Posted on April 16, 2021 by John Ripple
VC-funded mobile robotics upstarts --- you struck the lottery!!! Now what are you going to do with the money? Flashy new offices? Big splash at a trade show? Double-down on your AI initiatives? Hold up. If you want to create shareholder value, you need to create customer value. That means solving customer problems. Flashy offices and trade show booths are a distraction. Let’s explore what it takes to be successful in the world of industrial automation. Shall we?
First, we shall dispel with the myth that warehousing is a controlled environment and therefore ripe for automation. Ask any veteran warehouse manager, and they will quickly confirm one of top reasons they like their job is “every day is different”. The US Census Bureau conducted a survey in 2018 and found that advanced technology in warehousing was single digit market penetration. If it was easy, anyone could do it (and it would already be done). But you got funded to deploy your flashy new tech, so now it’s time to figure things out. Let’s go!
1. Relationships sell. Not pitch decks.
You thought VC investors had short attention spans for long slide decks? They’ve got nothing on a warehouse manager! The VC investor wants you to do well and make them buckets of money. The warehouse manager doesn’t have enough time in the day and your offering doesn't make their top 5 problems to solve TODAY.
A fancy pitch deck from someone they don’t know isn’t going to convince a warehouse manager to put their job on the line for some ground-breaking new tech. That takes strong relationships and trust. Which takes time. You’ve got to earn it by doing what you say, again and again.
VC startups… spend less time perfecting a sauve presentation and more time developing relationships and understanding what your customers need. In 20+ years of selling multi-million-dollar warehouse automation systems, I can’t think of a single sale where a PowerPoint presentation clinched the deal.
Do you need a pitch deck? Yes. Functional and professional. Sure. But it only reinforces the credibility you’ve earned by working hard to develop a strong solution, a strong relationship, and trust.
While we are on the topic of relationships and trust. You can’t do that remotely. Zoom doesn’t cut it. You’ve got to go see your customers in-person. Anybody who says they can do it remotely is only remotely correct. Wait, scratch that. They are wrong.
2. Build it Tough.
The real world ain’t no university lab! However durable and strong you thought would be enough, double it! Most warehouses (that need automation) run 24 hours a day, 7 days a week. This isn’t a lab where you show up and run the equipment 7 hours a day for a semester.
Those jokes you see on the internet where all maintenance has is an adjustable wrench, duct tape, and baling wire isn’t far from the truth. In reality, they have an adjustable wrench, electrical tape, a hammer, and 2 or 3 screwdrivers. They are overworked and underpaid. Frankly, they didn’t spec out your equipment, and while they’ve got a job to do, they won’t cover your butt for any design deficiencies.
If there was an area where you thought you could design it “just the right size”, or that a certain motor, battery, wheel, whatever, should be just right, rest assured, the real world will turn marginal designs into demonstrable failures. It may take 6 months; but any aspect of the design that wasn’t over-engineered will turn into premature mortality. Don’t let product mortality be the early demise of your budding startup.
Maintenance? Sure… when it breaks, the customer will fix it. Most maintenance literature reads as-if machinery will spend more time getting lovingly maintained than it does working. If you specify that equipment needs a daily check… you can be sure it will be given a quick once-over when maintenance responds to a problem. Otherwise, let er’ run!
Don’t scoff at machinery manufacturers that have been building industrial machines for the last 30-40 years with what seems like (to the outsider) designs past their prime, over-sized, or too heavy. Those machines will still be running 30 years from now.
3. Systems will take 2X longer to get running than you expect.
The first systems (frankly, most systems) will take 2X longer than expected to get running. Meaning, if you think it should take a week, and you’ve budgeted 2 weeks for the first few systems, it really means it will take 4 weeks. Queue up all the “yes, but our technology, solution, planning… will avoid that”. Be prepared that it will take 2X longer than planned.
That fact that it took 2X longer than planned isn’t really the big deal. It’s all VC money anyway, right? The first few systems were nearly given away, so does it really matter? Be honest, your customer already doubted the schedule in their heart of hearts, so don’t lose any tears on behalf of the customer. It’s your people that take the brunt.
The engineers that signed up to develop the product just spent the last few years working in the lab. They probably went home to sleep in their own bed every night (such a nice thought, eh?). Urgency to meet milestones were self-imposed. Now it’s deployment time! The engineers were excited to go on an all-expenses-paid work vacation and see all their hard work come to fruition!
The first 90-hour week and sleeping in a hotel was fun. The second 90-hour week was needed to get over the hump of a few unforeseen challenges – but doing laundry in a hotel kind of stinks. The third 90-hour week? Um… when do we go home to see our family? This is getting old. Cheer up, take a long weekend at home, and we’ll see you back next week! The fact is, project startups are hard on people.
It’s hard when your own baby (tech you worked so hard to develop) isn’t working like expected. It’s doubly hard when you are away from home, short on sleep, with a grumpy customer breathing down your neck. Things that worked so well in the lab, don't always work in the field. People get burned out and frustrated. Some of your very best will decide this isn’t what they signed up for. Welcome to supporting 24x7 operation!
4. People don’t WANT what you sell. They are told that they NEED it.
Industrial warehouse automation equipment is not the latest iPhone app. This isn’t the latest video game. It is not a (disposable) discretionary consumer device. It is industrial equipment. Sure, it may include some tricked out software. At the end of the day, nobody really WANTS industrial robots. The people responsible for operating and maintaining the robotic system don’t WANT it. Somebody (umm… management) told them they NEED it.
Are some people excited for the new system… yes… but that new car smell wears off pretty quick! When the startup is going a bit rough, that excitement gets forgotten so fast your head will spin. Sure, you got management buy-in. But management buy-in and boots-on-the-ground people running the system buy-in are two different things.
You know the drill. The warehouse floor people that are responsible for success of the automation may have told management “we’re so excited”. But what they wished they could say was that they had enough work to do already, and the old process was working fine. That, and give us a raise!
What does this mean? It means you need to show up with solutions that provide value and smooth startups. If you steamroll into success, it doesn’t give the naysayers room to say, “we told you so”. The equipment better be solid and the software stable. You’ve got about a 4- week grace-period from go-live to reliable operation. Beyond 4 weeks of headaches, and you’ll be losing support from the people who matter most to your success.
If you are brimming with confidence at the thought of 4-weeks, it means you haven’t really lived through a complex startup. Start thinking about how you can phase in the startup with a soft start and gradual ramp up. You’ll need every day you can get and don’t want to burn out customer goodwill on the way to success.
5. Customers are gold. Did we already mention relationships sell?
People don’t buy from startups. People don’t buy from pitchdecks. People don’t buy cool technology. People buy from people. People buy from people they trust. Why are they trusted? They are responsive, honest, knowledgeable, and friendly. They are trusted to provide good solutions and go to bat on behalf of the customer.
Friendly, but not knowledgeable. No thanks.
Honest but not responsive. No thanks.
Offer a good solution, but don’t go to bat for the customer. No thanks.
Slick pitch decks? Nope. Fancy trade show booth? Nope. Fancy website? Nope.
If you want to sell complex, multi-million-dollar projects that make-or-break careers, it is the relationship. The customer doesn’t NEED what you’re selling. Status quo doesn’t get people fired (it may lead to eventual demise, but rarely results in termination). A project gone awry with a new startup? That can get you fired.
Some VC backed startups have a bit of runway ahead before they need to start knocking down big orders. Word to the wise: find a highly experienced, well-connected sales executive that knows warehouse automation intimately. Someone with at least 15 years of applicable robotics/automation experience. They’ll know which doors to knock on and what to say to get those doors to open. Will they cost you dearly? Yes, they will. Do you want to wait until you’re at the base of your hockey stick growth curve to hire them? Nope, too late. Think you can pick up a few SDR’s fresh out of college to do the same thing. Good luck.
6. Service, Spares, Support. 24x7. Right now.
How do you lose the confidence of your customer? Poor service. Poor spare parts availability. Inadequate support. You may have performed flawlessly on the project, but if you can’t support the customer after the sale, the solution is a failure.
On the surface, customer service sounds easy. You’ll keep a few spare parts in stock. When customers call in for a part, they’ll know just what they want, and you’ll ship it out 2-day delivery. Poof! Happy customer. If only it was so easy. Some of the components this year are different than before. The camera you supplied on the project is no longer available and the firmware needs to be changed for the updated model. The camera body is smaller and the focal length changed, so now the robot doesn’t position properly. The challenges don’t get easier as your customer base grows, the variety of equipment offered grows, and you get a few years under your belt.
It is the rare customer that knows what part they need every time. Even though your documentation was perfect, right? You’ll be tracking down parts based on “it’s an orange-ish’ looking box and I don’t see a part number anywhere…”. Oh, and production is down – so can you get that part today? What does this mean? Your customer service department needs to be staffed with engineers, not “CSRs” (customer service representatives). You need to find engineers uniquely suited to dealing well with customers in stressful situations that communicate well in writing and on the phone. Easy, right?
And… if you recall, the operations you are supporting run 24x7. By the time the customer calls, they are already desperate. They’ve tried to fix it themselves and they are stymied. They’ve made 3 other things worse trying to “fix” it. Now they are out of time. Oddly, they don’t need help after your daughters soccer game is over or when you’ve finished a nice dinner at the restaurant, they need help NOW! Sometimes it’s a 3-minute fix, because your engineers are so smart. Other times it takes 3 hours… because… well, clearly that was someone else’s fault!
Service, spares, and support will become a significant source of revenue and an even more significant share of profits. You’ll need to strike a balance between using service-related profits to enable growth in other areas of your business… but without choking your existing customers with egregious support pricing. Offering remote support free of charge implies that you don’t take support seriously. Nobody expects good service to be free. Make it fair.
7. There is no substitute for real life experience.
They say, “perfect practice, makes perfect”. Unfortunately, in the world of industrial automation there is no such thing as perfect practice. Only hard-won experience. You can hear the engineers already… “but, it’ll be tested…”. Yes, in a practice environment!
Much like the musician that practices a song at home --- and it sounds awesome! It’s a different gig to stand on a stage and play for a thousand rabid fans! You need to practice at home. Then you practice in a small venue. Then work your way up to the world-tour superstar concert. It’s the rare musician that goes from their bedroom straight to super-star. It’s an equally rare robotics company that goes from the lab to full-scale production and doesn’t choke.
The “I’m so Smart, Hair on Fire” experience curve applies. In the early stages of a new company, the problems encountered are manageable (often by brute force), leading people to conclude their company and solutions are “so smart”. When the company encounters rapid growth, the problems arrive fast and furious, exceeding the experience level of the company, leading to Hair on Fire!
Unfortunately gaining experience takes time. There is no hockey-stick growth curve for experience. Indeed, you can intake new orders with a hockey-stick growth curve, no denying that. The hard part is delivering. By the time you learn something was wrong and fix it, it’s already a problem on 3 other projects. It’s a whirlwind of chasing problems and deploying fixes up and down the order book. Don’t let growth outrun experience.
8. Project managers will make you or break you.
Not long ago there was a webinar hosted by one of the leading VC-funded mobile robotics firms aiming to build a foothold in the North American market. Loosely paraphrasing, they said: “We give our project managers a template, they follow the template, and the projects are great. One week of tuning and we are done. The system is so flexible.” This is for projects that include dozens, if not hundreds, of mobile robots working in concert with humans.
There are two typical reactions:
There are many assumptions that could be drawn from that quotation, but we’ll stick to the topic of project managers. Complex industrial automation projects rarely follow a prescribed template where projects are “great”, only require one week of tuning, a round of high-fives, and a follow-up customer testimonial video two weeks later. Projects are complex, dynamic, and people are involved.
There are a million details to sort out, schedules to rework, resources (people) to juggle, changing customer requirements, evolving technical challenges, and budgets perennially short on dollars and hours. Project managers will make you or break you.
If you hire project managers thinking “they’ll follow a template and projects are great”, you’ll be hiring the wrong people. Aside from technical capability, project managers need to check a few boxes:
You get the idea. You need someone with experience in the critical role of project manager. If you think the job entails following a template from A to Z, you’ll be disappointed. The good ones aren’t cheap.
9. Integrator partners can help and hurt. Choose carefully.
You’ve got a great solution that solves a critical problem. Question is, how do you find customers and how does your solution fit into the customer operation. Often a systems integrator can help.
First, there are differences between material handling dealers and integrators. A dealer represents the manufacturer and typically focuses heavily on parts and service. Dealers are typically exclusive to a limited number of manufacturers and territory. Dealers are usually less focused on “solutions” unless those solutions include the products they represent as a dealer.
An integrator is focused on developing solutions, usually focused on a small number of customers or industry verticals. Most integrators do not offer exclusive representation to manufacturers. Many integrators claim to be equipment “agnostic”, and for the most part that is true. However, integrators employ people. People work with solutions they are comfortable with and like. Agnostic; yes. Human bias still applicable; yes.
If working with integrators is part of your go-to-market strategy, you’ll want to work with a number of them to gain market and vertical exposure. However, after your solution is selected by an integrator for a particular project, they’ll frequently want assurance you won’t quote the same solution to others. If the integrator brings you to the party, they won’t want you dancing with anyone else at that party!
Recommendation: Keep the lines of communication open. Don’t stick your head under a rock and pretend that competitors don’t exist. If your product is an integral part of the solution, an integrator won’t want you offering the same solution to their competitors. That might mean telling an integrator partner that arrives late to the project “sorry, already engaged”. Of course, you can take the approach that you’ll quote anything, to anybody, anytime – based on their specific request. Fair enough. That goes both ways.
Best to define up front how you will (or won’t) work with integrators. They’ll quickly realize if you are using them to get access to their customers to land a direct sale. If you do go to market direct and through integrators, it is best to clearly define the rules (and share those rules with your integrator partners), then stick to the plan. Integrators don’t like mixed messages.
10. The sales cycle is long. You might get lucky.
Industrial automation has a long sales cycle – especially when getting started. Product development. Finding customers willing to adapt emerging technology. Deploying that technology at small scale. Iterating and improving. Deploying at larger scale. Iterating and improving. Deploy again.
Of course, you’ll get lucky every once in a while. In a previous article about venture capital and mobile robotics, we took a look at the sales process. The same observations apply here:
Each successful salesperson will talk with 50-60 different customers in the course of a year that express interest and have a potential project. Of those 60 potentials, about 30 pass the initial sniff test for qualification and warrant further conversations. Of those 30 customers that warranted more than 1 or 2 conversations, about 10-12 are worth going after with real projects and real potential. Each one of those 10-12 require the salesperson to get in the car or on an airplane to go visit the customer, see the application, and make the pitch. About 8 of those opportunities get serious and require multiple trips (usually 4 trips to seal the deal). Per year, about 6 projects per salesperson turn into orders. Typical sales cycle from 1st discussion to order is 18 months.
Remember: we’re talking about multi-million-dollar orders here. The types of projects required to move the needle on sales volumes. They take time to develop a solution, client trust, financial justification, approval, and permission to proceed. These are systems that are deeply integrated into a clients’ operation. They can make or break a business. It takes time and expertise to sell. There is no magic pill. There is no solution so spectacular that it sells itself.
Is there a chance you’ll get lucky early on? Sure. Don’t confuse luck with skill. You’ll need equal parts hustle, persistence, and patience. Go get em’ – just remember Rome wasn’t built in a day!
How do you build a sustainable, high-growth business in the world of industrial automation and robotics? Remember the following:
This advice may read as common sense --- and it is. In the words of Will Rogers: “Just because it’s common sense, doesn’t mean it’s common practice”.
Good luck out there!