Grishin Robotics Has $25 Million to Invest in Robot Startups
Robotics today is like the Internet in the 1990s: Fuel it with the right combination of technology, people, and money, and it will explode into a formidable new industry that will profoundly reshape people’s lives.
That’s the view of Dmitry Grishin [pictured above], a Russian Internet entrepreneur who made his fortune as a co-founder of Mail.Ru Group, one of Russia’s largest tech companies. Now he has his sights set on robots. Grishin is launching today a New York City-based investment company that has $25 million to inject into robotics startups. His goal is to take robotics beyond factories and labs and bring robots to the masses.
Grishin Robotics will seek to fund 10 to 20 early stage or middle-size companies developing robots in areas that include home maintenance, education, healthcare, entertainment, and transportation. He declined to name specific startups he's interest in, but said his team is "building a list" of potential companies they want to look into.
After studying engineering and robotics at Moscow State Technical University, Grishin went on to become one of Russia's most successful young tech entrepreneurs. He's currently CEO of Mail.Ru Group, a $6.5-billion publicly traded conglomerate. One of his co-founders is Yuri Milner, the Russian entrepreneur and venture capitalist who has invested in Facebook, Zynga, and Groupon.
When it comes to robotics, Grishin, 33, admits that he’s an outsider. But not for long, he says. He wants to take his experience building successful Internet businesses and apply it to robotics, a field that, in his view, needs more focus on product development to turn inventions into viable, long-term businesses.
Early this week, I met Grishin at the IEEE Spectrum offices in New York. Here’s my full interview with him.
Erico Guizzo: Many entrepreneurs who made money with Internet companies went on to invest in areas like green energy, electric cars, and space exploration. Why did you choose robotics?
Dmitry Grishin: I always had this dream of bringing robotics to people's everyday lives. A lot of progress is happening in computing, telecommunications, smartphones, but really not a lot is happening in the “offline world,” including robotics. What I see all over the world is that robotics needs capital. If you look at robotics, it's similar to what happened with other technologies, like the PC in the 1980s and the Internet in the 1990s. Things started to change only when PCs replaced mainframes and only when regular people, not just governments and scientists, had access to the Internet.
EG: In particular, you say you want to invest in startups focused on “personal robotics.” How do you define that?
DG: Personal robotics is a term that is not very well established. I see the field of robotics as three main sectors: industrial robotics, military robotics, and service robotics. Part of service robotics is personal robotics. That’s any kind of robots for mass markets, like home robots, drones, robots for education, healthcare, transportation—anything just for personal use. I’m a big believer that major innovation happens not in big companies but in startups, and I want to bring the culture from the Internet to the robotics field. In the Internet industry, you now have very well established processes to bring products to market. Small teams can work very quickly to get products done. In robotics, things take five, 10, 20 years. Many robotics companies have good technology but they don’t understand how to create products for lots of people. That’s where I want to change things.
EG: But how can your Internet experience help an industry that is quite different? The Internet benefited from things like the extremely low cost of creating and moving bits, and robots, of course, are not like that.
DG: When the Internet started, it was limited to people with technical backgrounds. But later, after applications that could be used by regular people appeared, everything changed. I believe the same will happen in robotics. So I just want to apply my knowledge about mass markets, product developing, and funding. One issue is that most VCs are very conservative. They want proven business models and exit options after three years. My view is that robotics, especially right now, has a huge potential to grow from a niche sector to a big mass market. And to do this, you need both product-oriented culture and money.
EG: And why now?
DG: I read a lot of books about robotics, and back in the ’60s and ’70s people made predictions that in 10 years robots were going to be everywhere. That didn’t happen, of course. A major problem was cost. A decade or two ago, a cool robot cost 100k to a million dollars. In my university you couldn’t build full robots; you could build just parts or emulate them on computers. Only very rich universities in the U.S. and other countries could afford a robot. Now two things are about to change that. One is that processors, memory, cameras, displays, and batteries are getting better and cheaper very fast. The other thing is that, thanks to outsourcing, manufacturing of high-tech products is also getting easier and cheaper. It’s the Apple model: “designed in California, assembled in China.” So now cost shouldn’t be the major obstacle that it used to be for robotics. What you need now is to find the good applications.
EG: And why New York and not, say, Boston or Silicon Valley?
DG: I want to invest in companies from anywhere in the world. In the U.S., there are three major robotics clusters: Boston, Pittsburgh, and Silicon Valley. In Asia, I think South Korea leads the game. There’s also Japan. In Europe you have Germany and France. So basically New York is the site with the best access to all these locations. And of course it’s a city with a well established financial and capital sector. And another thing is Mayor Bloomberg is pushing innovation, and having that kind of support always helps. So it’s a good place to be.
EG: Have you already met with some companies in which you want to invest? What’s your impression so far?
DG: We’re building a list of companies we want to talk to. We’re looking for early stage and middle-size companies—for me the ideal is something like 20 engineers. So not just one guy with an idea. We want companies that have already built a product or prototype and need money to scale and go to mass market. The main issue I see, and I don’t want to sound impolite, is I see a lot of scientists and researchers building good robots but with no product experience. They tell me, “We have this super cool smart robot arm,” but the problem is they didn’t think about the application. What’s the application in people’s homes that the robot can help with? We need a different approach. And then you need iteration. You need more companies that start and die, just to speed things up. You can’t have 10-year cycles. We need more young people starting robotics companies. Many will fail. Some will succeed.
EG: You probably know you already have competition. There are people like Scott Hassan, who founded Willow Garage to advance personal robotics, and Jeff Bezos, who’s invested in robotics companies like Kiva Systems and Heartland Robotics. Not to mention VC firms like Intel Capital and others seeking opportunities in robotics…
DG: I don’t think it’s competition. I think that the more money invested in robotics, the better. Like in the Internet industry, everybody benefits if the Internet grows. And you can also team up with the other guys and invest together. So I don’t see that as a problem.
EG: Still, there's been a lot of smart people looking for opportunities in robotics. Why do you think that you can see something that they haven’t?
DG: I talk to a lot of robotics companies and you’re not right. It’s very, very difficult to find somebody who would give you money. You don’t have fully focused VC companies with enough capital to do investment in robotics. As far as I know, we’re the only investment company focused exclusively on personal robotics globally. Second, from my perspective, I have a good background in tech. For example, Mail.Ru Group right now has 70 million users, so I understand what it takes to build companies for big markets. And for me robotics is like the Internet 20 years ago. Good software needs to meet good hardware. You need to leverage technologies like the smartphone and Microsoft Kinect. The idea is not to invent new components but use existing ones. For example, on Kickstarter there are robots made of smartphones. I think that approach is very similar to what happened with the PC. Don’t build a complicated PC; build a simple PC and find good applications. Once you find good applications, and cheaper production processes, robots will finally enter people’s daily lives.
EG: And what about well established companies like iRobot? They had a huge success with the Roomba, and I’m sure they thought about every possible other robot that'd let them replicate that level of success…
DG: First of all, I don’t want to replace them. If you look at the Internet, you have Google, Microsoft, and other companies that are all competing for the same things and they can coexist. The thing about becoming a big company is that you have legacy; you need to support customers. If you need to innovate, you need to be small. The cool stuff comes from small companies like it happened with Facebook and Android, before Google acquired it. If you focus on too many areas, you focus on nothing.
EG: Tell me about some robots, or areas of robotics, that you like.
DG: Some people think that you have to build full scale robots that look like a person. That’s cool, but to me it’s more important to think about the issue you want to solve. You want to, say, clean windows on skyscrapers. Your robot shouldn’t look like a human. Look at what type of problems your customers want to solve and then decide what robots should look like. In terms of areas of robotics, I think telepresence is very close to reality. For telepresence, you have all the technology needed; you just need to find a good way to approach customers, and the right combination of price, marketing, and user experience. Telepresence is a big application, not just for offices, but also for homes. Another area, I think anything related to the home—vacuum cleaner robots are only the beginning. Think about home maintenance and security or supervision. I also like anything related to drones. For example, you could use drones to supervise big buildings. Or to take photos at a wedding ceremony.
EG: What kind of relationship you want to have with the startups you fund and their founders? Your business partner and friend Yuri Milner is famous for his hands-off approach.
DG: Personally, I’m an entrepreneur myself, so I understand how founders feel when investors get involved. I know how sometimes it’s tough. I want to be the kind of investor that doesn't push them if they don’t need it. Just to help them. I like the approach that Andreessen Horowitz has; it’s an investment fund setup by founders, people who already know exactly what entrepreneurs need. Most times VCs have only worked with money and have never run companies. I’ve already run a company with 3,000 employees and I grew it from a small size.
EG: Tell me a bit about your background. And where your inspiration for robotics comes from?
DG: It’s a combination of many different things. Isaac Asimov, of course. RoboCop was a memorable movie in my childhood. And I played a lot with LEGOs, or actually the Russian version of LEGOs. I always had this idea that automation and technology could help people. What I learned from my Internet experience is that you really need to find good applications for customers. You also need money, technology, people, and the right environment. This is what I learned from the Internet and what I feel can happen in robotics too.
EG: How much of your time you’ll dedicate to Grishin Robotics, and what kind of time frame do you have in mind in terms of seeing robotics taking off?
DG: I’ll continue to work as CEO of Mail.Ru, but I’ll have a team and will supervise and make all the final decisions about investments. Robotics is my personal passion. I want to help it advance for as long as I have the money and patience. This is my approach. Most people are just waiting for robotics to take off. I decided not to wait.
This interview has been edited and condensed.
Photo: Grishin Robotics + Pixlr-o-Matic