Chicken Little blog missives have inundated Medium’s site lamenting the stock market’s decline. Since joining ff Venture Capital’s partnership this summer, I’ve been awestruck by the level of optimism that permeates the organization. While others are now constricting their activity; ffVC is plowing ahead by closing its seventh fund and launching an eighth one for Ukrainian startups. Kicking off its second annual Drones & Robotics Summit this past September 20th in New York City, ffVC’s founding partner, John Frankel, conveyed this enthusiasm to a packed house of three hundred tech luminaries. Frankel’s confidence has been fostered by more than 15 years of portfolio management experience in riding fair weather and stormy seas, while at the same time hooking the next billion-dollar opportunities. As I encapsulate the three big takeaways from last month, each reverbarate the same chord – automation is on the upswing despite news on CNBC.
1. The Covid Multiplier Effect
While the S&P has declined over 20% since January 2022, the robotics market has climbed close to 45% over the same period. As a result, The New York Times recently reported that manufacturing in the USA added a net gain of 67,000 workers over pre-pandemic levels for the first time since the 1970s. The Times suggests that this uptick is in large measure in response to countering China supply-chain issues and localizing inventories with new “grey-collar” jobs managing robots. I think Erik Nieves of PlusOne Robotics, said it best at the Drones & Robotics Summit, “Well it was clear that there was not going to be enough labor to manage all of the deliveries and the packaging as we continue to move our commerce online. But Covid acted as an accelerant to all of that, because right when we had the most need for the parcels and orders to flow, is when we had the least reliable labor to do it. And so we have seen an important growth in the business just predicated on that. It’s not as if we were not going to get there eventually, but certainly, Covid had the effect of pulling forward three years’
worth of growth all at once. And you are going to see that writ large everywhere automation can play a role.”
Miika Satori of Cambrian, a leading co-bot computer vision company, shared Neives’ sentiment for the greater smart manufacturing space as well. Since the pandemic, the Industrial Internet of Things (IIoT) market has filled a critical void left by labor and supply chain shortages and provided startups rich opportunities to introduce a new array of technologies for a variety of operations leveraging computer vision, data science, machine learning, Internet of Things, and 3D printing. The application of mechatronic systems that utilize deep-learning software to command-and-control hardware systems offer the most scale and attractive margins for early stage investors. This conviction is further validated by the recent study that projects the smart manufacturing market to climb to $727 billion in 24 months.
2. Drone Delivery Is Happening, Now!
The pandemic also propelled food delivery to supersonic heights and drove a $190 billion global online food delivery marketplace in 2021. UberEATS, Door Dash, and Wolt, among others, have been feeding urbanites’ cravings by utilizing bike and moped messengers to deliver delicacies within minutes. However, this convenience comes at the cost of increased traffic congestion and mounting pedestrian/cyclist injuries. Unmanned Aerial Vehicles (UAVs) or drones offer the promise of sustainable infrastructure, lower costs, greater vehicular safety, and higher customer satisfaction. While UAVs sound like science fiction to many outsiders, Alan Hicks of Manna Drone Delivery shared last month that his company is making it a reality today to over 35,000 grocery and pharmacy customers in Ireland.
Hicks’ experience is further substantiated by a recent study that projects the drone logistics and transportation market to grow from $539 million today to $17 billion in eight years. In addition, opportunities for terrestrial roboticists include autonomous delivery fleets, unmanned rovers, and robotaxis over the next 5 years leading to a wider $120 billion market opportunity. Integrating drones into the national airspace falls on the lap of Star Ginn of NASA who is actively working to turn the promise of efficiency into actionable steps towards full autonomy. “We have this roadmap right now at NASA to start closing the loop on the system where machines and machines are negotiating that sort of scale, and we will just keep adding more complex situations. So It’s not just to show it works on a nominal day, what we are looking at is how we stress the system on all the off-nominals,” explains Ginn. This government-led public/private partnership is best illustrated in upstate New York with the Genius New York Accelerator and NUAIR in advancing drone startups from a napkin drawing to actual deployments in the skies.
3. Robots Are Filling Lost Jobs
Last November, the United States Congress passed the multi-trillion dollar Infrastructure Spending Bill that has allocated $1.2 trillion on investments in roadways, renewal energy, and other large public works projects in the United States over the next ten years. These large capital outlays, coupled with the loss of skilled labor post-pandemic, have accelerated the push for unmanned equipment. Today, the demand for highly skilled construction workers exceeds the supply of consultants ready to fill these jobs, exasperating the push for mechanized job sites. While global infrastructure spending is climbing to over $3 trillion, the number of skilled tradesmen is rapidly declining. For example, the Bureau of Labor Statistics reported that of the 65,000 people currently working in America as surveyors, cartographers and photogrammetrists, with just 9,000 under the age of thirty-four. This means that there is a shortage of new skilled workers replacing retirees at alarming rates. This labor void has provided automation startups a $12 billion market opportunity by 2026. Explaining the post-pandemic lift for his business, Liav Muller of CivRobotics shared with the Summit how his his large construction clients are calling him with a sense of urgency now to fill lost jobs.
Similar to Liav’s experiences with Construction, Charlie Anderson of Burro (an automous towing robot for fruit orchards), quipped at the irony of population density, higher food production, and no one under the age of 50 wanting to pick crops anymore. This is what is driving a $135 billion autonomous farming equipment market globally. This push toward automation has been exasperated by the post-pandemic labor crunch and supply chain shortages. According to NBC News, US farmers in September reported labor shortages as high as 20%, leading to a 10% increase in the cost of food. Beyond the inflationary concerns, the entire food supply is at risk of crumbling, prompting investments by the US Federal Government (Infrastructure Bill) and large manufacturers like John Deere to accelerate the adoption of autonomous tractors and harvesters. While corn and grain fields have been mechanized over the past ten years, orchards, berry, and nut production have been historically ignored by these types of initiatives. Startups like Burro are leveraging warehouse automaton technologies on farms to takeover most of the backbreaking and tedious jobs, such as harvesting, hauling, and packing goods. The most exciting opportunities will be driven by utilizing the immense amount of data collected by these autonomous machines to monitor plant health, growing patterns, and production workflow to increase global agricultural yields. Furthermore, the inventions created in the construction and agricultural verticals offer new product extensions for the adjacent renewal energy and sustainable transportation industries.
The exuberance was running high with startup after startup demonstrating real customer deployments, including such notable leading examples from Tailos, FotoKite, Onvego, and CarScanner. At the same time policy makers promoted new government-led funding programs, like the National Security Innovation Network (NSIN) and New York Ventures of Empire State Development. Wendy Ju of CornellTech reminded everyone that the hardest part of robotics is still people at the end of the day, not technology. Her witty presentation contained numerous examples of how people react differently to machines and the secret to successful implementations is understanding the culture where the machines will operate. Professor Ju emphasized her point by showing autonomous cars that are programmed to follow the laws are actually dangerous drivers, because driving is not the same from place to place, i.e. driving is culturally different in Delhi than New York City or Tel Aviv. In order for autonomy to be successful it has to adapt to how humans work, as Ju advises: “There is some really interesting things that we basically learn about how we actually have to have robots function if they are going to function well around people, which is different than if they are working in a fully autonomous space. This is some really interesting work to do, so people that are working next to robots can do well.” Closing out the evening on the NYC rooftop with cocktails in hand, I realized that Ju’s wisdom reminded me that the best part of the day was not the robots, but the humans who are building a better automated world that augments our creativity.