Automation has been a core human principle since the dawn of civilization. Ox to plow fields quicker. Looms with spinning wheels to make more cloth. Assembly lines to mass produce cars. Arguably the biggest step function though is what is happening now – after a sharp decline robots are poised to grow tremendously, in use cases as diverse as making smoothies, peeling potatoes or handling materials. This article is focused on the factors accelerating robotics, the outstanding challenges, and where do we go from here, all from an entrepreneur’s perspective.
1) Factors Accelerating Robotics
The word robot is just over a hundred years old and arguably the first modern robot was a hydraulic arm invented in the 1950s. They have been adopted widely in certain industries, especially manufacturing. But at Tau we subscribe to the view that robotics has now hit an inflection point and we are going to see robots adopted at mass scale. Part of it is the diminishing cost of materials, part of it is the combinatorial explosion of AI as outlined in our framework below.
The growth of foundational models illustrates how industry aka commercial applications are dwarfing the development of AI.
In the same vein the core arguments for robotics have been long-standing:
- cost – the unit economics of robots are increasingly making sense, especially for rote tasks
- efficiency – a robot doesn’t need to eat, doesn’t mind repetitive motions, doesn’t make mistakes from being tired
- safety – consider dangerous areas like factory floors or warehouses with forklifts
In the US specifically we believe restricted labor availability due to curtailed immigration will also propel robotic adoption. Overall at Tau our belief is the time is ripe for building great robotics companies.
2) Outstanding Challenges
The accelerating factors above aside, the reality is robotics has been through rough years. Funding actually hit a 5-year low in 2023 but has rebounded in a major way (consider the graph below is only till Aug ’24), both a stronger decline and recovery than many other VC-fundable industries.
Costs remain a big challenge. In the previous section we talked about the unit economics increasingly making sense – but we are still talking mostly about robots worth thousands of dollars deployed in enterprise, medical or safety & government. Robots that will cook food in your kitchen? Pipe dream for now
Another challenge is servicing. Complicated machines that often need an in-person visit are much harder than sending a software update over the air.
Perhaps the single biggest challenge is fear. Robots will displace jobs. Period. But we subscribe to the belief that like in previous revolutions new jobs will get created, many of which we can’t even imagine right now. Technology often evolves faster than human’s ability to adapt, and we will have to contend with massive social transformations – a very important and separate topic.
3) Where Are We Going?
Entrepreneurs are the leading edge of innovation and to them will fall several of these unanswered questions:
- Is RaaS (robots as a service) the answer for sustainable business models, with high margins?
- Startups are nimble, can customize their solutions, and outcompete larger platforms. But undeniably the latter have an edge given their scale advantages, especially in terms of distribution and hardware manufacturing. So will they mostly build themselves or buy / partner with startups?
- How will society react against increasingly faster robotization of jobs? In the US at least the expectation for the next few years are weaker regulations, including around labor.
Perhaps this data point is an indication of where we are going: below are YC companies tagging themselves as robotics:
Primary author of this article is Amit Garg. Originally published on “Data Driven Investor,” we are happy to syndicate on other platforms. These are purposely short articles focused on practical insights (we call it gl;dr — good length; did read). Many of Amit’s writings are at https://www.linkedin.com/in/amgarg/detail/recent-activity/posts and he would be stoked if they get people interested enough in a topic to explore in further depth. If this article had useful insights for you, comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page, with due thanks for supporting our work. All opinions expressed here are our own.
