The return on resources spent on R&D is far from optimal, making it difficult to sustain the business.
Despite the looming uncertainty in the field, reports indicate that the robotics industry could grow from $76.6 billion in 2020 to $176.8 billion in 2025. The lack of demand for robots outside of a few areas, such as logistics and hospitals, has been cited as another major reason for the decline in growth.