Technologies are advancing by leaps and bounds, and every day new devices emerge on the market that one could previously only read about in science fiction novels. Yet, there is still one invention that is not readily available: robots. If you have even a slight interest in robotics, you have surely pondered the following questions:

• Why are there no robots for sale that are presented at high-tech exhibitions?
• What caused Google to fail as a robot manufacturer?
• How can one create a successful startup in robotics, and is it worth doing? 

Robotics is a field filled with an inexhaustible number of ideas to implement. However, it is not a business that generates instant profits. Inventing requires passion, investment not only of money but also of skills, interest, and a desire to continuously learn something new. In this case, you will become not just a businessman, but a pioneer who brings new technologies to the world.

What is the secret to a successful business?

Any professional will tell you that behind the seemingly simple execution of a perfected action lies years of training, hours of exhausting repetitions, and a great deal of perseverance. Whether it’s about sports, art, or invention, an outsider only sees the beautiful result.

But behind the delightful spectacle, the mesmerizing painting, and the harmonious dance are dozens of people: directors and choreographers, playwrights, stage workers, makeup artists, lighting technicians, costume designers, administrators, and financiers. Even the most talented actors cannot stage a play alone, just as the most brilliant inventor cannot build a successful business single-handedly.

We have analyzed the stories of hundreds of companies that have tried their hand at robotics and concluded that the best results are achieved by firms led by financiers and marketers. In contrast, teams of engineers and inventors simply fall apart without skilled administrators. In other words, the one condition that must be met 100% is having a well-assembled team, each member of which understands what they are doing and is a specialist in their field.

It is crucial to have specialists in the team from the start who understand all the nuances of this business. Let me illustrate this with one resounding success and simultaneously a failure of Sony Corporation. Back in 1999, Sony made an absolutely phenomenal breakthrough in robotics by launching the AIBO robot dog onto the market. This was the most technically complex toy ever mass-produced. The robot had 22 degrees of freedom, could move for 2 hours, recognized its owners and environments, avoided obstacles, and was in fact the first robot in the world equipped with artificial intelligence (AI) systems. To give you an idea of what artificial intelligence means, the world only began to slowly understand it in 2015–2016. And yet, Sony had an AI system in a mass-produced model!!! In 1999. Moreover, the robot allowed for software upgrades (SDK), and any user could add their own programs. These programs could even be shared among other users commercially. And this was 5 years before the launch of the Apple Store.

Naturally, the robot enjoyed tremendous success. The first batch of 3,000 robots sold out in 20 minutes. By 2006, Sony had sold more than 150,000 AIBO robots at a price of around $2,000. What could be better? A phenomenal product, a technological breakthrough decades ahead of its time, queues of customers for many months, millions of articles in newspapers and magazines worldwide, thousands of reports. So why did Sony suddenly close the project amid the outcry of hundreds of thousands of customers?

The root of the problem lay in the support and maintenance of the robots. Since no one in the world had experience in supporting robots as consumer electronics, Sony approached the issue in line with all other home electronics. A percentage of returns and exchanges was factored in for each product group, usually around 2-3%. The same was done for AIBO robots. A world-famous corporation with thousands of distributors worldwide. Surely, Sony could organize customer technical support and the exchange of non-functioning robots, right?

However, the percentage of malfunctions and issues with the robots exceeded the worst fears. Furthermore, the good intentions of allowing customers to create and update software backfired against Sony. Improper updates or errors in "home" programming turned the robot dogs into mere plastic dogs.

As a result, instead of phenomenal profits from sales, Sony began incurring colossal losses from the maintenance and exchanges of AIBO. Due to the unprofitability of this line, Sony made the commercial decision to discontinue the production of AIBO, as new sales only brought more losses.

Only at the end of 2019 did Sony plan to re-enter the market, but with a new generation of AIBO, a new business model, and a different understanding of this business.

This was a lesson for the entire world that robots cannot be treated like ordinary consumer electronics, and the support and maintenance of robots is a separate independent business, with revenues from it needing to arise separately from the profits embedded in the sale price.

The Customer is Your Main Critic

The most important thing to remember is that the company works for potential customers. It does not matter what kind of robot you are developing, what functions it will perform, or how modern and beautiful it is—if it does not appeal to the customer, the business will collapse.

Unfortunately, one can never predict in advance how successful a development will be. Sometimes completely unexpected things succeed while promising developments get pushed aside. For example, in the early 2000s, the market was flooded with telepresence robots (remote-controlled computers on wheels), which ultimately were not accepted by the market, leading most development companies to vanish without a trace, displaced by WhatsApp and Skype.

A few years later, the world was captivated by drones, and hundreds of startups, reacting instantly to demand, rushed to develop flying machines. Most of these development companies collapsed after a few months: misunderstanding customer needs, ignorance of the legal aspects, lack of proper funding, and chaotically assembled teams led to failure. However, the largest Chinese drone manufacturer, DJI Innovation, emerged, becoming virtually a global monopoly.

The thing is, in business, one needs to act not only quickly but also with foresight. Spending time understanding a preferred niche, customer needs, development prospects, and gathering information will save you significantly in the future. Never neglect preliminary preparation.

Two Contradictory Strategies Leading to Success

If you are creating something fundamentally new that has never existed before, analyzing the market and competitors is pointless, as there is neither a market nor competitors. Here, you need to check whether customers are ready to buy your innovation. And you shouldn't rely on your own judgments; they may be incorrect.

If you want to release your model of robots into a segment that has already gained global recognition, you need to be very careful in both marketing and pricing strategy. You must honestly answer the question: what share of the global market do you plan to capture? How does your robot differ from existing ones? Why should customers buy your robots instead of those from a world-famous manufacturer? Can you organize global distribution, service, and support for your robots?

Correct goals and objectives, and motivating the team based on results—these are the basic foundations of success

In 2013, Google acquired six of the most successful robotics development companies, led by Boston Dynamics. Everyone thought Google would become the largest robot manufacturer in the world. But that didn’t happen. Why?

There turned out to be at least three problems.

The first problem was scientific. The fact was that all these companies consisted of scientists who valued technological success. The economic aspect did not matter. All the technological breakthroughs made by these companies were indeed phenomenal. But! No one in these companies was interested in bringing technologies to business products and mass production. And when the Google board set this task as a priority, it turned out that these were not the people who could develop a commercial model and mass production.

The second problem was technological. The breakthrough in one technology did not guarantee a breakthrough in another. Humanoid (android) robots are energy-inefficient. This means they need to consume energy even when they are just standing still. So, the phenomenal breakthroughs in robot movement and balance technology and artificial intelligence were not supported by corresponding energy technologies. On the best batteries, the robots could move for a maximum of 20 to 30 minutes. Installing nuclear batteries in every humanoid or dog-like robot is economically unfeasible and dangerous.

As the band "Nautilus Pompilius" sang—this music will be eternal if I replace the batteries. There was no eternal music due to the lack of batteries.

So we are waiting for the necessary power elements or at least remote wireless charging systems for android robots.

The third problem is the human factor. The fact is that all employees and management of the companies bought by Google became very wealthy when Google acquired them. But at the same time, almost all key employees also received "golden parachutes." This consists of huge salaries and Google stocks for three years if they do not leave the company within three years. As a result, they ceased to be interested in the outcome and merely clocked in their required time at work. Additionally, they, as scientists, were given tasks that were not typical for them. They were supposed to develop a production model of robots and establish manufacturing. And this is an entirely different specialty! In fact, it was not what they were used to and wanted to do. The lack of focus on results led to a lack of results.

This is not a critique of Google management. The company tried to enter a market that was not its own but did not consider that IT and internet business are very different from the robotics business. Moreover, a technological breakthrough in one or several areas of robotics does not guarantee economic success. We all owe Google a huge thank you for giving a tremendous boost to the development of robotics worldwide, drawing the world's and investors' attention to this industry.

In this respect, the IT business is much simpler. Robots not only add additional levels of complexity to business but also significantly reduce competition. Those who can bring technologically advanced robots to a production model become market leaders for many years.

Components that lead to success

So we have concluded that a well-developed business model is half the success; therefore, a thoughtful action plan that considers all nuances is necessary first and foremost.

Financial support. Investments are the starting point of the business, but that does not mean money solves everything. This is proven by Google's experience, which, as one of the largest corporations in the world, could not create a single robot for sale. Moreover, the robotics companies purchased by Google simply shut down quietly or were sold. Yet they received more funding than necessary for calmly exploring the required niche. When acquiring these companies, Google clearly expected something and economically justified this decision. Therefore, it is not just about money.

Refined prototype. This, by the way, can help with the financial side. A successful presentation will attract investors if they see potential and understand that all costs will be recouped many times over once the product hits the market and attracts customer attention.

Established production. Robots require casings, mechanics, and electronics. There are no factories that do all this simultaneously, so you need either to create your own production or find factories that can manufacture individual parts. At a minimum, you need to have a clear answer to the question of how and where you will produce robots.

Team of specialists. Success will belong to a team where everyone performs their duties. There should be an administrator, a finance expert, an engineer, and an inventor. Ideally, each team member should focus solely on their responsibilities without getting distracted by unrelated tasks. 

Universal software. The robot must perform specific duties accurately and be convenient in that area. There is no point in custom software. The key is to create a universal functionality that satisfies the overwhelming majority of clients. Robots can be trained for client tasks through AI. However, it is essential never to create multiple software versions for identical robot models for different clients. This would be suicidal for the company. 

Massive advertising. Even the most successful invention requires publicity; otherwise, it risks going unnoticed. Therefore, alongside talented engineers and administrators, it is crucial to find creative marketers who will inform the world about your breakthrough and convey to clients why they should buy or lease your robots.

Sales and service team. Regardless of the situation, an effective sales or rental of robots will require forming a distribution network, whose main task will be not only sales but also economically sound and technically competent local support for the robots and ensuring warranty repairs. 

What deters potential buyers? 

But suppose you have done everything necessary, developed the perfect product, presented it, and even received approval from the public and experts. There’s just one thing missing—sales. Why, what’s the problem, when everything seems perfect? Let’s analyze what could lead to failure at the final stage and what aspects should be addressed in advance to avoid deterring clients.

High cost and lack of guarantees. Innovations are always expensive, so the average buyer is wary of throwing money away on a cat in a bag. Even if the price is reasonable, initially, there are no guarantees that the robot will work as advertised. Essentially, the first buyers are always a test group, but the price of this service may turn out to be too high.

Risk of losing manufacturer support. Even if robots hit the mass market, clients may fear being left without support, as young robot manufacturing companies often dissolve at the beginning of their activities. In that case, the buyer is left with an expensive but disposable purchase.

Cheap Chinese knock-offs. Another risk is the theft of intellectual property. As soon as an interesting innovation appears in the world, Chinese manufacturers release a cheaper and lower-quality alternative. Therefore, it is better to keep the development stage secret. It’s also advisable to hold a trump card up your sleeve, which will make the original more appealing than the counterfeit.

Lack of customer support from other countries. A small company cannot physically provide support worldwide, but opening small service centers can solve this problem. The key is to ensure this from the start of sales abroad.

How to make a profit from robot manufacturing in such conditions?

The robotics business seems like a continuous obstacle course, but it can actually be made highly profitable by slightly changing the approach to product implementation. The most obvious and rational solution is not to sell robots but to lease them. This decision has several crucial advantages:

The robot remains the company's property. This gives the client the guarantee that the service center will respond instantly to any request and resolve issues as quickly as possible.

Rental income is higher and more stable. The client will pay less but every month, resulting in the company receiving a steady income that can be put into circulation.

Testing the device in practice. Laboratory tests do not provide a complete picture, but real-world usage of robots by clients allows for identifying all bugs, fixing them, and improving the program.

The main downside is that large capital investments are required at the initial stage; otherwise, launching mass production will simply be impossible.

We understand that starting a new business, especially in such an experimental field as robotics, is risky, which is why we offer our assistance. With significant experience in promoting startups, we have developed multiple effective business models and can confidently say that proper economic calculations, a rational approach, creativity, and a readiness to take reasonable risks always pay off. We enjoy watching the world change, observing scientific discoveries, and participating in their integration into everyday life.

If you have decided to enter the field of robotics as an engineer, investor, or administrator, we can assist in organizing the workflow. Be patient, and you will become the person who not only looks to the future but creates it!

Join us: together we will change the world!