In this episode of our Venture Capital Horizon series with Heath Terry of Goldman Sachs Research, we dive into the future of e-commerce and the adoption of robotics in everything from manufacturing to packaging and delivery.
This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Mrs exchanges, Goldman Sachs- I use chariot Odin, sacks research Welcome to another episode of our venture Capital HORIZON Series: where were you the lens of venture capital to identify emerging technologies, business models and entrepreneurs in Ireland episode? We gotta clean energy and the advances and sustainable nuclear power in their offices. We're going to die into the future of e commerce and the adoption of robotics in everything, from manufacturing to packaging and delivered its no surprise, given the current challenges a crown of irish people, buying online more than ever, growth of e commerce. the skyrocketed from eighteen percent in February to ninety three per cent in May. Look ahead. Is social, distancing and safety concerns remain in place. We may be up during a holiday season were crowded malls and sitting rooms are a thing of the past
design with roughly forty percent share in E commerce, is dominating the space. It's clear. Their fulfilment capacity has been stretched beyond its limits the past few months we saw Amazon is back. Shipments of non essential items are trying to hire without funds. thousand new workers They made even more difficult by the need to socially distance in warehouses, but Nugent Nations of affordable, advanced commercial robots are helping to solve for that accord the market research, firm farm API research, more than fifty thousand warehouses worldwide, will include commercial robotics by twenty twenty five, something it's only to be accelerated by the current environment. With that backdrop, we spoke to Devon brought the managing director of venture capital funds in sight. Those who has invested numerous e commerce companies as well. some of the most successful internet and software companies in the world, including Alibaba and twitter someone who's obviously been very clear, to the category and invested deeply in it over the over the years. How would you describe the state of e commerce I'll speak from it
personal experience. Ordering from Amazon in the middle of March was not a good experience. Delight lots. Things are took two weeks three weeks for weeks yet show up where You can actually gonna Walmart or target their places and get that product a lot faster. I was unprecedented situation and unprecedented time, so certainly Amazon gotta pass. But my point is that I think It's a situation where many the offline companies are gonna, really have become better competitors over this period time. How do you see about the enable meant side of e commerce, whether it's the software marketplace component of that or maybe importantly, when it comes to process complexity, the leg just it's the warehousing, the robotics investments that are being made, especially you're, thinking about all of the needs for labour and warehouses, and how are changing and a covert environment. Suddenly robotics maybe gets even more interesting. How does that enable my peace, shorter factor into the way that you're thinking about opportunities in commerce? I can tell you that
ray scale. E commerce company is looking at it is then up to look a robotics. What is at issue headaches, is automation right, so real robotics, implies a pig impact and then something Is that actually is for Amazon at Amazon scale, but for lots of companies like its economic to use, robotics impact, you actually easier to use human forbidden back and certain categories depending on the size of the company, although there rejected, but our worries about say, eight am I began to be covered, is covered by forcing right meaning that it actually hard to have high density in a warehouse right now and might be, for your might be for the foreseeable future. To hear. How covered is accelerating the adoption robotics and helping saw some labour shortages across fulfilment. We Melanie wise? The ceo of FAT Robotics adventure, black private companies, build robots used to automate e commerce. Warehouses like Amazon's are Walmart. If you look the logistics industry. You know before the pandemic
there was a large labour shortage. There were about six hundred thousand jobs available in the logistics of manufacturing industry, and they were being filled now today with the pandemic. We have some artificial creation of that, because you can only have some people on shift at a time solution, those suffering from labour short because I can't put more people in the building these social, distancing and other actors at limit their ass. You have people in the building, and so The way we looked at solving that problem prepared making our resolve it today with the pandemic is based implementing that labour with more efficiency tools like at times smaller robots, and so we help move, things from point a to point b within a facility, so person doesn't have to suit Melanie. We obviously seen in the last few months of this pandemic. This incredible slogan and demand for e commerce and delivery at home, and obviously
come in and even with all kinds of challenges for companies trying to do for fun it. How have you seen that impact your business here in the immediate term, and, I guess maybe longer term how's it impacting the way they you're thinking strategically about the future for four fatch? We are seeing a lot of big business, from segments had been stimulated by the pandemic and specifically work from home. So, that's in anything that relate to work from home, Pat care shopping at home, work from home supplies like like Tron Ex laptops, those things and then a lot of the more staples for things like a pandemic medical supplier since eight that there also growing and fetch his being gauge with those but one of the new things at its family shifted, silver focuses. We ve had a lot of inbound around disinfection and we ve been working with our partners in the last three months to get disinfection product
off the ground, and so we ve been developing some new features in our software to help support the pandemic law. Like content, tracing social distancing tools for you now, looking at, where the robots can do short, runs things like that new and easier ways to make the system more flexible for the day to day changes that have to happen. Did it say thing changes new cleaning schedules, how we introduce cleaning or about our disinfection robots into existing customer sites to make them effective. So a lot of it is around that. Obviously, whenever you talk about robotics, it conjures up allotted different images in people's minds. But what is really mean for fat. Yes, you'll get or customer base their predominantly into vertical fulfilment until filling e commerce fulfilment and manufacturing. So today, Fetch makes three autonomous Bobo robots are aimed Mars. They can move goods from thing from a hundred kilograms, two five hundred telegrams to fifteen hundred kilograms. So
It's like a two of toothpaste to a of toothpaste, and when you look at what happens in most of these facilities, they're moving goods to be operated on that could be in the case of fulfilment, that's picking her off the shelf and putting it into a box in the kitchen. manufacturing. That's taking a raw good like I'm, not a bolt or an engine block or parts of additional you're in bringing that to an assembly line. then be assembled and sometimes reign of moving the whole finnish good, like a dishwasher across epistle and so we used the robots to do that and before the pandemic, we were predominantly doing very long run. So several hundred feed bed took p As you know, several minutes to go, walk those distances said they could focus on doing, assembly tasks or boxing or some kind of quality inspection.
Today with the pandemic is shifted a little bit now we take over most of the movement, even movement between short movements between stations, so people dont have to interact with it other is so that something that we saw very quickly after the shelter in place. Orders happened a lot of our customers change. What the robots were doing to reflect some of the new policies that had to be put in place and so on. Mobile robots, you'd, have they amours had been at work in factories and in warehouses for a long time, including yours, Amazon alone, reportedly has over two hundred thousand in their fulfilment centres. When you look at the cutting edge of where the technology is, where it's going, the advancements dear you're, making a. How would you describe it? Yes, there s. One thing I am going to put out there is is so the type Robots said Amazon actually is: is there not a marsh their age? So they follow guidance on the floor, so HIV
stands for automated guided vehicle, so it has something on floor in the environment that its guided by they have little stickers on the ground, and yet they do have two or three hundred thousand of those vehicles doing delivery, and so We will get it ain t these came into the scene in the nineteen eighties, and those vehicles were probably guided by a things in the environment. You saw them in car manufacturing plants. You see the many commerce foment they ve become pretty prevalent, but one of the challenges with that technologies- it wasn't, is flexible, and so, but one of them mutations before two thousand and two thousand five? Was we didn't? Have the computation power to do a lot of the things that we want to do with the autonomous Moura lots and around two thousand ten thousand fifteen, you started seeing more and more companies being able to produce these autonomous, more or less so a Mars had been around since around two thousand twelve. I know
still has a long time, but it is a little bit different than nineteen eighty and I think the thing is that if you look at it robotics it takes decades to have an overnight success in the robotics technology and I think the dazzling it's it's kind of hard for people to understand how long it takes for the technology to evolve. We're still running on the machine tat. We have today, algorithms that were basically thought up in the early two, thousands in the late. Ninety nine these so that technology measures slowly, but the technology is evolving. It's definitely driving progress, but I would say that the biggest thing that I think has helped with it I'm a small robots in general is the ability to create a cloud platform. So that's one things had fetched eyes as we used the cloud to basically deploy so the coordination and fleet management aspects of the robots are done in the cloud. The robots are still autonomous units, but there's this partnership-
when the cloud- and there were about self Nuno people talk about the fog where there's edged computing over robots are basically the edge in some ways, and so, but I would say that it's getting there, but I don't think you're here, like a certain ubiquitous niche in the technology that word applying today, pray for another five to ten years. I just takes out long for the technology ran to happen in our space. We also asked Melanie about the technology for one of the most highly, has abated use cases robotics you, commerce, fates, autonomous delivery lot of applications for robotics outside of the warehouse you're. One of those that we have seen a lot of effort made is around solving the last mile model, whether its through autonomous delivery drones or on the ground robots that are working with any comers entries for how you see robotics as a solution for that problem areas.
If no one outside is pretty hard. I think that when you look in the robotic space we talk about going from Sir sure environments, which are easy to completely unstructured environments, which are very, very, very hard, so structured environments would be a large empty space with nothing moving typically year, history, Nerd research lab Semites pressured environments are things like warehouses where they have a lot of fixed infrastructure. The people in those facilities are trained and they I have a specific job, they're going to do now, less structure, environments like grocery stores, retail. That's why start blending into unstructured the facilities look the same. The infrastructure is there, but the participants are less trained, they have different agendas, different social norms like if you look at the cylinder of us have been deployed in grocery stores. Children run up
robots and hunt them. That's actually pretty pickled situation, further robot. Now, as you get further, further away from buildings and into the outdoors. It gets far are far more structured, and those are very, very, very difficult. Problems to solve Look at it? You have, you know, lots of participants. You have lots of different things moving it lots of different speeds, especially for on the sidewalk delivery vehicles they may have to cross the street. Were cars? Are there very low? the ground, the heart to see people like to play with them boy take pictures of them. I would say that ground vehicles have a lot of challenges unless they use the roadways, because the roadways, read some norms and that's it
I think some of the more promising delivery vehicles are ones that are smaller versions of cars that only deliver growth reason side of them, because their using the infrastructure that was built for road transport when you're not taking over public sidewalk, but we'll see one of the companies building autonomous, deliver vehicles for last mile delivery is neuro dot ay, I we spoke today, Ferguson accompanies chief writing off assert. Our second internet operates earlier this year to hear more about the opportunity for autonomous, deliberate warehouse you now in terms of being able to liver autonomously. You ve got this partnership that you recently announced with Walmart how far away our we from seeing something like that. You know really outlined in the wild today, the? U S, retail market, the consumer retail market is around six trillion dollars only eleven percent, that is commerce rise. So big, is Amazon, is and is pressing as a company is Amazonas we're still
we're talking about eleven percent of Retail commerce and the rest, the other eighty nine percent is performed locally in person and in the. U S, activity means you get in the car. You drive to your local shops, you buy stuff when you come back, What we are trying to do Neuro is to replace all of those trips by delivering things to people on demand and making it both better in terms of time, also safety efficiency, the effort required in terms of the technology on this offers, with solving many of the same problems as general passenger transportation. I think where we see there being a significant advantage for transporting goods instead of people is to use the example of detecting a break in the middle of the road to explain it. So the reason why solving self driving for passenger transportation is so hard is that your system basically has to be perfect. You have to take them. Rick every single time because you can't afford to run into a break in the middle of the road. For us.
we want to be the safest vehicle out on the roads, because we should be able to write, we don't have people inside and frankly, we dont care nearly as much about the eggs that are inside the vehicle, as we do about the kids playing in the road. So we want to be more conservative. We were our vehicle to effectively self sacrifice so that it can favour the safety of what's outside the vehicle Rollin was inside and so from a technical perspective. We leverage all of that. As when designing system we still have to take traffic lights, we still have to detect other vehicle was so. The features is very similar to general self driving, but where to really really bias towards safety, so that we can produce both a much safer overall system and we solve the entire take challenge as a whole, much much faster where focused on goods transportation, because we see it as a trillion dollar opportunity that we can really go scale and capture. However,
I think that is actually a pretty strong argument to be made that by doing so, we're gonna end up having a much larger fleets of vehicles. That's out there actually profitably operating in the world, and we that fleet. We then an order of magnitude, more data, and that enables us to solve the entire passenger self driving problem as well. That's not sort of a core goal of ours. I do think that we can see an acceleration in terms of solving the general problem by the more vehicles that we get out of there being capable. So a growing number of retailers and shipping companies are adding robotic technologies to increase productivity during this challenging times, Melanie says you drive robotics in everything, from warehouses, delivery and even in the home will be dependent on the other. need to bring down the overall cost of the technology, so as someone who has spent her career in robotics? Where do you see here the field go away,
you see nearly twenty years of progress. What are the next twenty years? Look like yeah so the next twenty years is really around the expansion of practical applications of this technology. You know, I would say that until two thousand and ten it was pretty hard to deploy robotics technology outside and very rigid industrial applications right now, or entering the next phase of collaborative robots- and it took us about sixty years to get through the industrial robot face. Now, the collaborative robot phase. So I really think that the next who need of thirty years is going to be really the expansion of the collaborative robot phase. I think near the middle of that so the next ten to fifteen years, we might mean see the beginnings of some home row up. Applications beyond vacuum, cleaner, that's better about that. Have the ability to manipulate the environment, but it's hard because the component trade sensors that we need to make them
technology worked pretty expensive unheard make mean if someone suddenly tomorrow with a reality sensor. Robotics would have a very different time line and execution model, but until we have this magical sensor that can measure all of reality, its very expensive to built robots and to make technology at the price point that people looking for you know, it's important to remember that a cell phone caused a thousand dollars and the cell phone doesn't have any actuation in it other than a vibrating motor, and the problem is that there is a big disconnect, because if you go- and you say to some one I'll give you a robot that a clean, your house and fold your laundry and you ask me, what do you think you should cause they're, gonna say thousand dollars? But today, if you want to live together in the milk that cost about thirty thousand dollars and her there gotta. We ve got a pretty long bridge to cross to do that. All costs may be a challenge. Dave Ferrie and believes that transformation is eminent if you
back in the last thirty years at how life has changed say that, from the digital perspective, we ve seen unbelievable transformation right. Smart finds the internet, and everything that has enabled. But if you look, if you think about the physical world with mobility being a piece of that, things haven't really change that much the chairs the sitting on the table. They just sitting behind might be slightly different, but but fundamentally not much has changed in the physical world in the last thirty years. If forward from today, another twenty to thirty years. I think we're gonna see drastic drastic change back includes this just episode of exchanges, I want to thank them. nobody wise the day. Ferguson for joining us be sure to an end. At the end of this week for exchanges, market update or Goldman Sachs Sport shared their perspective on the weeks financial developments. We hope you today's bypassed, and if you did please subscribe on Spotify or Apple bypass and raiders on Apple, bypassed I'll, join
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Transcript generated on 2021-07-03.