Supply Chain Startup: The evolution of a startup

I first talked to Tom Galluzzo, the founder and CEO of IAM Robotics, nearly 6 years ago on July 15, 2014. He was the first founder of an early-stage startup that I had the chance to speak to. We wouldn’t meet for the first time for another eight months at the 2015 Promat.

Early stage may have been an understatement. While the company had been founded in 2012 by Galluzzo and colleagues from Carnegie Mellon University’s National Robotics Engineering Center, in the summer of 2014, it was largely a PowerPoint presentation on his laptop in the summer of 2014.

I’m not sure if they’d gone live with a website at that point. But, with support from Rochester Drug Cooperative, Galluzzo and his team had built an autonomous mobile piece-picking robot that could go up and down a warehouse aisle and pick items from a shelf to a tote.

At the time, they nicknamed it GOFER, which stood for general order fulfillment robot. Galluzzo now fondly describes that prototype “a Frankenrobot. We bolted things together and had a robot that went up and down one aisle picking product to a tote from shelves.”

Here was the thing: While robotics of this sort was fairly new to me at the time, based on some video I viewed – and then later saw in person at Rochester Drug’s warehouse – it worked. A few months later, after interviewing the then CEO of Rochester Drug, I wondered whether solutions like those from IAM Robotics represented the future of warehousing. I posted a three-part series on the topic. You can click on the links to read Part 1, Part 2 and Part 3.

I had another question: Why was a roboticist working at one of the nation’s premier robotics centers interested in the supply chain? That was especially pertinent because many of Galluzzo’s colleagues were leaving Carnegie Mellon to work on self-driving vehicles for Uber. Galluzzo answered that question with an article I published in the May 2015 issue of Supply Chain Management Review, Robotics at a Tipping Point. If you get a chance, give it a read and notice how much of what he predicted has come to pass.

We’ve kept in touch over the years. I’ve watched as the company evolved from a Frankenrobot to a still young solution provider with a $20 million investment from the venture capital firm KCK Ltd. and a significant DC project with A.S. Watson Group, the world’s largest international health and beauty retailer. In that deployment in the Netherlands, more than a dozen robots from IAM Robotics will manage about 50% of the facility’s e-commerce picking, according to Galluzzo.

Recently, I asked Galluzzo about that evolution. He told me that at the time of the company’s founding, he was working on a project to do autonomous manipulation for DARPA – think a robot that would combine the mobility of an AMR with the picking capability of a robotic arm. “I was excited about the commercialization prospects for the technology and started thinking about simple material handling,” he recalled.

Around that time, Kiva was acquired by Amazon. That acquisition validated the business opportunity for both roboticists like Galluzzo and the venture capitalists that were funding them. IAM Robotics raised $3 million in angel funding. Initially, Galluzzo says, IAM Robotics was going to focus on modular, low-cost robotic arms, but Galluzzo had a connection at Rochester Drug Cooperative, where he saw an application for an autonomous mobile, piece-picking robot that could go up and down aisles and pick from a shelf to a tote without human intervention. “We decided to go after it,” he recalls. He says that shifting from robotic arms to a fully autonomous solutions was the company’s first big pivot.

He and his team began working on the Frankenbot. By 2014, they had a prototype that could go up and down a single “warehouse” aisle they constructed in the lab and pick 1,000 items an hour from a shelf. In 2016, went to Modex. Instead of introducing a modular robotic arm, IAM Robotics introduced SWIFT – the new name for GOFER. It was a landmark show for robotics, also featuring booths from Locus, Fetch and 6 River. IAM Robotics was one of the four finalists for MHI’s Innovation of the Year award. “We got some good attention that year,” Galluzzo recalled. The following year, the company’s first commercial robot went live at Rochester Drug Cooperative, where I watched it work flawlessly over a 3-hour period one evening in the summer of 2017.

Robotics in warehousing and distribution have been on an upward trajectory since then. Autonomous mobile robots (AMRs) and pure stationary piece-picking robots, like those from RightHand, have gotten faster acceptance than the solution combining the two that IAM Robotics brought to the market. In part, that’s because bringing together mobility and piece picking into a single unit is a trickier proposition than implementing a robot that performs one task. “We always knew that our robot wasn’t going to be the be-all and end-all,” Galluzzo says. “It isn’t going to do receiving, shipping or anything like that. It has to be part of a holistic design, and I think we’ve always been transparent about that.”

Another pivot, or evolution: IAM Robotics is introducing the Bolt, essentially an AMR that can handle larger totes coming out of AS/RS and shuttle systems, and do so “more quickly and efficiently than an AMR, providing greater flexibility than fixed position conveyance,” according to the company.

So, what has changed in the ensuing years? First, was the $20 million infusion of capital in 2018. That provides breathing room, more money for R&D and the ability to take on a large international project like the one with the A.S. Watson Group.

Second, has been some important lessons that will shape the company going forward. One is the importance of commercial partnerships with larger organizations that can provide that holistic distribution center design of which IAM Robotics is just a piece of the puzzle. To that end, IAM Robotics has recently begun working with TREW Automation, which will offer IAM Robotics technology in a variety of applications. But, it’s not alone. Players like RightHand Robotics and Fetch have also been working with partners, and just this week, Conveyco announced a partnership with Geek +. By my count, it’s the second or third partnership announced by Conveyco.

The other important learning is a change in mindset. “As roboticists, we were originally trying to sell on the technology,” Galluzzo said. “What we’ve learned is that in the supply chain, the margins are so slim that there’s no appetite for technology for technology’s sake but there is an appetite for savings that deliver to the business.” Now, when IAM Robotics is considering a change to its technology, one of the first questions to answer is how that change will impact the ROI for the customer. It’s a change in mindset that I’m beginning to see in other startups that were founded by technologists as they learn the finer points of our space.

What’s next? Galluzzo is watching the prospects for scaling up – yes, scaling up IAM Robotics, but also scaling up the deployment of all kinds of robotic solutions across the supply chain. “None of the startups out there are close to the level of magnitude of Amazon Robotics,” he said. “It’s going to be interesting to see how we evolve as an industry once there are thousands of robots out there.”

SCMR’s Supply Chain Startup Blog is published every Friday. If you’re a startup, a venture capitalist or a supply chain practitioner working with startups, and want to share your story, or have startup news to share, email me at [email protected]. Remember that the purpose is not to promote any one firm – and a blog shouldn’t be interpreted as an endorsement of a firm or its technology. Rather it’s to start the dialogue between me, my readers and the people creating the NextGen Technologies that will power tomorrow’s supply chains.