Robots-as-a-service: why we invested in Gecko Robotics

All of us have heard the omen: robots are going to replace humans in a variety of jobs. While this may be true one day and while some of the world’s smartest engineers have made incredible progress towards this goal from the Roomba to the self-driving car, there are still significant barriers that make selling robots to end customers impractical. For example, selling hardware requires the end customer to correctly operate and maintain the robot. In addition, buying hardware can be expensive and often deters customers from purchasing when they know a newer, cheaper version will eventually hit the market.

That’s why in Silicon Valley we’ve seen an emergence of a trend called “robots-as-a-service.” The concept here is that instead of selling a robot outright to a customer, a technology company can provide a service using their own proprietary robots, which still gives a customer the benefit of time, safety and better data, than using a human. This not only is more cost-effective for most customers but it also lowers the maintenance issues often associated with owning hardware.

There are many startups who have caught wind of this more efficient business model for selling robotic technology and Gecko Robotics is one of the first to demonstrate this at scale. Gecko Robotics is a robots-as-a-service solution for industrial services, starting with inspections. Inspections of equipment like power plant boilers or oil and gas rigs are expensive, slow, reactive and dangerous. They are also mandatory. The average time to complete a human inspection is ~10 days. As a result of the reactive nature of the inspections, plants are typically shut down while the inspection is ongoing, costing in most cases millions of dollars of down time. Lastly, human inspections of industrials results in ~40 deaths per year, making it a dangerous undertaking.

Gecko replaces human inspections at industrial plants with wall-climbing robots which are safer and 10x faster and gather 10,000x the data to predict failures in this massive industry. However, rather than selling the robot outright, Gecko’s team shows up to operate the robots and perform the inspection, giving the customer the end result they need.

When we first met at Jake Loosararian at Y Combinator a few years ago, we knew he had the right combination of domain expertise and technical skills. Jake majored in electrical engineering in college and during his senior year, worked on a project for a nearby power plant where he was exposed to some of the challenges facing power plant owners. He was shocked to learn that every time a piece of equipment would shut down due to a malfunction, it would cost the power plant $1 million a day. In addition, doing inspections of this equipment was not only expensive but very dangerous. He started looking for another solution for inspections; he found none so decided to build one himself.

Fast forward six years and Gecko Robotics has become one of the most profitable and fastest-growing robots-as-a-service startups. HIVE Ventures had the opportunity to double down on our investment in the company’s recently announced $40M Series B, alongside some incredible investors like Founders Fund, Next 47, Mark Cuban, Jake Seid, Deep Nishar, Gokul Rajaram, Justin Kan, Josh Reeves.

Here’s why we have a strong conviction in the company:

1. Domain Expertise. Jake had spent two years building his first robot with a design customer who represented thousands of other customers with the same pain point of industrial inspections. In addition, Jake had been able to recruit a phenomenal team of electrical and robotics engineers.
2. Solving a mission-critical problem. What we love about this business is that inspections are mandatory and recurring. Gecko’s value proposition was crystal clear with a high ROI in a short period of time: by using Gecko’s robot solution, customers could avoid down-time, which meant millions of dollars saved.
3. Massive market size. Power plants, oil/gas refineries and pulp/paper plants lose a staggering $984b/year globally ($193B in the US) due to downtime or machine malfunctions. Even by capturing a small percentage of this market, Gecko could grow to be a multi-billion dollar business.
4. Clear product-market fit. When we invested in Series A, Gecko had a hand-full of customers but when we spoke to those customers, their enthusiasm for Gecko’s solution was clear. By the time Gecko went out to raise their Series B, they had X customers and had grown 700% YoY.
5. Zero churn. We found it incredibly impressive that not a single customer had stopped using Gecko Robotics for inspections. In fact, the opposite was true: once a customer started using Gecko, they would spend almost double the following year on rolling out Gecko to more locations or doing inspections more frequently.

For all these reasons and more, we could not be more excited to be supporting Gecko Robotics through HIVE. We were also proud to bring Jake to Armenia for the first time as one of the HIVE Speakers in 2017.

“The HIVE summit revealed that Armenia is a goldmine of amazing talent, founders and ideas. I will be back soon and so will the others from that trip. “ — says, Jake Loosararian

Congratulations to Jake and the entire Gecko Robotics team for all the success so far! We can’t wait to see what you will achieve next!

PS. If you found Gecko’s mission inspiring, good news — they are hiring!