Build a rover, send it to the Moon, sell the movie rights.
That was our first business model at iRobot. Way back in 1990. We thought it would be how we’d first change the world. It’s ironic, of course, that through that model, changing the world, meant sending a robot to another one. Sadly, that business model failed. And it wouldn’t be our last failed business model. Not by a long shot.
Why? Because changing the world through robots, it turns out, is no easy task.
Perhaps the biggest challenge back when we started in 1990 was that there existed no rule book on how to do it. There weren’t many robots, let alone robot companies, let alone any kind of robot industry. We would have to build it. All of it.
Walking that path meant being comfortable with ambiguity, and comfortable with the knowledge that not everything we tried was going to work – at least not in the way we originally conceived. It was and continues to be the cost of inventing the future.
But walking that trying path also meant learning from our mistakes, dusting ourselves off, trying again, and eventually yes, doing what we set out to do: change the world through robots.
We’ve learned so much along the way – what have we learned in our 30-year journey building the robot industry?
Robots are hard.
I’ve said it before, and I’ll say it again – when we first started iRobot we had to invent every element of the robot. Spatial navigation was a robot problem, voice recognition was a robot problem, machine vision was a robot problem, just to name a few. Back then, no one else had set out to solve these hard problems. Because so many of these problems existed, the robot industry, if it could be called that, moved in anti-dog years. Fortunately, times have changed and the ecosystem around the technologies that make robots possible is much richer… but back then… it was just us.
But even today, with a much larger ecosystem of bright minds solving for the hard tech problems, getting a robot to work successfully still means getting just the right mix of mechanical, electrical, and software engineering, connectivity, and data science into a robot form factor that people trust and want to invite into their home.
Speaking of trust, therein lied another challenge – even when we did invent a robot that worked extraordinarily well – Roomba – consumers simply didn’t believe a robot could do what we said Roomba was capable of. It turns out that the principle objection to purchasing a robot for much of the last 30 years is a lack of belief that it could possibly work.
But that’s not all: even when you build a robot right, you can still somehow build it wrong. We experienced this with Roomba. We built it to match the reliability standards of European upright vacuums, something of which we were very proud. Of course, we didn’t anticipate that our customers would run their Roomba once per day, rather than the once per week average the European standard set – and as the first generation of Roomba robots broke down two years ahead of schedule… we learned that reverse logistics, great customer service, and a generous return policy were a very important part of a good robot – as was the realization that we couldn’t compare usage to whatever traditional means of action a good robot might take the place of.
And yet while building a robot that was durable, that people wanted and trusted was hard enough, 30 years building robots has also taught us that…
Good business models are harder to build than good robots.
Let’s state this one right off the bat: for a long time the robot industry was unfundable. Why? Because no robot company had a business model worth funding. It turns out that a business model is as important as the tech, but much more rarely found in a robot company. And for a long time we were no exception: we tried 14 business models before we arrived at one that sustainably worked.
But the tenuous nature of our business models did teach us the value of extending the runway for our business until we found one that worked. And how does one extend the runway most effectively? By managing risk.
It’s one of the great misunderstandings of entrepreneurship – that great entrepreneurs are risk takers. Great entrepreneurs are not great risk takers… they’re great managers of risk. And this was something we at iRobot were and are exceptionally good at.
How did we manage risk early on? Through partnerships. The kind of partnership we looked for were ones in which there was a big company – one that had a lot of money, a channel to the marketplace, and knowledge of that marketplace, but for whatever reason lacked belief that they themselves were innovative – and us – a small company with no money, but believed ourselves to have cool technology, and be highly capable of innovation.
What we’d do was give our partner, the big company, absolute control. By doing this, it allowed us to say that since they could cancel the partnership at any time, we needed them to cover our costs… which they did. But we also didn’t ask them to pay us profit upfront. By not having the pay profit upfront, it makes obvious that we’re sharing the value that the partnership would ultimately create, and in a worst-case scenario for our partner, if the partnership didn’t result in a successful product, they got very inexpensive high-quality research.
This “Asymmetric Strategic Partnership” approach not only provided the funds needed to sustain our business when we didn’t have a sustainable business model – the “failure” of those partnerships actually led to our ultimate success. Why? Because…
Innovation and failure come hand-in-hand.
While this is far from a ground-breaking realization, its applicability to iRobot is quite unique. Because for us to become successful, it turns out that we had to learn the lessons from failing to earn royalties on robot toys (business model #3), failing to license technology for industrial floor-cleaning robots (business model #8), and failing to sell land mine clearance robots (business model #11).
Why? Because #3 taught us to manufacture at scale, #8 taught us how to clean floors, and #11 taught us how to navigate and cover large spaces. All of which gave us the knowledge and capability to build… Roomba.
Yes, you can change the world through robots.
We did. In more ways the one. We changed the world by eliminating the need for people to vacuum the house themselves. By IPOing, we showed that a robotics company could be successful – which gave investors more reason to put money into robotics companies around the world.
But perhaps the most important way we’ve succeeded in changing the world, is by making robots a daily reality for it. And how do we know that robots are now a reality? Because for the better part of the first 30 years of iRobot, what people said to me about robots – and Roomba specifically – was, “I can’t believe it actually works”
But now… the question they ask me is “Why can’t robots do more?”
It is a great question. And that is what the next 30 years of iRobot will be about.