I really liked this guy. Maybe it's Boston but here's a guy with two wildly successful startups in robotics and he's having trouble raising money because his idea isn't sexy enough!
I thought investors were smart and knew how to calculate odds. There is never any absolutely sure thing. But if a guy has been wildly successful twice aren't the odds pretty good he can do it a third time?
Having been through the VC system, I don't believe his face value statement, and I 100% believe you're right.
They want to invest, but not at his terms that he's demanding.
The thought experiment is - he wants to raise 1m @ 2m val. 50%. There's not a VC/angel/seed who wouldn't take that deal given who he is. So he's pricing himself at a level he "is willing to do this startup thing again" and it's simply too expensive.
A guess: Smart VCs know that they are not smart enough to evaluate a business from a plan or a founder' background and instead wait for the revenue growing explosively.
A smart VC knows they have 0% chance of getting into that round (even the top VC maybe 1/3 chance) much less leading it by then, and only chance is getting into it when it’s still contrarian.
I know a very low profile entrepreneur who has essentially built the exact same business (with slight variations) 3 times over the past 20+ years, selling the first two, so yes I believe there is some corelation between his 2 previous successes and being able to do it again. Even if it's imaginary the funding markets swear by previous success being a strong marker for future success.
Years ago my friend had the best app for a particular game in the App Stores. But competition was rising. So he just rebranded his app with a few changes and then got 3 of the top 5 spots! Same underlying app
iRobot got crushed by Chinese competitors. Rethink failed early, they had a poor quality product and Universal made a much better cobot. And this new venture is pointless, there are 10 other companies in the Boston area alone doing warehouse automation...
The comment about humanoid forms raising expectations comes from Rethink's hype and failure.
Rethink tried to solve manipulation and failed.
The Rethink hype video, with their cute little face on a screen.[1]
What the Rethink robot could actually do: take PC boards off a conveyor and put them in a fixture.[2] That's a routine robotic load/unload task. Like this one with Fanuc robots.[3]
I'm a huge fan of the ease of cleaning & repairing iRobots, especially the earlier models. I don't know if the competitors match that but I have preferred their simplicity & quality.
China competitors are always going to be tough to beat in terms of margins.
Upvote for you sir. I was writing the same response as you posted the exact response. The only thing I did not mention that I will add here. iRobot was kind of a turd. They basically kept the same turd of a robot for a decade plus. Bang, bang, bang, bang, bang…
I mean, VCs want stories (or at least hype) - not accolades, i.e., Altman, Neumann. Heck, accolades might hurt you. They want the unfound gem/they're so smart/cerebral...
Define success. Without a doubt iRobot was a category leader for a long time. They created the market but were they ever profitable? At this point it feels like a company on life support that is getting their butts kicked by the Chinese who offer double the product for half the cost. Without a doubt though he created the category. Was the second company ever a success, all I could find is it being trade for parts over and over.
This third company looks interesting but it’s also a flooded market at this point.
So for me the guy never had a real success and is currently building in a market that has been for years flooded with products like his.
From that, they had 13 straight years of profitable net income starting in 2009. Rough recently because they got eaten up by cheaper upstarts; happens to almost everyone eventually. But clearing several hundred million cumulative in net income over a decade+ (peaking 2018-2020, so they were consistently growing from 2009 to 2020 even) is far from "were they ever profitable" territory. They don't have pre-2009 there, but from some other googling it looks like they were profitable by when he left in 2008 after their 2005 IPO. So he was there from inception to IPO and millions-a-year-profitability, and then you're discounting that because 12 years after he left some companies in China had better copies. Building something for 15 years to IPO isn't some VC pump and dump scam, it's harder.
If that's not success you have a ridiculous bar. "So for me the guy never had a real success" - get out of here, do your googling before making claims like that.
Not every business loses 95% of their market cap in 3 years. Many companies bleed out slowly as they struggle to retain their market share in the face of new competition. This is normal. It's not normal for a business to just collapse out of nowhere.
Did shareholders and investors collectively make money from the whole ordeal? Looking briefly at the numbers, it looks like they didn't. During the profitable years IRobot made $639 million (sum total) but they lost -$737 in the collapse that followed. No dividends were paid either during the good years. Shareholders were left holding the bag.
Building a business from nothing to IPO is a real accomplishment and I won't diminish that. However, if a business collapses and incinerates more money than it has ever made during the sum of all profitable years calling it a "real success" is a bit of a stretch.
Thanks for elucidating what I failed to do. That was my only point. Someone said he created a number of wild successful companies. iRobot in my eyes was a segment creator which is awesome but it was/is never a wild success. He was also one of 3 founders and is not credited for the first iteration of the roomba.
Sorry I hit a nerve, it’s easier to share an opinion without telling people to get out of here though shame on you. The adjusted ebitda numbers I was looking at either had it below or near zero hence I did not really consider them a financial success. He was one of 3 founders and another individual invented the first iteration of the roomba. I am not saying he is a failure but the person I was replying to stated he was “wildly successful” with three companies. I saw iRobot as a category creator but never capturing the market and no idea how you could say the other two are wildly successful can you share how? Otherwise get out of here.
Rodney Brooks is widely recognized and celebrated roboticist, ran CSAIL for a while. iRobot as a company created a new market and managed to put a functional household robot out there, whether Chinese alternatives ate the share of it is largely irrelevant to his argument on humanoids, which I find to be completely reasonable.
There is a wide gap between academic and entrepreneur/business operator though. He was one of three co founders of iRobot the company l, is not even credited at the inventor of it, and iRobot has largely been a one hit wonder. They created a category but the underlying product largely was unimproved until China started dominating.
His other business was a failure and his third current is in a crowded marketplace. Humanoids are the minority in warehouse automation.
Who is even talking about his argument on humanoids? What does that have to do with my comment. My response was on a comment praising his triple success in business and I am questioning that definition of success.
You say one hit wonder, but iRobot's PackBot and other gov-focused efforts were/are very profitable, though the company had to spin off the defense arm.
What are the other efforts? Packbot was sold off for $45mm for the time a company with a market cap of $1.6bn. Again the PackBot could be great but would you call a product that had low $ contracts to the government that eventually was sold for peanuts a wildly successful company? I don’t consider iRobot to be a wildly successful company.
Endeavor Robotics was recently sold for $382MM. So clearly it was actually valuable.
Are you aware that from an investor perspective, creating a household brand and high IRR though IPO is considered a wild success? All companies eventually decline. By your metrics GE wasn't a wildly successful company either. Or AOL. Or Yahoo. Or Myspace. Every one of those companies eventually declined and your return would be poor if you held on to your investment over their entire arc.
Are you aware you are picking the wrong numbers. $382 is post iRobot when endeavor sold to Flir. Why would you even use that number. PackBot sold for $45mm. That’s a decade worth of work and investment for $45mm. I think you might be narrating a bit too much and putting words into my mouth. I don’t know the IRR for iRobot as I was never part of the funding rounds while private or an insider while public. That said it was a stagnant public company that had a jump around Covid time which has come crashing back down. Maybe those folks like yourself, based on the way you speak, invested early in the 90s in iRobot and were part of that IPO.
I am not attacking the man only a perspective that I am not sure investors would see him as a wildly successful entrepreneur.
That’s why I asked how do you measure success, they created the market but never were able to operationalize it or improve it from the initial iterations.
And brooks was one of three founders and not credited for the first iteration of Roomba. During his time the company barely broke even on and adjusted ebitda basis. His other company was a failure and this third is in a crowded marketplace.
Again as I keep saying. My reply was to someone who said he had three wildly successful companies. Yes iRobot created a segment but I still struggle to classify it as a wild success.
I thought investors were smart and knew how to calculate odds. There is never any absolutely sure thing. But if a guy has been wildly successful twice aren't the odds pretty good he can do it a third time?