In the wee hours of the night, when normal workaday folks are sleeping, creative hackers Daniel Pizzata and Adam Ellison are feverishly working on a prototype of Modbot, their modular DIY robotics platform. In just six hours, they’ll be in front of a roomful of potential investors as well as their early backers at startup incubator Highway 1, demoing a prototype of a movable robot arm—which, at the moment, isn’t working.
Completely exhausted, fueled by nothing but almonds and peppermint tea, Pizzata and Ellison are literally running around the room, deliriously engineering a dangerous, high-powered robot that’s juiced by 400 amps of electricity—enough to destroy the robot’s motor or kill a sleep-deprived human or two.
As day breaks, the robot arm begins to move correctly. After catching 20 minutes of shuteye, Pizzata and Ellison are off to successfully present their demo and vision: to give anyone who wants it the power to create their own robots through a system of modular, programmable components that snap together like Lego bricks. The demo goes off without a hitch. And they soon realize that now is when the hard work really starts.
Modbot has been a Hollywood-worthy hardware-startup success story so far. How are Pizzata and Ellison doing it? And how are they doing it thousands of miles away from home, on a timeline that can only be described as, well, insane?
A Stacked Deck and Other Challenges
“Everything is about stacking the deck in your favor when you’re creating a startup,” Pizzata laughs, “and we started with the worst stacked deck ever, coming from a foreign country without Stanford degrees, having to deal with the logistics of moving countries.”
The challenges of establishing Modbot as an American company owned by Australians were—and still are—legion. It’s an expensive and bureaucratic process. Yet the siren song of the States must have been pretty strong to overcome not just the hurdles involved in setting up shop on a foreign shore, but also the specific challenges inherent to creating a hardware startup.
“There’s a saying, ‘hardware is hard,’” Pizzata says. “It’s a nightmare of logistics that requires locking in specs that are changing literally every month. When you release hardware and realize you have an error or a problem, you can’t just give people an app update. You need to recall the product, redesign it, remanufacture it, and redeploy it.”
The amount of capital needed up front is also a level of magnitude higher than for a software company. In starting Modbot, Pizzata and Ellison faced the expensive prospect of luring top-caliber engineers to help produce a highly technical product in one of the most expensive cities in the United States: San Francisco. Hardware startups also need to raise capital for inventory and warehousing as well as marketing.
“We almost need to sell Modbot before it even reaches the shelf to validate the capital we’re raising,” Pizzata explains.
Pizzata and Ellison have negotiated some of these challenges by engaging in serious expectation management. Modbot’s early access program, for example, let them bring on large clients to help finance their first production run.
“What we can do is incentivize people to come on board,” Pizzata says. “They know up front that they’re signing on to a product that might have kinks. And we know we can’t bring out a product that’s only 80 percent there, or that has only 80 percent of the features we promised.”
That means getting buy-in early from clients that can see themselves as partners in something big, something that could change the world.
“We’ll also be targeting the maker community by selling developer kits,” Pizzata says. “It’s a good model. We can then start incorporating those developments into our next production run.”
Lessons in Dollars and Sense
Startups often have bandwidth issues (not the Internet-connectivity kind). It’s about not having time to get your haircut or sleep more than a few hours a night. But this intensive technical development needs to be tempered with business development.
“What we’ve found is that as we’ve focused on fundraising, we lost momentum with technical development because matchmaking with investors is so specific and complex,” Pizzata says.
The right combination of qualities can be hard to find in investors: They need to possess an appetite for high risk and high reward and the stomach to handle an accelerated, full-throttle timeline, plus their own unique ways to add value to the company. Pizzata and Ellison have their own guideposts for finding the right VC partners for Modbot.
“We want VCs who’ve made hardware, who understand that hardware startups require more cash up front, who’ve been entrepreneurs, who have the capacity to see the product through, and who are willing to invest in each stage of our growth rounds,” Pizzata says.
The willingness to stick it out through what might be a roller coaster’s worth of ups and downs is a necessity. Hardware startups can do everything right, but there still might be unforeseen issues in production or beta testing. Because of this, Pizzata advises, “don’t raise money when you need it, raise it when you can get it—because when you need it, raising capital can be very expensive.” The key, he says, is to get VCs excited about the future that they and Modbot can bring about together.
I Robot, You Robot, We All Robot
Taking on the Sisyphean task of building a hardware startup requires a certain kind of zeal, powered by more than just peppermint tea and almonds. For Pizzata and Ellison, the seed of that vision came from wanting the future to arrive, well, now.
As Pizzata says, “The true entrepreneurial spirit comes from an internal passion, a desire to make something from nothing, a vision of the future.” He and Ellison exist in that vision of the future. “We asked ourselves, why don’t we have this thing right now, in the present? We were frustrated by the fact that the technology we want wasn’t here yet.”
From The Jetsons to 2001: A Space Odyssey and beyond, Hollywood offers visions of how daily life will be enhanced and made easier by robots that take on the drudgery of day-to-day tasks, leaving humans to devote their time to loftier pursuits. Today, robots in the consumer space are everywhere, but they’re hidden—they exist inside vending machines, automatic doors, and dishwashers.
What excites Pizzata and Ellison, and what drives them to bring Modbot to market, is that robots have the capacity to have input and then intelligently actuate their environment. They’re capable of problem solving and social interaction.
For Pizzata, Modbot isn’t just about a product or an idea—it’s about moving toward a vision of the future they can see the contours of, that they wish was already here. And that makes the hard parts of hardware worth it; it’s not how they’re doing it, it’s why.
“It’s a hard lifestyle, but it’s a choice,” he says. “It’s the ability to pour who you are into your product. I already see people who are fascinated with what you can do with Modbot. Those people will take our vision even further. I love the prospect of giving this technology to university students, or to people who don’t necessarily have the technical skills but who have a vision of the future and just need the tools to get there. Making technology radically accessible will increase the bandwidth for innovation.”