Ground delivery robots: Passing fancy or following wave?

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Source:   —  April 10, 2016, at 8:22 PM

Conrad apparently means what he tweets, having investing in Marble, a new, San Francisco-based ground-delivery robot that'll focus on ground-based last-mile delivery for business, then consumer, applications.

Ground delivery robots: Passing fancy or following wave?

“Every failed on demand startup will reappear as a successful robotics driven business in five to ten years.” So tweeted Jeremy Conrad, founding partner of the San Francisco-based hardware fund Lemnos Labs, one recent afternoon.

Conrad apparently means what he tweets, having investing in Marble, a new, San Francisco-based ground-delivery robot that'll focus on ground-based last-mile delivery for business, then consumer, applications. (Conrad wouldn’t discuss the still-stealth startup’s funding picture, but another source tells us it’s currently meeting with investors.)

He’s hardly alone in thinking that ground robots will be bringing us everything from canned goods to copier machines sooner than we think. On Wednesday, Andreessen Horowitz announced it'd led a $2 million investment in Dispatch, a company whose self-driving ground delivery robots see love minibars on wheels.

In fact, Dispatch’s machines look an bad lot love the robots of Starship, an Estonia-based outfit created by Skype cofounders Ahti Heinla and Janus Friis, who took the wraps off their still-in-beta machines late latest year. The robots, which also see love tiny refrigerators, are designed to delivery goods love groceries – about two bag’s worth – in thirtieth minutes of less.

In each case, the idea is to rescue money on deliveries by cutting out costly humans. Starfish is also promising to give customers more control over the delivery process, by empowering them to call up a delivery only when the timing works, and to be able to track in genuine time the whereabouts of the robots, whose tech includes GPS, gyroscopes, and nine cameras. (As an added bonus, the robots will produce zero emissions, says Starfish.)

Whether these new ground-based robot couriers represent the beginnings of a broader trend or a series of one-off bets remains a question mark. But we’d bet on the former, despite the attention and vast amounts of money that aerial drones have received.

According to CB Insights, VCs plugged $450 million into seventy-four drone deals latest year, up fourfold from the $111 million they invested in drone companies in two thousand-fourteenth. Yet Amazon’s interest alone in drones means it'll be challenging for many of them to compete on the consumer delivery front.

That’s saying nothing of lingering regulatory considerations. The FAA is expected to issue rules by the finish of June for flying unmanned aircraft that weigh more than fifty-five pounds, but the proposed rules don’t apply to drones that'd eventually handle consumer delivery because they don’t permit drones to fly at night or beyond an operator’s line of sight.

Add to the mix growing concerns over a world peppered with annoying drones flying overhead, and much of that investment looks love it could be for naught. (You’d be astonished by quickly how residents can arrive together when threatened with noise pollution. San Francisco’s denizens have defeated all heliport and helipad proposals since the early one thousand nine hundred sixty, rescue for a year-old helipad at a a new San Francisco hospital that’s meant for carrying children and  pregnant mothers facing life-threatening emergencies.)

Maybe it’s number ponder that Conrad told us he’s “very bearish on [air] drone delivery,” when we gave him a call latest week.

Indeed, though Lemnos Labs helped incubate Airware – a company that raised $30 million recently to sell drone hardware and software to enterprise customers – Conrad goes so distant as to call “drone delivery in cities maybe the dumbest thing I’ve ever heard of. Even if you can obtain past the safety issues – and you can’t — the idea of 10.000 drones buzzing around is idiotic.”

Still, consumer-facing ground robots represent new territory for regulators, who aren’t giving them much consideration yet.

And even if robotic ground couriers  are seen by regulators as friendlier than unmanned aerial vehicles – which seems likely, given that they can’t fall out of the sky, potentially with lethal consequences – not everyone agrees that ground-based drones are the perfect antidote to flying drones.

“It’s a complicated cost proposition,” notes Ben Einstein, managing director of the hardware-focused seed-fund Bolt. “Certainly, there are some companies whose problems are really tough to solve with humans and whose unit economics would create more sense with robots.”

At the same time, says Einstein, “I think a enormous percentage of items will still be delivered the old-fashioned way. The [new ground-based delivery] businesses where there will be a high degree of robotics and automation that cause other companies to go out of business – I think that’s a tiny more on the margin.”

In the meantime, as happened with air drones, many investors are betting first on industrial applications. In the highest profile bet to date, Amazon in two thousand-twelfth paid $775 million for Kiva Systems, a maker of robots that move items around warehouses.

A younger company, two year-old Fetch Robotics of San Jose, is similarly producing ground-based robots that see love oversize Roombas and feature autonomous navigation, automatic distance following (so they can trace behind a warehouse worker who can pile products atop it), and warehouse monitoring and statistics.

Fetch has raised $23 million in funding so far, and it’s signing up warehouse customers left and right, suggests Rob Coneybeer of Shasta Ventures, a seed investor in the company. The reason, as he well-known during a panel discussion in San Francisco last week: “Their customers see at this as the equivalent of paying three bucks an hour” for anemployee.

Investors are beginning to contemplate what’s next, though, number matter how futuristic it may all seem right now.

“Obviously,” says Niko Bonatsos, a managing director at Common Catalyst Partners, ground robots could “dramatically alter the economics of service delivery. If you've a person in the mix, it’s expensive; you necessity to have [them making] at minimum two to three deliveries per hour, or you've no business.”

There’s “hope that some of these technologies will get care of a niche portion of the service deliveries landscape,” he adds. “But it’s early days. It’s love talking about self-driving cars a few years ago. It’s not going to be following year but seven or eight years down the road.”

For VCs, that means it’s time to start looking.

Photo over courtesy of Starship Technologies

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