What if there was a better
way to make and deliver pizza to you? Turns out
there is. Fast food jobs are
demanding and sometimes even dangerous. But not for robots. The machines can look at
more things faster, in greater detail. They
never get bored. They don't need breaks. Boston Dynamics has made a
name for itself by building robots like
Spot. We're using technology to
advance the state of the art in molded fiber
production, and we can do it with speed that is
absolutely category leading. Welcome to White Castle. This is Britney. How may I
help you? This robot named Flippy
runs the fry station at a White Castle outside of
Chicago. With its mechanical arm
and using computer vision technology, Flippy can
cook everything from french fries and onion
rings to cheese sticks. White Castle said it
plans to add 100 Flippy's to its kitchens
nationwide. We used to need two people
to operate that french fry area during peak hours,
and now we are able to only have one person
operate in that area. Would you like to try the
mac and cheese bites today? All right. Thank
you. If the screen's correct,
it is $8.27. Second window, please. Fast food jobs are
demanding, quick-moving and sometimes even
dangerous. But not for robots. When you look at the
restaurant industry, it's a little bit late to the
party at adopting automation and robotics
in particular. So far, the restaurants
that are using them are trying them out, say that
this automation really only has to do with
helping relieve boring tasks from workers'
plates, help make their jobs easier, let them
engage with the customers more. But there's a lot
of reports out there kind of guesstimating how many
jobs could be replaced by these robots, by
automation. Up to 82% of restaurant
positions could to some extent be replaced by
robots. Automation could save
U.S. fast food restaurants over
$12 billion in annual wages and restaurants are
also struggling to find workers. American
restaurants are down more than 560,000 jobs, or
about 4.6% of its workforce from their
pre-pandemic levels. About a third of
Americans worked in a restaurant as their first
job, and half have some restaurant work
experience. The economics of this are
very, very compelling. If you take minimum wage, just around the $20,000
per year mark, that's the cost of one robot. Other companies in the
space include Picnic that has a robot that makes
pizza and Autec whose machines make sushi. So what impact will
robots have on the fast food industry and the
livelihood of its workers? CNBC got a
behind-the-scenes look at restaurant robot maker
Miso Robotics to find out. Miso Robotics got its
start in 2016 with a handful of engineers in a
Pasadena, California garage. Two years later,
the company launched Flippy at a nearby
CaliBurger restaurant. Flippy's first job was
turning over a hamburger patty after it was placed
on a grill by a human chef. But the company
quickly pivoted to fried foods, rolling out a
portable fryer station for baseball games at Dodger
Stadium. This was really the peak
throughput test for us. Can Flippy keep up with
in-between innings at a Dodger game and everybody
goes to the concession stand? Can we meet that
demand? In 2021, Miso launched
Flippy 2 using a mounted rail system, AI and
computer vision technology that can identify and
track food as it moves through the structure. Although it has a camera,
tablet and robotic arm, engineers say the real
tech is in the software. The hard thing to get
right about this product is having the computer
vision, the algorithms that plan the cook cycle
and the software that manages the robotic
motion to all work together so that it's as
reliable as a refrigerator. And it does
the job. Food is dispensed directly
from the freezer into a basket. The robot's
computer vision identifies the type of food and
places it in the appropriate fryer. Once the food is cooked,
the basket is taken out of the fryer, shaken and
dumped to a holding area where it is bagged by a
worker. For those of us who have
been in a restaurant, this is exactly the same
process that is done today by a human. He's constantly playing a
multi-frame game of chess in his mind,
understanding where to be next. So his sequence of
movements is precise and he doesn't undercook,
overcook food. But what about the cost? Miso charges restaurants
about $3,500 a month for a Flippy 2 under its robot
as a service model. The company charges an
additional fee of about $10,000 for installation. By comparison, the median
hourly wage of fast food workers in the U.S. is
just $12.07 an hour. There were roughly 11.7
million restaurant workers in the U.S. in 2022. But Flippy 2 is different. Flippy 2 works around the
clock. We have many 24 hour
locations where Flippy 2 is installed. Flippy
doesn't call in sick. Built in Columbus, Ohio. It takes Miso about six
weeks to manufacture one Flippy 2. The current
off-the-rack mechanical arm is the same type
designed for car factories. And Miso says
they cost $15,000 each, plus another $5,000 to
modify with additional grippers and sensors. Last year, Miso partnered
with robotic arm maker Ally Robotics and hopes
to start producing its own arm in 2023. The company also makes a
streamlined version of Flippy 2 called Flippy
Lite, as well as a drinks dispenser named Sippy. Flippy Lite is currently
being tested in restaurants by Chipotle. And what Flippy Lite is
designed to do is to take one item that requires
frying and just cook the heck out of it all day
long. With about 25,000
shareholders, Miso has so far raised more than $70
million in crowdfunding. The company has also
announced it is testing a robot that fries chicken
wings for Wing Zone. The global fast food
industry is a $273 billion business, including more
than 280,000 fast food restaurants in the U.S. alone. At this White
Castle on the outskirts of Chicago, staff in the
busy lunch hour shift face a barrage of orders
coming from drive thru customers as well as the
main counter. Would you like to try any
mac and cheese bites today? Thank you. If the screen's correct,
it is $10.42. Second window, please. It's very fast-paced. We're all in our
positions, but we do move around, jump out to help
out to get the orders out. But meager salaries, fewer
teenagers in the workforce and fear of Covid have
been a drain on fast food restaurants. Job openings
at restaurants and hotels reach 1.3 million in
November 2022, the 20th consecutive month, with
over a million vacancies. Bars and restaurants make
up about 90% of those positions. A typical fast
food worker makes about $26,000 a year compared
with a concierge at a hotel who can earn more
than $37,000. During the pandemic, we
faced a lot of staffing challenges and things are
better, but there's still challenges with staffing
many locations. To assist workers, White
Castle added Flippy to take over its fry
station. The robot cooks food more consistently
and doesn't require time off. And I think some
restaurants are also looking at this as a way
of, 'Well, this robot is expensive, but is it
cheaper than however many employees I would need to
hire, especially because a lot of workers have not
been sticking around as long as they used to.' This is one of the
positions that is the hardest to fill and
hardest to retain for restaurant operators.
There are dozens of positions back of house. This one is a really
demanding one. It's hot and it's very,
very fast-paced. Robots like Flippy solve
other problems for restaurants, too. For starters, fast food
work can be dangerous. In California, the state
with the highest number of people employed in the
fast food industry, workers face health
hazards ranging from overflowing sewage, smoke
inhalation and extreme heat, according to one
study. Turnover is another
headache for the industry. Prior to the pandemic,
the restaurant industry faced a workforce
turnover of 130%, according to Panera Bread
CFO Michael Bufano. At the same time,
low-wage workers made up 43% of the U.S. workforce. As you look at the labor
allocation within the restaurant, that's being
able to shift one human from that station
somewhere else, and that's saving every single
month, probably somewhere around $700 to $900 in
actual profit. Another incentive for
restaurants, hard to fill positions have forced
chains to push hourly wages to new highs. The wages have been very
low in these industries. They've really been very
much pegged to the minimum wage so that when the
minimum wage has been allowed to decline in
real terms, that is, it hasn't kept up with
inflation, then those jobs get progressively less
and less attractive. Labor is one of the
biggest costs restaurants face, averaging about 25%
to 30% of sales. McDonald's said it would
reach an average of $15 an hour by 2024 at all
company owned restaurants. Starbucks said it was
bringing its pay floor for U.S. baristas to $15 an
hour. Gen Z consumers made 5
billion restaurant visits in the year ending July
2022, including 4.3 billion trips to fast
food eateries. Restaurants often have
thin margins, which is one of the reasons why
adoption of automation has been slow. But that could
be changing as the cost of robots has declined by
50% over the last three decades. Industrial robot
usage has tripled over the past decade from about
1,000,000 in 2010 to 3,000,000 in 2020. The auto industry, by far
the largest segment in the market, is followed by
electronics, food and beverage and metals and
machinery. The industrial robotics
market is expected to reach $81 billion by
2028, up from almost $42 billion in 2021. But will those trends
impact Miso's business? Robots are hard to develop
and they're expensive to develop. It takes a lot
of time and money and frankly, a lot of
engineers to get all the technology working
together smoothly. Miso makes money by
having more and more robots in the field. In 2021, Miso spent $1.5
million on R&D, $7.8 million on salaries, $6
million on sales and marketing, and a little
over $6 million on overhead and
administrative expenses. Revenue was just $36,000
in 2021, mostly from the deployment of one Flippy. Right now, it seems like
Miso Robotics is probably the biggest and best
known player in the space. Competitors is a pretty
small pool at the moment. We've been on the
forefront of this for a long time, but they are
coming and we know the ones that aren't here
today will be here tomorrow. Robot adoption could come
quickly in a similar fashion to the way
delivery apps revolutionized the
restaurant space. The global food delivery
app business is over $150 billion, triple the
amount it was in 2017. And that would be welcome
news for fast food restaurants who face
pressures ranging from rising food costs to
staff turnover. Americans spent $2.1
trillion on food in 2021, with more than half of
that money going to food-away-from-home
purchases. The tide has turned.
There's no longer a question of 'Are robotics
coming to the industry?' It's a foregone
conclusion. The question is 'At what pace and in
what form?' And what you will see in
the months and years ahead for the foreseeable
future is more and more automation solutions like Flippy 2 being deployed in
everyday restaurants, including some of the
best known brands in the world. There was a lot of hype in
2017 around Zume. What if there was a better
way to make and deliver pizza to you? Turns out
there is. Zume is revolutionizing
delivery model. All pizzerias out there,
you're in trouble. At the time, Zume was a
pizza company that used robots to automate the
pizza creation process and utilized large
oven-carrying trucks to bake the pies as they
traveled to customers. The idea was a hit and
earned Zume a $375 million investment from SoftBank. So why are we talking
about pizza made by robots in a video about
compostable packaging? That was our question,
too. One of the problems that
we encountered in pizza was our beautiful pizza,
with no stabilizers in it, in a traditional box,
declined in quality from the time you cooked it to
the time it was delivered to the point where we
didn't think it was good enough. So we designed a
new pizza box. At the beginning of 2020,
Zume laid off half of its workforce, 360 employees. This is another stumble
for SoftBank's Vision Fund, which invested $375
Million into Zume, bestowing that unicorn
status $1 billion valuation. But the company kept
going. Now Zume is dedicated to
producing compostable packaging that is durable
and backyard compostable breaking down in a matter
of 90 days. Zume is breaking into the
$274.2 billion sustainable packaging market, which
is expected to grow to $413.8 billion by 2027. But the industry does
face challenges. I wish I could say it was
just the cost, you know, and cost is going to come
down. Or it's just that we need one thing. But it's
really, I think, a variety of factors. As the oceans fill up with
plastic waste and as companies make pledges to
switch to greener packaging, it could be
great timing for Zume. So let's take a look at
some roadblocks in the compostable packaging
industry and what can be done to overcome them. Let's talk about the life
cycle of a package first, using a takeout container
as an example. Takeout containers can be
made of many different materials, which all have
their pros and cons, like plastic, metal,
styrofoam, cardboard and a compostable material like
molded fiber. Some plastics and metals
can be recycled, but they have to be perfectly
clean in order to be made into another product. They can also be
downcycled, which is where they're used to create
something that cannot be recycled again, like a
park bench. But recycling has failed
in the U.S. In 2018, less than 9% of
plastic waste was properly recycled in the U.S., and
it got worse in 2019 when China stopped importing
American trash. So most of what you think
may be getting recycled is actually getting sent to
landfills or making its way into rivers and
oceans. The UN says that by 2050,
we'll have more plastic than fish in the ocean. Plastics become so
prevalent that every person on the planet eats
a credit card's worth of plastic a week. Plastic recycling has
actually been considered by some to be a ploy by
oil companies to make plastic production seem
more environmentally friendly than it is. And even sending food
scraps to the dump can be harmful. When you're actually
introducing those organics in landfills, you create
a lot of methane. And as you know, methane
is a very important greenhouse gas emission. So then you want to
reduce that amount of organics that you send
into the landfill. But the U.S. loves
plastic. The country generated
more than 14.5 million tons of plastic in 2018. It's not easy to get away
from that. Plastics and amazing
material. It's miraculous. And the
convenience of plastic has powered many of the
modern conveniences that we enjoy as consumers
around the world. But unfortunately, the
things that make plastic great come with
catastrophic consequences. Aluminum containers are a
bit easier to recycle, but still only saw about a
35% recycle rate in 2018. Cardboard is recyclable
and compostable, but only if it's clean and doesn't
have some sort of coating on it. Virgin cardboard
can also contribute to the deforestation of
endangered habitats. Styrofoam or polystyrene
is technically recyclable, but not in a way that is
economically feasible or environmentally
effective. Many cities and states, including New
York City, Maine, Vermont, Maryland and a long list
of cities in California have completely banned
the use of polystyrene, and the trend is growing. Compostable materials
seem like a solution to these recycling issues,
but come with their own set of confusing
marketing tactics and end of life difficulties. For instance, the word
biodegradable, which is used to describe certain
materials like plastic made from corn, has been
scrutinized. That necessarily does not
mean that a bio acronym at the beginning will mean
that the polymer is from bio-based resources or is
biodegradable. And if it's
biodegradable, doesn't mean that it's
compostable either. The word biodegradable on
its own for a marketing term is seen as
potentially pretty misleading. So several
states have passed laws actually forbidding the
term biodegradable in marketing language when
it comes to single-use items. So states like
California, Maryland and Washington, Minnesota for
bags specifically. Some materials require
composting in an industrial facility like
certain cutlery and coffee cup lids, which means you
can't just throw it in your backyard and hope it
will break down. It has to be sent to a
facility that monitors the chemical and temperature
levels of a large compost pile. The materials are
also sifted to make sure everything has broken
down properly. And if you think you're
doing the environment a favor buying these
industrial facility compostable products and
still throwing them away in the trash, you're only
partly correct. Landfills are usually too
compressed to allow oxygen and microorganisms to
break materials down, even for things like food or
paper, which are usually pretty easy to break
down. Unlike with recycling,
where you have different plastic types, you have
different shapes and that can help determine the
recyclability. And each community has its
different requirements based on what their
recycling facility can sort. There's no one
common definition of what is recyclable. With
compostability, it's different. We have these
international standards saying this is what is
compostable, regardless of what plastic type you're
using, regardless of whether there's paper in
there or not. According to one report,
only about 27% of the United States population
has access to some kind of composting program that
accepts either food waste only or food waste and
some form of compostable packaging. So it's not a
ubiquitous solution yet. The real difficulty here
at Zume is finding the solutions to replace all
of those arrows. Let's get rid of those
arrows so that you don't have the confusion at the
consumer level. Can I or can't I? And throw your hands up
and I'm just going to throw it in the trash and
let it go to the landfill. So it's going to make it
simpler, easier. I know I can just take it
and post it, and 90 days later I can use it to
fertilize my garden. Zume developed packaging
that is backyard-compostable and
it really makes a difference.
Backyard-compostable packaging can break down
without the use of industrial monitoring. They use the
microorganisms in the soil or water to break down
packaging for people living in areas without
composting services, this gives consumers the
option to discard their waste in a local compost
pile or even in their backyard compost piles. I can tell you that we've
tested our products with independent labs in all
of the known waste streams, and we have all
the certifications that give you the results that
you'd be looking for. Recently compostable
products have been on the rise. Companies like Full
Cycle in the U.S., Astu in India and Biofase in
Mexico have been springing up left and right. Unilever and PepsiCo,
among others, have goals to design 100% of
packaging to be reusable, recyclable, compostable
or biodegradable by 2025. That's partly a technical
definition, so making it technically recyclable or
compostable. But you also have to be
able to get it recycled or composted at scale. And that's what we're all
working on right now, is how do we how do we make
that happen, both technically recyclable or
compostable and at scale? And Zume is trying to make
the compostable transition easier for brands,
brokers and distributors by creating packaging out
of materials that are local to the companies
that need them. For some of their
packaging, the materials they use come directly
from nearby farms who can sell their agricultural
waste to Zume. One of the big things I
think we can do here is the revamping of the
supply chain. So let's build a pulp
mill next to the source of the agricultural waste so
it doesn't get burned or it doesn't get taken to a
landfill, turn it into premium molded fiber
packaging that then is composted. So it's a
place to grow the next crop. It's a closed loop
supply chain. And if you know something
I think we've heard a lot about over the past year
is the supply chain. The company has products
available in 21 countries, including takeout
containers, cosmetics, packaging and their
robotic technology when a company wants to produce
packaging themselves. We work with some of the
largest industrial companies in the world,
and they build factories based on our technology. At the same time, we work
with some of the biggest brands in the world and
we solve their product problems. We help give
them a road beyond plastic. When we have
these fully qualified products and these fully
qualified factories, we connect the two of them
together and we give brands a path beyond
plastic at scale with great economics for the
brands and great economics for the factory partners. The sustainable packaging
industry is a $274.2 billion a year business. Of course, the packaging
industry as a whole is about $900 billion, so
there's still a lot of work to be done. There are some
constraints when it comes to compostable packaging,
like higher cost. A hundred plastic straws
can cost as low as $1.53 when bought in bulk,
compared to paper straws, which can cost $1.67 for
100 when bought in bulk. That's an increase of 9%. These plastic clamshell
containers for burgers and sandwiches can cost $0.13
each when purchased in bulk, their natural fiber
counterpart can cost $0.19 each when bought in bulk,
an increase of 46%. Remember, packaging is a
commodity and it's always a low cost product. So in general for food or
for this kind of situation, your margin is
very small that you can actually don't have a
large amount of room there to have a cost in the
packaging system. Zume says its robots are
the reason it can keep costs down. Previously, machines could
either make very low quality things quickly. Some machines could make
high quality things very slowly, but they were so
expensive that they would be outrageous for a
consumer market. What our technology does
that's so revolutionary is it can make very high
quality parts very fast. And then there's the
question of performance. Compostable packaging
companies have come up with many ways to make
their products as durable as
environmentally-damaging alternatives. But it's
not always easy. We're using technology to
advance the state of the art in molded fiber
production so we can take many, many millions of
tons of agricultural waste and turn it into not
plastic. And we can do that
without compromising on performance or on price,
and we can do it with speed that is absolutely
category leading. One thing Zume doesn't
have control over, though, is the difficulty that
comes with waste management, including the
lack of composting programs mentioned
before, along with the general confusion of
whether something is compostable or not. The problem is that the
waste management system is still at the state-level. So we have 50 states
with different types of goals. So we should have
tried to get at least an aggregation of state or
if the federal government can actually pass some
type of regulation on where we have goals to
move the whole country forward. Without a fully circular
economy, meaning packaging is created, used and
turned back into materials that can be used to
create more, our packaging obsession will continue
to cause problems. There's tremendous demand
for these solutions in the market and with
consumers. So now that the solutions exist and the
demand is there, now we're getting the scale. You may have been one of
the 140 million people who've seen this video on
YouTube. Boston Dynamics has made
a name for itself by building robots like
Spot, which move in ways that many of us have only
seen in sci-fi movies. We look at ourselves as
having mastered the ability to create robots
with mobility, vision and manipulation, and we
think we can combine those in just almost an
infinite number of ways at different applications. The public's fascination
with Boston Dynamics' robots is likely owned to
equal parts awe and fear. A 2017 episode of the
popular dystopian Netflix show Black Mirror
depicted a woman running from a pack of killer
robot dogs. The show's creator later
admitted in an interview with Entertainment Weekly
that Boston Dynamics' videos were the
inspiration. Most people think when
they see Spot that that's cool. There is a small
fraction of people who say it's creepy. We've been
telling ourselves fictional stories about
dystopian robots for 100 years. I think it's
people's desire to kind of explore that fear that
makes them want to react so negatively to Spot. But while Boston Dynamics
has sparked the imaginations of the
general public with its viral videos, the company
is now hoping to get the attention of paying
customers. I expect that we will
become a serial producer of novel robots with
advanced capabilities. I think we'll build every
3 to 5 years. We're going to roll out a
new robot targeting a new industry. CNBC got a rare look at
Boston Dynamics' office in Massachusetts, where the
team showed off two of the robots they're working to
commercialize, Spot and Stretch. The yellow robot that you
see walking around is a mobility platform. It gets really
interesting when you start adding payloads on it and
integrating it into things. We have really
nice visual cameras, thermal cameras,
microphones, gas sensors and those let you take
the robot into interesting places and collect data
about what's going on. We see Stretch as
ultimately a general purpose box moving
machine that can be used anywhere in the
warehouse. Those two markets in
particular, the robotics inspection and the
warehouse market, are what we perceive to be the
fastest growing market within all the robotics
segments. The machines can look at
more things faster, in greater detail. They never get bored. They don't need breaks. They're just relentless. With nearly 30 years of
experience, Boston Dynamics has proven its
ability to make robots that move in remarkable
ways. Now the question is, can
the company turn a profit? Boston Dynamics was
founded in 1992 by Marc Raibert. The company was
an offshoot of Raibert's work on dynamic robots at
Carnegie Mellon and MIT. Early on, much of Boston
Dynamics' research and development was funded by
the U.S. military and DARPA. In addition to robots,
Boston Dynamics also developed 3D computer
simulation software. This robot, LS3, was part
of a project that we worked with DARPA and the
Marines. This was a proof of
concept project to show that the robot could
actually carry equipment in a useful way for a
marine squad. Some of Boston Dynamics'
other early creations included Big Dog, which
like LS3, was meant to traverse rough terrain
and help soldiers carry gear. And Cheetah, which
at its fastest, could reach speeds of 28.3 mph. Petman was one of the
company's first humanoid robots. It was developed
for the U.S. Army to test the special
clothing used by soldiers for protection against
chemical warfare agents. We're very proud of our
history that involved Darpa and government
funding for creating some of the fundamental
technology. It was really that visionary funding
that sustained over long periods of time that was
required to solve truly hard problems. But in 2013, the company's
focus shifted after Boston Dynamics was purchased by
a well-known technology behemoth. What does a Big Dog,
Wildcat and Cheetah have in common? While it may
sound like the beginning of a joke, those are the
names of robots by Boston Dynamics. Google
continues its recent string of acquisitions
with engineering company whose repertoire includes
designing research robots for the Pentagon. When Google purchased
Boston Dynamics for an undisclosed amount, the
internet giant was gobbling up robotics
companies left and right. The New York Times first
reported the acquisition, noting that it is the
eighth robotics company Google has bought in just
the last six months. There is speculation that
Google wants to build a new class of robots that
could perhaps do everything from a
warehouse work to package delivery. At that time, Google was a
bit more ambitious and they are trying to look
for the next big thing. And highly specialized
robotics is perceived as a big emerging area that
the industry was sort of expecting or anticipating
at that time. Google itself did not say
much about the acquisition other than that it would
honor Boston Dynamics' existing military
contracts, but was not interested in becoming a
military contractor itself. I think there are some
concerns around Google dabbling with military
contracts that might hurt their public reputation. But without government
contracts, Boston Dynamics would lose its revenue
stream. Even existing contracts that the
company had with the military did not always
pan out and R&D was expensive. Owning Boston
Dynamics reportedly cost Google $50 million a
year. Internal movement at the
company also shook things up. When Google bought
Boston Dynamics, its robotics effort was being
run by Andy Rubin, who was well known at the company
for leading the development of Android. But after Rubin left
Google in 2014, Google's robotics division
stalled. Then in 2015, Google, which by then was
renamed to Alphabet, got a new CFO, Ruth Porat. Over the next few years,
Porat went on a cost cutting spree, and Boston
Dynamics was one of the casualties. That relationship didn't
really last very long, mainly because the fruit
of that relationship is not as big as what Google
perceive it to be. Boston Dynamics again
found itself with a new owner. SoftBank. Adding to its
artificial intelligence portfolio by buying robot
makers Boston Dynamics and Tokyo-based Schaft. Once that company moves on
to SoftBank, SoftBank tried to inject more of a
commercial DNA into the startup itself. When SoftBank purchased
Boston Dynamics in 2017 for a reported $165
million, the Japanese conglomerate already had
a few robotics companies in its portfolio, as well
as a consumer robot known as Pepper. The idea for SoftBank was
that it really wanted to become a large robotics
supplier to the industry in general. Under SoftBank, Boston
Dynamics did open up sales to its first commercial
product, Spot, in June of 2020. Prior to that, the
inspection robot had only been available to lease
as part of the company's early adopter program. But like Google before
it, SoftBank found that breaking into the
robotics market was harder than it seemed. The market still largely
concentrated around industrial robots as well
as warehouse robots. So the robots type that
form factors that Boston Dynamics excels in are
not what the market wanted at the end of the day. In December of 2020,
Boston Dynamics changed hands again. South Korean
car company Hyundai announced that it was
taking an 80% stake in Boston Dynamics to the
tune of $880 million. This year, tens of
thousands of robots will be built and put to work. Out in the world making
money. But in the next ten
years, millions of robots will be built and get put
to work in the world. And in most of these
markets, no matter how big they are, a small number
of companies end up dominating a majority of
the market share. And so I think Hyundai is
positioning itself to be the leading robot
manufacturer. Hyundai bought us for our
mission. They're excited about our
mission to launch novel robots that can help
industry. And ultimately, I think
they see their own mission evolving beyond cars to
generalize mobility and see the things that we've
been developing as ultimately complementing
them. Hyundai and Boston
Dynamics are so far from dominating the robotics
market, but it's a market with a lot of potential. Revenue from mobile robots
in the warehouse, manufacturing and
infrastructure spaces is expected to increase
dramatically from about $6.1 billion in 2020 to
about $64.9 billion by 2030. Something like 800 million
containers are shipped around the world each
year. Many of those are full of
boxes. There's probably trillions of boxes that
are loaded and unloaded by hand each year in the
United States. It's a huge job. It's a mountain of
material that has to get moved. Stretch is really
power tools to help people move that material. Stretch is made up of a
few different parts. The robot uses a mobile
base to move around tight spaces and go up loading
ramps. An arm, gripper, vision
cameras and sensors allow the robot to identify and
handle a variety of different objects. We're starting with truck
unloading, but we think truck loading as well as
what we call order building. So when you go
through a warehouse and assemble a bunch of
different boxes onto a pallet, that order
building is a big job and we're actually developing
that at present. Similarly with Stretch,
we're building in intelligence so that the
robot can deal with unexpected conditions. If suddenly it knocks
down a cascade of boxes, the robot can deal with
that and pick them up and clean up its own mess. How do you feel about
competitors? There's Amazon that has their own
robotics for warehouses. There's a lot of
automation companies that are entering the
logistics space, and of course the logistics
space has a huge variety of problems to solve. We're uniquely focused on
mobile box moving, which almost nobody else is
looking at. So we think we have a
nice safe entry into that market that we can own
for a significant portion of time. Amazon, I think, is
lighting terror in the hearts of all the
warehouse owners across the world. So they have a
very motivated buyer that wants to buy tech that's
comparable to what Amazon is developing. Boston Dynamics says it
expects Stretch to go on sale next year, though it
would not provide a price point. Customers can also
opt to purchase just the computer vision software
that powers Stretch, which Boston Dynamics calls
Pick. The company says it's
working with a few early adopters to test the
robot, but would not say who those partners are. Unlike Stretch, Spot has
already hit the market. We've sold several
hundred Spot's thus far. We launched it really
commercially just last year. The entry level
Spot Explorer is about $75,000. We have another
version that has additional capability in
a recharging station that's a little bit more
than that. Sales have exceeded
expectations, really. Payloads like Pan Tilt
cameras and LIDAR are sold separately and can be
quite pricey. Even so, Spot has
received interest from a number of industries. So far, the robot has been
used to do inspections at construction sites, oil
rigs, nuclear plants to check the vital signs of
Covid 19 patients in hospitals and even remind
people to maintain social distance amid the
pandemic. So I would take a
substation like this and subdivide it into maybe
four sections and I would have the robot do a
detailed inspection on each of those four
sections. This is Dean Berlin. He is the lead technology
analyst for National Grid, an electric and gas
utility company that serves customers in
Massachusetts, New York and Rhode Island. For the past year and a
half, Berlin and his team have been testing to spot
robots by programing them to do inspections of
National Grid's equipment. Berlin says the team also
considered other robots for the job but chose
Spot for its mobility capabilities. Some of the advances that
we find for the Boston Dynamics robot is that
because it's a four legged walking terrestrial
robot, it can actually transverse our
substations fairly easily. The robot also can be
equipped with a variety of different payloads,
making it mission specific. So we're going to power on
and undock enterprise robot. A typical inspection looks
something like this. First, engineers program
Spot so that the robot knows where to go and
what gauges to pay attention to. The instructions for each
mission are relayed to the robot using a QR code. The robot that National
Grid is using is equipped with LIDAR to help it
navigate as well as visual and thermal cameras to
take detailed photos and thermal images of the
equipment in the substation. The robot will be focusing
on switches and circuit breakers. It will also
take zoomed-in visual images of some of the
gauges on the equipment to monitor the levels of
those gauges. It can use this
information to diagnose if there are hot spots on
our assets that might indicate areas of concern
or areas that we might need to attend to in an
upcoming maintenance. Prior to using Spot, most
inspections at National Grid substations were
done by people. In some cases, operation
of the substation would have been temporarily
shut down since it wouldn't have been safe
for humans to do the inspections while the
equipment was still on. National Grid has noticed
savings in terms of time because the robot is able
to perform these missions in parallel to a human
performing other tasks. So in a sense you get
efficiency from having a human and the robot
operating at the same time. Spot may even go to space. NASA has been sending
teams of the robotic dogs into caves to see if they
can one day be used to search for life on other
planets. Caves, protection from cosmic rays and
stable temperatures, NASA says, makes them the most
likely of places to find life. My team's focus at NASA is
on developing next-generation AI and
autonomy algorithms for robotic systems. Our
solution, which we call it NeBula that analyzes the
terrain, analyzes the environment and risks in
certain sense, you can look at NeBula as robot
brain that we integrate with robot body that
could be a real rover and legged platform or even a
flying drone. In the case of exploring
caves, Agha says his team chose Spot for several
reasons. You often come across
narrow constrictions, narrow passages that you
really want to be able to traverse with a system
that is not large and bulky. And the Boston
Dynamics robot offers an interesting combination
of small size, at the same time, high locomotion
capabilities and enough power to be able to
traverse through those sorts of narrow passages. The ability for Spot to be
equipped with different payloads also comes in
handy. Sending in one large
robot to carry all the scientific equipment
needed for a mission would make navigation in a cave
difficult. Instead, NASA sends in
teams of spot robots, which can each
simultaneously accomplish different tasks. NASA says there are a
number of things that need to be worked out before
Spot can explore new planets. But the
potential opportunities have scientists excited. We have a region on Mars
called Tharsis region. There are a lot of
interesting caves that if we can explore one day we
will learn a tremendous amount of knowledge and
we can get a lot of science from it, but it's
highly uneven. That's where different
and new locomotion ideas need to come in, and
legged platforms is one of those that can transform
how we think about exploring. Although demand for
warehouse and inspection robots is expected to
increase in the future, Boston Dynamics still
faces a number of challenges on its road to
commercialization, many of which the company has
already been running into with its Spot robot. Over the past ten years or
so, we've basically solved most of those fundamental
research problems. When things were working
well enough, we started to ask, 'How can we make
this practical and how can we start making this
useful in real applications?' Manufacturing, having a
service department, having a sales team, those have
all been new skills for us. Marketing, all new
things for us that have encouraged us to really
expand our staff. Playter says his team has
grown from 100 employees during the R&D stage to
400 employees now. So far, Boston Dynamics
says it's been able to keep up with demand,
producing around 40 to 50 Spot robots a month with
the help of contract manufacturers. Final
testing, assembly and repairs are done
in-house. But in order to compete in the larger
market and have a shot at profitability, experts
say Boston Dynamics needs to seriously ramp up
production. Boston Dynamics' biggest
challenge to commercialization today
is just cost, pure and simple. The hardware
itself is the other piece. The hardware itself for
something like a Spot is, today, probably in the
$20,000 ballpark. They've got a great
robot, hugely technically capable right now, but
that's far too expensive to really sell at huge
scale today because people's alternative is a
robot that's not nearly as capable, but one fifth
the cost. And as long as it's
capable enough, they're always going to go with
that alternative. Boston Dynamics hopes
that's something else Hyundai can help with. Hyundai is really going to
be a great partner for this stage of
commercialization because they bring expertise in
manufacturing and obviously a worldwide
footprint in sales and service. And those things
are going to help us get our robots out into a
broader audience. In the inspection space,
Spot will have to contend with wheeled inspection
robots and flying inspection robots or
drones. A number of companies, including
Swiss-based Anybotics and China-based Unitree
Robotics, for example, are also making four-legged
dog-like robots, though the latter seems to be
marketed more as a human companion rather than an
industry tool. We do enjoy a pretty good
lead in terms of the robots having reliable
behavior in complex environments. Our robots
have dramatically better integration between their
vision systems and their balance systems, and we
also do a lot of the higher level functions
that you don't see our competitors doing, like
complex mission planning and actually completing a
lot of these end use applications that produce
value. Spot's really the only
robot in the world that can deal with the
complexity of the terrain that people can. Boston Dynamics faces just
as much competition in the warehouse robot market,
which includes companies like 6 River Systems,
Fetch Robotics, GreyOrange and Geek+. And then, of
course, there's Amazon. The interesting part with
Amazon when it comes to logistic business is that
they tend to develop solutions just for
themselves. Amazon doesn't really
supply the technology to external parties, but
then again, they definitely can be a
competitor because at some point Amazon may feel
like they are ready to now serve the wider market
and then they can now roll out their solution. In the end, some experts
believe the market could be regionally segmented,
with Western customers choosing Western robot
manufacturers due to security concerns. When you deploy robotic
solution into the field, it's also about
collecting data. The current market
perception is that if you were to go with the
Western suppliers, in this case Boston Dynamics,
there is a lot more respect towards how your
data is being used. Boston Dynamics says it's
off to a good start. So I'm sure developing
these products is very, one, time consuming and,
two, costly. How are you covering the
cost right now? Really, through the
investment of our owners such as SoftBank and
Hyundai, they're really covering the cost. Now,
we do have significant revenue at this point,
which is also helping. We're generating revenue
currently from the sales of our robots, primarily
Spot. We have a little bit of
time before we're profitable, but we're on
a great trajectory so far. As for its R&D roots,
Boston Dynamics says it's not leaving those behind. It's critical that we
maintain leading edge R&D work within the company
as we commercialize, but we've only covered a
fraction of what we need to do with robotics.
There's additional work in vision and manipulation
that we want next-generation robots to
have that we currently can't do. So it's
important to keep pushing that forefront. Playter says the company
is also looking at other industries, including
construction, manufacturing and
entertainment. As for Atlas, it will
likely remain in the lab. Could we see Atlas doing
parkour with us in our backyards someday? I do think robots will
ultimately have relationships with their
owners, that could be rewarding and
interesting. I don't see Atlas as being that
product. I hope in the long run,
robots aren't the exception. Instead, they
become the rule and that we're all comfortable
around them and they delight us and enhance
our productivity and safety.
