Entrepreneurs

The $2,100-A-Month Factory Robot: Rapid Robotics Pushes To Automate Small Manufacturers, Helped By $12 Million In New Funding

Forget big, fancy robots. Rapid Robotics wants to spread its robots, which are inexpensive and programmed to do very simple jobs, at small manufacturers across the country.

“The big brand name customers like Home Depot and Sam’s are not the customers that we are going after,” says cofounder and CEO Jordan Kretchmer. “Those are the 2%-ers. We are going after the 98%.”

Its machines do simple work, like heat stamping, fastener insertion and pad printing that are basic, exacting and repetitive — and the type of jobs that small factories have had trouble hiring enough people to do. To date, the San Francisco-based startup has deployed nearly 100 robots at clients in the Bay Area, bringing in revenue that Forbes estimates in the range of $2 million to $3 million. But it’s got plans to expand rapidly, especially at small manufacturers in the midwest and southwest, where Kretchmer says it’s seeing a lot of interest. To fund that expansion, he tells Forbes, Rapid Robotics has raised $12 million, led by NEA. The new investment brings Rapid’s total funding to $17.5 million, at an estimated valuation of $40 million.

Rapid’s orange robots look as basic as can be, but their differentiation is inside with AI-driven software and vision systems. In a video that Kretchmer shows over Zoom, for example, a robot hot stamps a logo onto a coffee maker. Other robots can operate pad printers that are used to create tagless labels on apparel or print onto plastic and other materials. “We were going to name it the Boring Robotics Company, and then Elon came around and stole it from us,” Kretchmer says. “We don’t have a robot that shows off all its fancy footwork. We have a robot that can be programmed using AI to do very specific tasks that are ubiquitous across manufacturing facilities, especially contract manufacturers.”

Last year, for example, Westec Plastics, a Livermore, California-based firm that makes medical testing kits, saw its orders for PCR tests that could be used for Covid-19 soar from 400,000 to 4 million in a quarter. But with social distancing rules in place, the company had to halve its number of employees, making fulfilling that demand extremely difficult. “They called us in and said, ‘We have to start production on these now,’” Kretchmer says. The PCR test kit components come out of injection-molding machines connected in groups of four and need to be snipped apart; Rapid’s robots pull them out, put them into a gate-clipping machine and then onto a conveyer belt — simple, repetitive motions done over and over again.

To appeal to small manufacturers like Westec and component fabricator Fabri-Tech, Rapid operates on a subscription model, and charges $3,750 a month per robot in the first year and $2,100 a month after that, including support and maintenance. It recently switched its pricing from annual to monthly to further appeal to firms with tight margins and low budgets for capital expenditures.

A few years ago, the key patents on the ultrasonic positioners used in most robots expired, allowing smaller, cheaper robots to be created, explains NEA general partner Forest Baskett, a member of the Forbes Midas List who led the investment. “Now you really see the effects in the marketplace,” he says. “The robots are a lot cheaper, and you can imagine that if you can solve the software problem you can use small, cheap robots to do the tedious stuff that is otherwise done by people standing for hours and hours and hours in one place and moving their hands and coordinating their eyes, which is a mind-numbing activity that no one wants to do.”

“In the U.S., you either develop this kind of capability or you need to go offshore.”

Kretchmer, 37, is not a robotics geek, but found himself in the robotics business almost by accident. He grew up in Coppell, Texas, a small town north of Dallas, and started out as a user-interface designer. His first business, Livefyre, which launched in December 2009, ran an online commenting system and other audience engagement tools for customers that included Coca-Cola and CNN. It raised $67 million in funding and was purchased by Adobe in 2016 for an undisclosed sum. “It was the school of hard knocks in enterprise software,” says Kretchmer, who stayed at Adobe for a few years after the acquisition. “That was an enterprise subscription model. I cut my teeth and learned everything.” 

It didn’t take long for investors to come calling. “They said, ‘I’ve got these industrial companies in my portfolio, and we’re trying to figure out how to impose an operating expense business model.’ After the third one of these, I was like, ‘What’s going on? I need to look at the industrial space,’” he recalls.

In October 2019, he teamed up with Ruddick Lawrence, who is now Rapid’s chief technology officer. Lawrence, 35, had previously run the software group for Intuitive Surgical, makers of the widely used da Vinci surgical robot, and was vice president of engineering at Carbon Robotics, a manufacturer of low-cost robotic arms that shut down that fall. The two were introduced by a Carbon Robotics investor. “I surround myself with people who are really good at things I am not,” Kretchmer says. “We deployed our first robot three months after we founded this company.”

Unlike many robotics startups, Rapid spent zero time on hardware development. Instead, Kretchmer and Lawrence decided to simply buy off-the-shelf robotic arms, strip them of their existing software and install their own proprietary artificial intelligence and vision systems. “It just looks like an arm, but it is a super intelligent arm about these very simple tasks,” Kretchmer says. The grippers they use are also basic – and 3D-printed so that if they break Rapid can simply print out a new one as a replacement. “We treat all the hardware as throwaway, as commodity,” he says.

Before investing in Rapid, Baskett – who is also invested in robotics firm Berkshire Grey, which is planning to go public via SPAC, and a number of other robotics companies – says he looked at several other similar firms, including one based in Germany, that offered basic robots that could do simple factory tasks. Deloitte and the Manufacturing Institute have estimated that U.S. manufacturers may have 2.4 million open jobs by 2028.

“It’s clearly a big need,” Baskett says. “You might not want to go that way if you had a huge supply of cheap labor, but we don’t. In the U.S., you either develop this kind of capability or you need to go offshore. We are losing our manufacturing capability in the U.S.”

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