What is Robotics

as a Service?
A Practical Guide to RaaS

What is Robotics as a Service? 1

Table of What is Robotics as a Service?
A massive market opportunity
3

Contents Fundraising for RaaS Companies 6

Creating a realistics business model
Larger rounds and longer paybacks
When to raise what
Finding potential investors
Winning them over
Alternatives to traditional funding sources

Real Solutions for Real Problems 13

Start by solving a discrete problem
Hot industries for RaaS

Going to Market 18
Solving labor shortages vs. replacing humans
Touting the full spectrum of benefits
Positioning pilots for success

Setting the Stage for Growth 28

Ditch the DIY mentality
Have a plan, but be open to changes
Line up funding sources before they’re needed

RaaS Will Fuel the Future of Robots 32

What is Robotics as a Service? 2

What is Robotics as
a Service?
Robotics as a Service (RaaS) is a paradigm-shifting new business and
service delivery model for robotics. This arrangement dramatically
reduces the barrier to entry for introducing robotics into any industry
by delivering a robotics-driven solution on a subscription basis.
However, the advantages of RaaS solutions extend far beyond the
sticker price.

In a traditional model, businesses would identify a need for

automation, seek out the right hardware for the situation, and
then purchase—or build themselves—whatever corresponding
software was required to control and manage their new robot fleet.
Maintenance, upgrades, and operational management would also fall
on their shoulders.

The limitations of this arrangement are obvious. First, businesses

must proactively design their own solution. Then they must fund all of

What is Robotics as a Service? 3

the robotics hardware upfront, then engage in another build vs. buy
decision to cobble together the right software stack for their solution.

And with operational and maintenance responsibilities also weighing

on their shoulders, most businesses would need to hire additional
skilled staff or procure extensive training for current employees to
deploy and manage their robots.

Looking at the to-do list above and the hefty price tag, most
businesses have put off or merely dabbled in the world of robotic
automation, scared off not by the technology itself but by the related
costs, labor, training, and risk of failure. This does not set the stage
for mass rollouts, but rather a smattering of pilots and trials poorly
positioned for long-term success and subsequent mass adoptions.

RaaS removes many of those hurdles for potential customers. First

and foremost, RaaS companies provide full turnkey solutions for their
customers. Figuring out all the hardware and software issues is taken
care of, with RaaS businesses offering complete solutions for the
tasks they target. Companies no longer must hire Ph.D. roboticists or
invest lots of capital in hardware configurations that may or may not
fit the bill.

RaaS solution providers also remove much of the financial risk from
the equation for their customers. Instead of large capital expenditure
(CapEx) outlays, customers can fund their RaaS deployments out of
operating expenses (OpEx).

Not only does that require a much smaller financial commitment

from their customers, but it also allows them more time to gauge the
success and value of these solutions, only expanding them over time
if the business case proves out. RaaS also enables these organizations
to fund these investments from the same pool of money that
went toward those services when they were previously completed
manually by employees.

At a more fundamental level, RaaS also shifts the conversation

away from technology for technology’s sake to identifying pressing

What is Robotics as a Service? 4

 problems and pain points before introducing solutions specifically
crafted and tailored to address them. This puts technology into its
appropriate place as an enabler rather than stealing the spotlight and
overemphasizing the actual robots and hardware itself.

A massive market opportunity

In the far off future, everyone expects robots to play a major role in
the economy. But what may surprise some is how large the market
RaaS markets are opportunity already is today… and how quickly it will experience
projected to grow exponential growth.
from $39.22 billion
in 2019 to $142.23 One report projects the RaaS market growing from $39.22 billion
billion by 2025. in 2019 to $142.23 billion by 2025 at a CAGR of 23.95% from 2020
to 2026. A more modest prediction from Facts & Factors sized the
market at $14.5 billion in 2021 with an expectation of reaching $44
billion by 2028 with a projected CAGR of 16.5%.

What is Robotics as a Service? 5

Fundraising for
RaaS Companies
Raising money for any new venture can be a long, arduous process,
especially when the founders or executive team lack entrepreneurs
or leaders with prior successes and exits under their belt. Winning
over investors for a RaaS play comes with additional challenges.

Creating a realistics business model

Before knocking on anyone’s door, RaaS companies seeking funding
must refine their business plan so it includes all of the very real costs
of doing business. Robots are expensive, and require maintenance,
upgrades, and the staff to perform those duties.

Plus those robots won’t run forever, so end-of-life for the machines
and their replacement costs must factor into the equation. Other
factors include operations and support personnel, maintenance
costs, setup, and deployment costs.

At the end of the day, these robots are competing with staffing
people to perform those same tasks. If the price point for the
customer isn’t competitive, then the model is broken from the start.

However, most RaaS founders and investors understand that

generating revenues and profits from Day One isn’t the goal, but
rather achieving those things when the operation is running at scale.
Figuring out how to shrink unit costs with more efficient processes,
remote management, and the expected decline of robotic component
costs, while still laying out a roadmap for reaching a breakeven point
and eventual profitability is a challenging journey.

What is Robotics as a Service? 6

Larger rounds and longer paybacks
First, unlike many hot “as-a-service” markets, RaaS companies aren’t
just looking for cash to beef up a software development team or
spring for flashy marketing campaigns. RaaS businesses also need
funds for hardware, whether they’re building the robots from scratch
themselves or combining off-the-shelf components for their field
deployments.

This capital-intensive hardware need may be foreign to many tech

investors who have previously limited their bets to purely digital plays.
While some may be willing to dip their toes into the physical world
of product development thanks to the allure of robotic automation,
founders should be sure to target investors with an appetite and
realistic understanding of what it takes to bring a hardware-based
solution to market at scale.

Another hurdle for fundraising RaaS companies is the lengthier

timeline for RaaS deployments to turn a profit. Because RaaS
businesses are paid monthly, quarterly, or annually for their solutions,
it can take months or years until an individual customer engagement
goes into the black since the initial revenue is covering the upfront
hardware costs of each robot.

Relatedly, initial RaaS robot deployments may also not have as long
of a working life as learnings and iteration over time should yield
more cost-efficient robots with longer working lives, rendering earlier
generations obsolete. Patience is most certainly a virtue in this space.

Finally, since it’s still the early days for robotic automation, not
every investor may be up for the “Wild West” atmosphere of the
industry where lots of RaaS outfits are attempting land grabs with
competing solutions. There’s no established playbook for long-term
RaaS success, and the lack of benchmarks and comparables may
scare off potential backers that aren’t completely sold on the market
opportunity and potential.

What is Robotics as a Service? 7

 When to raise what
Bullish founders embracing their grand vision might wish their nascent
RaaS startup was already poised to be the next “unicorn,” but most
investors have specific thresholds in mind for each round of fundraising.

Patrick Hermann, an investor for Picus Capital whose robotics

portfolio includes amongst others Formant as well as Coboworx,
says each round comes with its own expectations. Hermann also
recommends especially first time founders bringing in noteworthy
angel investors from the robotics and tech world to validate the team
and build credibility for the pre-seed/seed round.

You need a strong idea and a first technical MVP

(which can be hacked together) just to show
there’s a path for a very specific solution which
already can bring quick time to value.
— Patrick Hermann, Picus Capital

For pre-seed investments, Hermann says “you need a strong idea and a
first technical MVP (which can be hacked together) just to show there’s
a path for a very specific solution which already can bring quick time
to value. You also need a founding team with technical expertise,
including someone with a Ph.D., post-doc or any other academic
relevant background. Most importantly, you need a big vision, although
you don’t need product-market fit yet.”

When eventually approaching venture capitalists, RaaS firms should

be sure they understand the vision for the business and the
connection between where the company is starting from and its ideal
endpoint. “You need long-term investors looking for true partnerships,”
Hermann added.

What is Robotics as a Service? 8

At the seed stage, Hermann says they look for product-market fit
versus a specific revenue target. He’s also expecting the business
to have one-to-three successful pilots that are on track to convert
to generating RaaS revenue. The team should also have proofed its
ability to hire stellar talent with the first one or two good hires and
should have a plan to hire someone on the commercial side.

For a firm seeking Series A funding, $30,000-100,000 in monthly

recurring revenue (MRR) is expected, along with the first significant
addition to the base product. Beyond that, Hermann says “it’s all
about scaling, volume, and organization buildout.”

Finding potential investors

Given the capital-intensive nature of spinning up and growing a RaaS
business, potential investors must fit certain profiles, although more
and more generalist funds are now seeing the potential for robotic
automation and dipping their toes into the space. However, entering
into the RaaS domain may be new territory for traditional tech
investors.

“Salesforce.com doesn’t fall over when it hits a rock,” says Jeff

Linnell, founder and CEO of Formant. RaaS players will need to
educate investors along the way regarding the unique aspects of
RaaS compared to pure digital plays.

For most RaaS businesses still in their early stages, Hermann

recommends following in the footsteps of other robotics pioneers.

“Map out the investor market based on who else has invested
in similar robotics/tech companies at that stage,” he said,
recommending TechCrunch, Crunchbase and personal networks to
research this topic.

“Understand the goal, why I’m taking money, who’s the partner, and
what do I need from this partner” Hermann continued. “Create a first
wishlist, get warm introductions, and be bold. Ask other founders that
you don’t compete with directly for their guidance.”

What is Robotics as a Service? 9

Hermann also recommends that RaaS companies don’t put all their
eggs in one basket when soliciting investments by reaching out to
multiple potential investors simultaneously to create a sense of
competition and urgency in their fundraising efforts.

Winning them over

Investors hear tons of pitches from founders and CEOs all convinced
they’ve got the golden ticket and secret sauce to unlock the market
and reach great heights with their ideas and businesses. To break
through the noise and secure a financing offer, RaaS companies need
to demonstrate a few key things about their business and the market
opportunity.

“Many founders are great at talking tech, but only a few of them leave
the room/chat with an investor with clearly stating why their venture
it’s a massive opportunity for the investor & themselves,” Hermann
said. “All investors follow their theses on markets and a founder
should know them and pitch in a way that convinces the investor on
why their company fits into that vision.”

One winning ingredient is pitching more than just the hardware. RaaS
businesses should see margins at scale more comparable with SaaS
businesses than pure hardware plays, making them more attractive
to investors looking to get in on the automation and robotics wave
without adding a major outlier to their portfolio.

While most RaaS businesses seek funding for immediate growth,

expansion, and additional research and development, investors are
thinking about other things. What they’re really seeking from RaaS
businesses is achieving predictable, stable cash flow sooner rather
than later.

It’s also critical to delineate between hardware manufacturers,

software businesses, and the services model. For hardware
opportunities, Hermann says they will benchmark the technology
against other competition in the market, only investing if it passes
that comparison. He also advises against any hardware offering that

What is Robotics as a Service? 10

doesn’t include at least some software offering, as hardware itself
is rapidly commoditizing and margins will shrink as uptake ushers in
more competition.

On the software side of the house, they’re looking for a really strong
offering with a large enough market opportunity. Too often, Hermann
says, the value proposition for software alone is slim, and there are
far fewer barriers to entry.

For RaaS opportunities, investors want founding teams to be thinking

big from the beginning. Hermann is looking for companies with solid
plans for building out or buying the infrastructure to scale, a strong
core team, and an understanding of growth channels for the business.
These solutions also require infrastructure, logistics, operations, and
support, so if a business isn’t doing that already, they need a solid
plan for which components they’re buying from others or how to
utilize partners.

In particular, a growing number of prospects being funneled through

a primarily online sales process is a positive indicator for slightly
more mature businesses, as well as a commitment to and strategy for
educating the market during these early stages of adoption.

What is Robotics as a Service? 11

Alternatives to traditional funding sources
Raising money from angel investors, private equity firms, and venture
capitalists is the “typical” funding route that many startups pursue.
However, those aren’t the only ways to secure the cash a young RaaS
firm needs to build out its MVP, hire additional talent, and land a few
pilot customers.

Because robotic automation has such massive potential and ancillary

benefits, there are lots of research and grant dollars also available
to RaaS firms looking to fund their businesses. George Leno Holmes
Jr, PhD, co-founder of the RaaS startup Hire Henry, is developing
industrial robotic mowers for commercial organizations, and has
taken his company from crazy idea to pilot phase without any
venture or institutional dollars.

Instead of giving up equity, Holmes’s team has entered pitch

competitions, accelerators, and secured grant dollars to fund
operations to date. That includes a grant from the National Science
Foundation I-Corps Program for studying the commercial lawn care
industry with a focus on redesigning the job of mowing the grass for
Gen Z and Generation Alpha workers. With these funds, Hire Henry
has launched several pilots, deploying their mowers at the City of
Sugar Land, Texas Regional Airport and the City of Northwoods,
Missouri City Park providing their fully electric mowers to reduce
greenhouse gas emissions and fill labor gaps.

Customers may also find ways to pay for their RaaS deployments
using similar government funds. Additionally, there may be regulatory
and legislative pressure creating urgency for a RaaS solution, such as
California banning the sale of gas-powered lawn mowers by 2024. It’s
wise to keep tabs on how local regulations and laws make a particular
market segment even more open to RaaS.

What is Robotics as a Service? 12

Real Solutions for
Real Problems
Organizations and individuals buy things that address real, tangible
needs. When it comes to robotics-driven automation, there are
a plethora of potential applications, but for the most promising
prospects it all comes down to fixing ongoing pain points with a
vastly superior solution. Most organizations are unlikely to make the
significant shift to a RaaS solution if it doesn’t move the needle on a
persistent and growing problem.

Start by solving a discrete problem

Robotic automation will fundamentally change the world, from
increasing prosperity and abundance to reshaping how humans think
about work and labor. But it’s still very early days for robotics. Even
RaaS entrepreneurs with the grandest visions must first introduce

What is Robotics as a Service? 13

viable ways to address particular pain points for now since this
transformational journey is still in its infancy.

Most customers aren’t interested in buying “technology” but rather

using whichever methods, products, and services are available to
fill their needs. If using a few robots is the cheaper, better way to
do things, many organizations will give it a chance. But if a robotic
alternative can’t outperform the “old way” of doing business, there’s
little appetite for engaging.

Engagement requires RaaS entities to identify a very specific use

case where their technical expertise and assets can add significant
value. When starting Hire Henry, Holmes interviewed hundreds of
organizations to determine how best to solve the industry’s problems.

What they found were short-staffed parks departments and facilities

management teams unable to keep up with their mowing needs. This
led the company to a realization that the municipal and government
market was ripe for technological advancement, and they’ve been
able to achieve major successes, including generating contract
revenue. Their customers are able to let their robots handle the
mowing while staff use other tools for maintenance tasks less well-
suited to the current generation of robots.

Only after really nailing that point solution—including learning-based

iterations from successful field trials, pilots, and initial deployments—
should RaaS firms even begin introducing add-on features or pursuing
different vertical opportunities.

That’s not to say that RaaS teams can’t have a vision for how their
offering will expand and evolve. Those aspirations should be taken
into consideration when mapping out their technology roadmaps,
pitching their business to the investment community, or even
attracting top talent. But a narrow initial focus free from distraction is
essential to make sure the business does one thing really well before
branching out into new territory.

What is Robotics as a Service? 14

Hot industries for RaaS
There are some industries more ready for robotic automation
than others. What they all have in common is a need to complete
repetitive, labor-intensive tasks on an ongoing basis. This creates
a foundation for a strong business case due to the predictable,
continuing need for this service and an expectation that labor
shortages and/or labor costs will only increase, heightening the
demand for a viable alternative.

Logistics
Logistics mobility solutions were some of the first RaaS offerings
to make a splash, helping to automate warehouses and shipping
facilities. These were a perfect environment for robotic automation
since items are stored in an organized manner and the entire facility is
a controlled environment dedicated to the task.

Moving an item from Point A to Point B is an essential but relatively

simple task and robots equipped with bar code scanners and electric
eyes can take orders, scurrying down clearly marked aisles to
transport goods and package them for shipment.

Filics has automated pallet transport, including unloading and

loading them from trucks and rail cars as well as moving them about
warehouses. Kuka is helping the likes of Airbus and Mercedes-Benz
assemble their planes and vehicles with movable, heavy-duty robotic
platforms to maximize their productivity.

Coherent Market Insights has pegged this industry as the frontrunner

for RaaS, as the “logistics segment is expected to drive the market
growth during the forecast period. Among end use industry, the
logistics segment is expected to hold a dominant position in the
global Robot as a Service market during the forecast period.”

What is Robotics as a Service? 15

Agriculture
Agriculture is rapidly becoming a strong second-place market
opportunity for RaaS firms as well. Farms are always looking for more
efficient methods, from increasing crop yield to speeding up the time
from harvest to market due to the perishable nature of their goods.
The industry has also been forced to grapple with climate change-
driven droughts, flooding, and wildfires, not to mention severe labor
shortages.

RaaS solutions are helping agricultural firms overcome the economic

challenges of delivering high-quality produce at reasonable prices
and with predictable, consistent yields. Robotic automation allows
farms to overcome labor challenges and optimize harvests for
maximum yields while lowering watering, irrigation, pest control, and
fertilization costs.

Xihelm, for example, is deploying robotic harvesters for greenhouses,

while Neatleaf automates indoor cultivation. Outdoors, Muddy
Machines harvests crops up to 16 hours per day while Burro acts as
a “force multiplier,” automating the transport of human-harvested
crops in the field.

Property management
Real estate maintenance applications such as automated cleaning and
lawnmowing solutions are also picking up steam.

Many Walmart shoppers are no longer surprised to see one of Brain

Corp’s 10,000 robots cleaning the aisles (although they may not
realize that the same robot is also collecting valuable inventory
data) or Avidbots scurrying around and scrubbing floors in airports,
shopping malls, schools, and hospitals.

Robotic lawnmowers from the likes of Hire Henry and Mowfleet, and
will soon be trimming the grass in parks and along highways around
the world.

What is Robotics as a Service? 16

Construction
Large-scale construction applications are also maturing as builders
and general contractors look for ways to cut costs and mitigate
labor shortages without sacrificing safety or quality. From digging
out foundations and trenches with solutions from Built Robotics to
CANVAS finishing drywall on construction sites, there are various
entry points for RaaS firms to add value.

Other services
Personal services and healthcare applications are also prime targets
for RaaS solutions as entrepreneurs design and build offerings for
everything from delivering pizzas to disposing of hazardous biowaste.
Regulatory requirements can make the healthcare industry in
particular more challenging for a RaaS offering to break into, however.

What is Robotics as a Service? 17

Going to Market
When it comes to robotics automation, Formant’s Linnell is a huge
advocate for getting out of the lab and dealing with actual use cases.

“Successful RaaS businesses are fearless,” Linnell said. “Put the

hardware out early and get real-world experience. You get invaluable
field knowledge versus developing for years and then realizing you
were wrong. Break things fast and iterate.”

But there’s only so much a burgeoning RaaS business can achieve

without bringing some early customers along for the ride. Here are
some strategies for going from concept to pilot to full deployments.

Solving labor shortages vs. replacing humans

A common misconception is that robots are going to steal jobs from
humans, forcing large swaths of workers out onto the street while
faceless machines perform their previous tasks faster and better than
they ever could. While it is true that robots do perform tasks once
completed by humans, that doesn’t spell disaster for those workers.

Robots seldom take the jobs workers want to do because robotic

automation is best suited for simple, repeatable tasks. This is why
robots first made a splash on assembly lines, which are by their very
definition a series of repeatable tasks.

Instead of cutting headcount thanks to robotic automation,

organizations can instead maximize the staff they do have on the
payroll. This includes reallocating them to other areas also facing a
labor shortage but less appropriate for automation and leveling them
up into more skilled and rewarding positions.

Additionally, robotic automation creates new opportunities for

staff looking to build new skills and explore different roles. Robots

What is Robotics as a Service? 18

aren’t truly autonomous and still need operational oversight,
troubleshooting, maintenance, charging, and distribution, which
usually falls on human staff that can now manage the fleet.

It’s also a helpful reminder that machines already perform many tasks
formerly handled by manual labor. From washing dishes to harvesting
corn to opening garage doors, we now take it for granted that there
are better things for people to do when a machine can perform a task
easier and cheaper than a person can.

Reiterating the fact that these robots aren’t taking away jobs should
be fully ingrained in how RaaS companies research and approach
prospects and get reflected in the business case and ROI calculations
being marketed as part of the pitch.

Touting the full spectrum of benefits

While some organizations may be champing at the bit to utilize
robotic automation, others may take significantly more convincing,
particularly when it’s a completely new application or their industry
peers haven’t yet taken the plunge. Making a comprehensive case for
RaaS means going beyond a strictly financial ROI.

More hours, fewer mistakes

Robots don’t need bathroom breaks or lunch hours, so even when
deployed 40 hours per week they’re already far more efficient than a
human doing the same job. But with the ability to work, 10, 12, or 14+
hours per day, each robot can often double or triple the efficiency of
workers previously assigned to those tasks.

Advances in battery life and rapid charging technologies could soon

lead to robots operating nearly around the clock in some cases. But
this increased service time highlights the need for better remote
management tools and visibility into how the robots perform and their
physical locations and states.

This is another area where RaaS providers are relying on remote

management platforms and other services from third parties. Instead

What is Robotics as a Service? 19

of building those tools from the ground up, they can incorporate
purpose-built, off-the-shelf software that collects and aggregates
all the sensor data each robot collects, enabling a single member
of the operations staff to monitor dozens if not hundreds of robots
deployed in the field.

On-site support may be needed to intervene when robots encounter

tricky situations, get stuck, break down, or must be retrieved for
relocation or charging. But RaaS fleet management tools offer those
operators a dashboard for the entire deployment, creating higher-
skilled, better-paying jobs.

And since robots are best suited for repetitive tasks, in many cases
their error rate is far superior to that of their human counterparts. For
example, installing drywall is a laborious task requiring lots of sanding
and finishing, but multiple firms have introduced robotic solutions for
this purpose.

Since the robots have sensors specifically tuned to create

consistently finished drywall, jobs get completed faster and have a
reliable, homogenous finish. Humans can then touch things up and

What is Robotics as a Service? 20

handle the less standard spaces, but the overall job timelines and
labor requirements can shrink significantly.

For nearly any task, the robots don’t mind completing the job by
meeting the precise specifications and level of detail a human worker
might struggle to achieve in the same period of time. Unlike their Unlike their human
human counterparts, robots thrive when things are really boring and counterparts,
monotonous, with daydreaming and fatigue replaced by rigorous robots thrive
quality control and measurement. when things are
really boring and
Environmental wins monotonous
Many corporations and government entities have sustainability
reporting requirements and specific targets they’re either legally
obligated to meet or shooting for as part of their overall sustainability
strategy. RaaS solutions have plenty to offer in this department.

For starters, the vast majority of robots are powered by electricity or

rely on rechargeable batteries. Since organizations are on permanent
lookout for ways to reduce their carbon footprint, RaaS solutions
provide multiple positive contributions in this department, especially
when customers source their electricity from solar, wind, or other
renewable sources.

If the robots replace a different machine powered by fossil fuels

or decrease the need for gas-fueled transportation of staff, these
CO2 savings make perfect fodder for both their annual corporate
social responsibility (CSR) reports and for making a business case
that extends beyond just dollars and cents. Although high fuel prices
alone might make a convincing argument for automation, cutting
toxic emissions and reliance on foreign imports also sweeten the pot.

Cutting another type of pollution

Not only do electric motors consume fewer fossil fuels—if any—nor
spew noxious fumes on-site, they also cut down on noise pollution.
Indoors this means quieter workplaces and reduced danger of hearing

What is Robotics as a Service? 21

loss or other damage for the humans working in the same location.

But the real wins in this department come when robotic applications
happen outdoors and near the general public. For example, while a
weekly visit from landscapers is usually accompanied by a cacophony
of gas-powered lawnmowers and leaf blowers, battery-powered
robots hum along at a much lower decibel level.

This causes less disruption and fewer complaints from nearby

residents or workers going about their day. It also allows robot crews
to begin work earlier in the morning and run later in the day when that
practice doesn’t run afoul of local regulations.

Positioning pilots for success

For any RaaS venture, everything’s theoretical until it gets a few pilots
under its belt. No matter how many simulations are run or edge cases
considered, no one really knows how a solution will perform in the
real world until it’s actually out there.

Successful pilots often include a few key elements:

A game and willing customer

Eventually, every RaaS business must try and win over skeptical
prospects. But starting off with two or three customers that are open
and excited about the opportunity robotic automation represents will
both yield better results and be a far more pleasurable experience.

First, those customers viewing the pilot as a partnership will likely

provide far more useful feedback. They won’t sugarcoat what’s gone
wrong, but they’ll also share the positives just as enthusiastically.
They’re hoping the solution succeeds just as much as the RaaS
business is, making it a more collaborative than combative relationship.

Also, these types of pilot customers are usually much more accepting
of the tweaks and modifications to be made based on some of the
early rough patches and unforeseen obstacles the pilot encounters.
When a robot gets stuck in a ditch or its sensors get covered in mud

What is Robotics as a Service? 22

 or it drops a pallet on the warehouse floor they’ll be more willing to
chalk it up as a learning opportunity rather than proof the solution
won’t work or isn’t ready for the market.

Hermann says that ideal pilot customers are usually businesses run
by younger leaders open to new ideas or relatively new industries still
figuring things out themselves, such as cannabis farmers trying to
optimize their yields or the next generation of a family farm interested
in modernizing their operations. They’re also likely to be far more
comfortable sharing important data the RaaS business needs to
optimize and enhance their offering.

Dr Holmes also urges RaaS business to include terms regarding how

the company can share the results of any successful pilot. This
scrubbed data can serve as excellent fodder for whitepapers and
case studies, which will help convince future pilot prospects of the
efficacy of their solution.

Ideal pilot customers are usually businesses run by

younger leaders open to new ideas or relatively new
industries still figuring things out themselves.

“Whitepapers are gold,” Dr Holmes said of their utility during the sales
cycle and for fundraising. “They see the hard data and calculations,
and the final number is really impressive with how much they’re
saving and how much productivity they’re increasing.”

A limited scope
Early pilots should try to do one thing well on a relatively small scale.
No unproven RaaS firm should approach a prospect and, for example,
offer to automate an entire farm. Instead, start with a single field and
solely focus on harvesting or yield optimization.

What is Robotics as a Service? 23

This narrower approach has a few benefits. First, it doesn’t
overextend a young RaaS outfit that may not have the staff to
monitor a larger deployment or enough actual robots to do all the
work, especially since earlier generations of hardware are much more
expensive than when production scales up.

Second, it’s easier to make those on-the-fly changes based on how

the pilot is going. Instead of having to apply a hotfix to the firmware of
dozens of automated robots or replacing a component on hundreds
of machines, the team only needs the time, resources, and equipment
to update a few of them.

Another plus of a limited pilot is that it creates a natural control

group. By automating only a portion of the customer’s operation, easy
comparisons can be made between the incumbent process and the
RaaS solution.

And by only trying to perform one task with RaaS, it’s much easier to
assess and prove the superiority of the RaaS solution. When robots
are doing too many things at once it’s less clear to evaluate the net
benefits of each function.

A broader set of stakeholders

Another ingredient for success is to engage more broadly with pilot
customers. For Holmes’ Hire Henry, they don’t limit conversations to
the operational teams that will interact directly with the robots.

From the earliest stages of discussions, George’s team takes a much

more inclusive approach. They’re talking to human resources about
how robotic automation could make jobs more desirable to future
workers and discussing the net environmental benefits of electric
robotic mowing with folks in the sustainability office.

Hire Henry also makes a point of engaging with the technology and
innovation parts of customer organizations so they can plug their
solution into the broader technology roadmap. These departments

What is Robotics as a Service? 24

are critical to finding additional funding and giving the project internal
support. Plus they also must often greenlight any new addition to the
organization’s technology portfolio.

Connecting with departments responsible for liability and risk

early and often is also key. They’ll also need to approve a RaaS
deployment at some stage, and the groundwork laid with those teams
at the outset makes it much easier to expand the pilot into a larger
implementation after the data prove its feasibility.

Clear and measurable goals and objectives

For any pilot, what qualifies as “success” should be settled on well
before the first robot is powered on. This protects both the customer
and the RaaS business while ensuring stakeholders on both sides are
completely aligned.

RaaS firms can set the stage for this conversation by assessing the
current operations expenses, required labor, environmental impact,
and efficiency. These are the numbers the pilot must equal if not
better to qualify as a success.

From that starting point, the RaaS business can calculate the
expected savings and productivity gains from their solution. With a
little bit of padding, these can serve as a starting point for an ROI
calculation and target for the pilot.

Ideally, the terms of the pilot also include automatic expansion of

the deployment based on reaching those goals. If those targets are
met, the pilot should be deemed “successful” by the customer and
a framework is already in place to build on the pilot and start scaling
things up.

Thorough onboarding and training

Each pilot’s success hinges on execution, some of which may be out
of the RaaS provider’s hands once the robots are deployed onsite.
The overall pilot depends on customer staff knowing what to expect,

What is Robotics as a Service? 25

how to troubleshoot, and having the right structures in place. Until
robots can recharge themselves, refill their own consumables, and
perform their own maintenance, on-site customer staff will play a
huge role in the relative success of each and every deployment.

Think through everything that must be in place to ensure a successful

pilot and bake that into the pilot plan. Whatever tasks customer
staff may be expected to perform should be covered during this
onboarding and the process should confirm that those employees are
fully capable and informed before turning things over to them.

There should be clear support and escalation procedures in place

(including a dedicated account/customer success manager),
documentation available, and a plan for training up new staff as the
pilot expands or staff turnover occurs. Make them feel like partners
with a stake in the outcome during this training so there are built-in
allies within the customer organization.

Real-time visibility
Both RaaS businesses and their pilot customers derive real benefits
from a steady stream of data coming out of these early deployments.
Creating a dashboard that aggregates and provides easy access to
these insights keeps everyone engaged and informed, leading to
faster actions and expedited expansion.

Working with pilot customers to define exactly what metrics they’re

interested in tracking upfront ensures the right instrumentation is in
place. Then, with agreed-upon success metrics and targets in hand,
RaaS companies can give their pilot customers a regular glimpse into
how things are progressing using the language, terms, and metrics
they understand and that apply to their own businesses.

This level of transparency may feel uncomfortable—particularly until

the kinks are worked out—but an open and honest exchange of the
facts builds trust with the customer and removes any suspicion that
the business might try to fudge the numbers to secure a larger rollout.

What is Robotics as a Service? 26

RaaS firms must be confident that they can deliver the value they
promised and back it up with the numbers that demonstrate that.

Location, location, location

This is one area where RaaS companies and their backers may have
a difference of opinion. On one hand, local pilots are much easier to
manage and monitor since staff can be onsite whenever needed to
both watch what’s happening and intervene when necessary. Early
customers may take comfort knowing someone local is on call if
anything goes awry.

However, with the right cloud-based management and operational

services, pilots can be successful from further afield. For example,
Hire Henry has pilots running all over the United States, having built
out a national pilot program with a waiting list.

After site surveys, initial configurations, and customer training,

RaaS companies can easily monitor progress from afar and when a
robot finds itself in a tricky situation, the company can use remote
operation capabilities to address most issues. Some on-site support
from the customer or a local employee/contractor may be needed
at times and their observations and feedback are critical inputs into
the iterative development and enhancement of the solution. But
thanks to all of the sensors, computer vision, and remote controls,
their manual intervention should be limited to times when the robot
physically can’t “fix itself” or needs to be relocated.

What is Robotics as a Service? 27

Setting the Stage
for Growth
MVPs, pilots, and early-stage fundraising are important steps in
growing a RaaS business, but teams shouldn’t overlook the steps they
can take today to effectively scale tomorrow.

Ditch the DIY mentality

One turning point in every business’s trajectory is when they figure
out that if they want to do things at scale they can’t do everything
themselves. This requires a careful self-examination to determine
what are the things they must do in-house because there are
no viable alternatives or it’s core to how they’re valued by the
investment community.

Build solutions, not robots

In the RaaS business, this evaluation begins with the hardware. Even
the most specialized applications can often be performed using
robots assembled using off-the-shelf components.

For many founders, building robots from scratch is the fun part,
but that thinking runs counter to a successful RaaS model, which is
bringing solutions to market at scale as cheaply as possible. Rolling
your own is seldom competitive at scale.

If there really is no other choice, the company can still develop its own
hardware, but they should really limit those efforts only to those parts
that no one else offers at an attractive price point, otherwise relying
on a platform built with third-party parts. This will keep the cost of the
overall robots down—which makes it easier to turn a profit and sell the
service at a lower price to improve the ROI for customers.

What is Robotics as a Service? 28

Another benefit to limiting hardware development to specialized
pieces is that robotics staff can spend more of their time on the parts
that really differentiate the company. And as time goes on, the team
can continually seek out cheaper, lighter, and superior components,
creating less expensive, more durable, and superior robots for their
customer engagements.

Rely on third-party software platforms and apps for

non-core capabilities
The same tenets for hardware development mentioned above also
apply to the software side of the equation. While the application-
specific code may be best designed and written in-house, there are
a host of software offerings that can handle many functions common
across RaaS solutions.

These solutions eliminate the need for RaaS companies to build their
own software solutions for sending robots commands (even when
they’re offline), managing data uploads from the robots, aggregating
Do one thing really
that data, and turning it into a useful management console and
well while having a
reporting dashboard. Issues are identified faster and remote
vision for what else
corrections and fixes can be performed to minimize any disruption.
robotic automation
could offer those
The RaaS model depends on those businesses managing greater customers
and greater numbers of robots per employee, so it makes sense to
leverage the ready-built tools designed to make that a reality and
reduce the need for expensive on-site visits. These tools also don’t
require PhD-level familiarity with robotics so operations teams can
find talent more easily.

These tools not only help RaaS businesses manage significantly

larger deployments, but also provide the information needed to show
customers the value and productivity they’re getting from the service.

Have a plan, but be open to changes

The best practice for early-stage RaaS companies is to do one thing
really well while having a vision for what else robotic automation

What is Robotics as a Service? 29

could offer those customers. This vision is what motivates
colleagues and prompts investors to open their wallets.

Figuring out when to add a second core capability will depend

on many factors, including how successful initial pilots are, the
incremental cost of adding on new functionality, cash flow, and
talent. But it’s a good idea to determine which milestones the
business must hit before kicking off the research and development,
design, build, and go-to-market activities for each new product or
line extension.

However, RaaS business leaders should be wary of getting too firmly

committed to their roadmap for market domination. As they land
more pilots and develop deeper customer relationships, they may
find that their customers have other ideas for how to put a new
fleet of robots to use. That street sweeping robot could also spot
potholes, but the customer may see more value in reading license
plates and issuing parking tickets instead.

Remaining open to new ideas and partnering with customers to

explore those possibilities may uncover new applications that
weren’t even on the radar beforehand or way down the list of
priorities. With a customer-centric approach, RaaS companies can
stay nimble enough to seize those opportunities and expedite their
growth and customer value.

Line up funding sources before they’re needed

Once a RaaS solution begins gaining traction and garnering press
mentions in a given industry, the sales pipeline may soon be swelling
with eager prospects looking to get on the bandwagon. This is
certainly good news, but RaaS companies may quickly run into
money problems if they’re not thinking ahead.

Since the RaaS business model usually takes years to pay off the
hardware for each deployment, companies need a way to front the
cash for more robots to service these additional customers and

What is Robotics as a Service? 30

expanded deployments. Going from 10 robots to 100 or 1,000 requires
more than a higher credit limit on the company credit card.

While additional investments might cover those costs, closing those

deals takes time and further dilutes current shareholder equity.
Although that may be worth it some of the time, RaaS companies
should also line up lines of credit and other debt financing options
that allow them to quickly increase their purchasing power without
another investment round.

The last thing anyone wants to stifle growth are easily preventable
cashflow issues. And don’t forget that all those extra robots will
probably require increased headcount as well to maintain a high level
of service and deal velocity.

What is Robotics as a Service? 31

RaaS Will Fuel the
Future of Robots

Most businesses don’t want to own robots. They

don’t want to maintain them, fix them, upgrade
them, or even figure out the best way to use them.
They have dull, dirty, and dangerous tasks that
robots can handle and they want specific solutions
that do just that.

By offering robotic automation services, RaaS

providers are fixing the “last mile” issue by crossing
the chasm between intellectual curiosity in robotic
potential and actually putting them to work solving
real-world problems today. These pioneering
businesses are learning a ton about what
happens when robots start working in real-world
environments and have first-mover advantage in
these markets.

What is Robotics as a Service? 32

However, scaling up from a few pilots to having
tens of thousands of robots in the field across
hundreds of customers presents a whole new
set of challenges. For RaaS businesses to survive
and thrive as pilots turn into large deployments,
remote management is a must-have item. The
cost of supporting each incremental robot in the
fleet must go down for these businesses to remain
financially viable.

The market is rising to the occasion with

purpose-built platforms and tools to expedite
that process and let RaaS businesses focus on
their core products and services. Smart leaders
will investigate and invest in these enabling
technologies now so they can progress to a fully
scalable solution as quickly as possible.

What is Robotics as a Service? 33

What is Robotics as a Service? 34