Ep. #870 - Robots as a Service

00:00.00 Matt Watson
And we’re back for another episode of Startup Hustle. This is Matt Watson, and today, I’m excited to be joined by Will Santana Li from Knightscope. We’re gonna talk all about robots today, and this is gonna be really exciting. Before we get started, I do want to remind everybody that today’s episode of Startup Hustle is sponsored by fullscale.io, helping you build the software team quickly and affordably. Will, how are you doing today?
00:27.21 William Santana Li
I’m doing quite well. Greetings from Silicon Valley.
00:28.67 Matt Watson
So I’m excited to talk all about robots. You know my background is in software engineering. And I’ve had the privilege of writing software to control a few things before but never a robot. And that always sounded like a fun thing to write software for.
00:44.35 William Santana Li
Robots are here. They’re coming to kill everybody and take everyone’s job. So it’s really easy to just write. You know the code to take care of that.
00:54.63 Matt Watson
Do you have any experience with Robot sharks with laser beams?
00:59.95 William Santana Li
We do have lasers on the machine but not for what you’re intending. We use a similar to a self-driving car. We have tons of lasers on the machine so they can roam around autonomously yeah, completely unmanned.
01:14.23 Matt Watson
So you were the founder of this company in 2013, is that right?
01:19.72 William Santana Li
That is correct. Company’s just over nine years old. April fourth was our birthday.
01:26.30 Matt Watson
So how did you guys start this? What was the genesis behind this?
01:31.16 William Santana Li
Ah, professional and a personal answer. I think the professional one, as a former automotive executive, I spent a significant amount of time in Detroit. And I really believe self-driving autonomous technology is going to change the world dramatically. I’m just not in agreement in the path to commercializing the technology. I think you need to take a crawl-walk-run approach as opposed to I am going to go to pluto first and not stop at the moon or mars. Which is what everyone else has been primarily doing. Not everyone but primarily. I guess second on the personal side, I was born in New York City someone hit my town on nine eleven. I’m still profoundly pissed off about it. So I’m dedicating the rest of my life to better securing our country. I love my country but it’s deeply flawed in a couple of aspects in this regard. We decided to want to go build a completely new technology stack to give the 2000000 officers and guards out there an ability to have them actually do their jobs much more effectively than they do today.
02:35.54 Matt Watson
So when you started the company, was security always the goal? Like when you were building these types of robots? Or was there several different use cases that you were you were thinking of and security just ended up being the one?
02:46.98 William Santana Li
No, ah I am criticized for saying this, but one of the problems with the robotics industry is roboticists who just focus on I have a robot I need to go find a problem. Like I’m an x car guy. That’s not my motivation. My motivation is to fix the problem for the country which is crime. And terrorism has a $2000000000000 negative economic impact on the US every single year. The focus was, what set of technologies can we put together to make a huge dent in the problem? And it turns out that if you combine 4 really hard ones, you can actually make a difference. So our technology is a unique combination of self-driving autonomous technology like self-driving car robotics ai and electric vehicles. And if you can get all that to work 24/7 in the rain across an entire country, with a client down your throat, then you’ve got something and that’s kind of where we’re at now.
03:47.27 Matt Watson
Well you mentioned earlier self-driving and so I own a Tesla and I love the idea of self-driving but it seems like a really really crazy complicated problem I imagine trying to program ah a robot to you know.
03:56.58 William Santana Li
Um, yep.
04:03.36 Matt Watson
Make lapse around a a warehouse that is typically empty looking for you know, somebody breaking into the warehouse or whatever right would be much simpler problem to solve like like you like you mentioned like ah like full self driving on roads in rain and no and everything else seems like a crazy problem.
04:13.44 William Santana Li
Yeah, this drives me crazy exactly this drives me crazy like you know engineers are really good at solving problems with constrained boundary conditions and the way and last I looked I’m sure I’m a little bit dated on the numbers. But. You know over $80000000000 who’s been invested in self-driving technology is 200 plus companies working on it collectively, they’ve shipped all about 0 and their revenues are close to 0 it’s because one it’s kind of hard and 2 I think it’s a dumb way to set up a problem for an engineering team. Like you want to go take a £4000 unmanned vehicle on a public road random constraints random environment random time of day. No regulatory framework no insurance framework no legal framework please Mr. Mrs Engineer make sure this works and it works 100% of the time and nothing ever goes wrong.
05:06.73 Matt Watson
Um, yeah.
05:10.11 William Santana Li
Like that’s a ridiculous assignment. Um, so for me, we intentionally have done something a little bit different, which is hey can we get this to work like three miles an hour outdoors and indoors with lots of people in cars and at something that’s much more containable. Um, in a geo-fenced area and if we can get that to work twenty four seven then maybe we can kind of branch out right.
05:30.64 Matt Watson
Um, yeah, well so you know I’m a software engineer by trade. Um, and I know that as a software developer if my code works perfectly Nine Thousand Nine hundred and ninety nine times out of 10000. It works perfectly like it. It can fail 1 in 10000 times, and that’s acceptable which is crazy, but you know most things have like you know a 99.9 percent uptime or whatever if it’s if it’s a car that’s driving itself that means it might have like ran over somebody and killed somebody that.
06:06.62 William Santana Li
Um, yeah, yeah, yeah, and then and then remember for us. It’s the the software. Um, ah you know the firmware the telecommunications, so you know these machines generate a amount of data.
06:09.23 Matt Watson
1 that that point oh 1% of time or whatever right? where.
06:20.25 Matt Watson
Um, yeah.
06:24.38 William Santana Li
There’s the electrical Cor you know portion. Ah, there’s the mechanical portion and all of them if you combine all those that tolerance stackup or you know that probability of failure. It ends up going to barely being hard.
06:30.69 Matt Watson
Um, yeah.
06:36.19 Matt Watson
Yeah, yeah, yeah, absolutely well and you know anyway I’ve ever talked to that’s done computer programming related stuff around hardware developing hardware hardware-based stuff that mixes hardware and software together is an extremely difficult challenge and. You guys went all in right? like So I I Imagine you’ve got to have some horror horror stories of like hey we built the Hardware. We got the firmware. You know we? we we go to manufacturing, we get the product then it doesn’t work at all right? like I’m I’m sure.
07:06.42 William Santana Li
Yeah, have no idea where you’re talking. No idea where you’re talking about everything works just fine. First shot out was perfect, like a hot knife through butter.
07:18.67 William Santana Li
Ah, the first let’s see so the company was founded in 2013. The first machine that was put out in the wild was for the star wars fans out. There may the fourth ah 2015 um, and it was horrifying is the is. Literally something was breaking every 2 hours and for four months either someone on the team or the entire company did an all-nighter I mean it was just it was horrifying it got so bad that some at 1 point after those four initial months I’m like okay just. Just bring the machines back home. We need to like do the next version and then release that because this is untenable. Um.
07:58.61 Matt Watson
So when was that first released? What was the product that you released there? What were you doing? What was the project?
08:06.16 William Santana Li
Yeah, it’s the Knightscope k five. It’s out there today. That’s our most popular product. It was version. 2.0 um, we’re ah we’re working on virgin 5 o now. But it’s a £400 a five-foot-tall three-foot wide machine that roams around primarily outdoors ah up to three miles an hour in you know, crowded environments with either vehicles or or people or both ah to help security guards do their their jobs. Ah, a bit more effectively, as I mentioned before, but it was that. That same product that we’ve been iterating on and finally got it working at scale now.
08:43.19 Matt Watson
Yes, so you mentioned that product. Do you have other products as well. Do you? Do you guys have a huge product suite?
08:52.34 William Santana Li
Yeah, if you go ah if you go a http://knightscope.com that we have three machines in the production of fourth one coming and then there’s this fifth one. That’s also in development. Um, so there’s the k five that I just mentioned which is primarily outdoors. There’s a smaller version called a k three. It’s a four foot tall primarily for indoors, and then we have a stationary version that’s rather large for ingress-egress locations. Let’s say at a casino or hospital or a real estate development company or something like that. Um. And then we have a smaller version of that coming out later this year and then if all goes well ah the fifth generation version of the k five outdoor machine will also get released this year so we’ve operated more than 1000000 and I think about a million a half hours now and we hold contracts from Hawaii through Texas to North Carolina um and we’ve been operating 24 7 3 65 fully unmanned. There’s no one despite what the internet might say there’s nobody inside. Um, and these are you know level 5 ah equivalents and ah.
09:56.20 Matt Watson
Yeah.
10:05.90 William Santana Li
It’s been ah, an interesting ride. We’ve we have a lot of quote-unquote lessons learned I’ll say.
10:08.25 Matt Watson
Have you ever done any kind of military or government kind of contracts work.
10:15.59 William Santana Li
Oo lots of fun. Um, so we’re about more than halfway through a 2 wo-year cybersecurity review with the us federal government so we actually hold a contract with the federal government. We can’t. Perform on it because we haven’t gotten this cybersecurity clearance. So. There’s this lovely 2 year process that we’re going through if everything goes well cross fingers end of this year we should get an auto or authority to operate and this would be certainly not on the battlefield this would to help you know the. Department of offense better secure assets and and people same for veterans affairs for FEMA for the 10000 buildings that the GSA manages who have the federal protective services have another 15000 officers and guards that protect those buildings. 400 plus federal courthouses that the us marshals ah oversee ah customs and border patrol I mean the TSA the list just goes on and on and on and on.
11:13.60 Matt Watson
yeah yeah I mean so could you see them using robots like this to um, well so how fast did they move you said up to three miles an hour or are there some that go way faster. Okay.
11:23.84 William Santana Li
Yeah, for the ones we have in production now in the future. You know obviously I don’t think you want to be doing three miles an hour at at the border. So.
11:30.96 Matt Watson
Yeah, that’s what I was thinking in my head I’m like three miles now on the border is not going to cut it.
11:34.84 William Santana Li
Yeah, we have a K seven that’s ah, a really difficult project that we’re working on. It’s a four-wheel version of our technology. It’s the size of a small car. Basically um and has all the complexities associated with it.
11:44.28 Matt Watson
Okay.
11:50.78 Matt Watson
So typically give give us an example of of how somebody typically uses this for security like what is a real-world case you mentioned like it helps other security guards or police like what what does it tell them like I’m just kind of curious The the real-world use case there.
11:57.62 William Santana Li
Um, Chuck sure.
12:07.60 William Santana Li
Sure, um, so I’m a break um break this down into kind of 2 different parts 1 less obvious than the other so the less obvious one if you don’t spend time on security I’ll just give you 2 examples and then you’ll get it. 1 is just to provide a physical deterrence.
12:09.52 Matt Watson
And more detail.
12:27.00 William Santana Li
So if I put a marked law enforcement vehicle in front of your home or your office criminal behavior will change just physically being there or you’re going down the highway and ah you see a patrol vehicle on the side of the road frankly don’t care what speed you’re doing. You are going to look down at your speedometer and or pump your brakes right? It’s just a natural. Ah, reaction. So if you’re wanting to do something nefarious and you’re going, I don’t know to a hospital at three o’clock in the morning you want to go steal a car and you pull up and you see this five-foot-tall £400 machine roaming around. It says security or or police on the side of it. The strobe light going. It’s making some interesting sounds or might announce itself or what have you? you have no idea what it does you are going to not steal that car or do it somewhere else, and that is one major, um, effective piece of impact that we’ve had the http://secondis. machines generate over ninety terabytes of data a year that no human is going to be able to process so we put that in a browser-based user interface that it’s more easily digestible for a guard or officer to basically have their eyes ears and voice on the ground in multiple locations at the same time. So they have 360 degree live streaming HD video at their fingertips recorded and live. They’ve got an ability to read several hundred license plates a minute. Ah you can do racial recognition. We can treat your mobile device as if it’s a a license plate kind of sniffing for for Mac addresses. Um, we can run a thermal scan of the environment. The officers can speak through the machine as if it’s a mobile system and those are kind of some basics. So our clients are, you know, major corporate campuses. You know like a citizen’s bank or bank of Hawaii or who’s.
14:10.42 Matt Watson
Yeah.
14:20.90 William Santana Li
Houston methodist hospital or Samsung or something like that and let’s just say someone got fired last week and it didn’t go well, they’re worried the person might come back so they can upload the profile pick the license plate, and all the mobile devices and the machines are literally on the lookout 24 enty four seven ah for those detections.
14:39.43 Matt Watson
So so these things can actually maneuver around a parking lot, and they’re smart enough to realize when there’s cars driving around and all that kind of stuff and like getting away getting out of the way of the cars or like it still seems like a dangerous.
14:53.71 William Santana Li
Yep yep yep and so on Colorado we’re going up and down a 9-story parking structure. Ah you know Preco imagine three o’clock on Saturday at the mall indoors.
14:55.98 Matt Watson
Ah, Dangerous. You know situation. Yeah.
15:08.64 William Santana Li
And you got mayhem of people and kids and whatever you got to be able to patrol through that and you know given your technical background I think you the wheels are turning you know how hard that can possibly be yeah.
15:18.63 Matt Watson
Oh yeah, this is a complicated problem Solve. So if you’re maneuvering around the inside of a mall What kind of behavior would these robots look for you know you know or they mean or they look you know using Ai to figure out like oh this dude looks like he’s trying to steal something or like you know what. What are they looking for if they’re running around inside of a busy mall.
15:38.16 William Santana Li
Um, so for example, ah the a couple of things give you live examples that actually happened. Um, so obviously we’ve got live streaming and recorded video. We stopped a fraudulent insurance claim. Ah, someone decided to sue the commercial property owner because they fell down the stairs. Um, we the client notified us. So the issue is we happen to have the footage of the person throwing themselves down the stairs. And so I was like hey is this you do you want to retract that claim again. So that was helpful. Another is um, usually especially smashing grabs people come back to the scene of the crime. So the machines can be within five hundred feet of the machine or so. Ah, read any kind of mobile device and the and the make of the device then you can put that on a blacklist and be on the lookout. Um, so you’re able to then go oh at ten Twenty-two in the morning these 4 devices were within five feet of the machine let’s pull the video from that particular timestamp. Oh, look who’s back. Um, and then lastly you can do um just customer service stuff. That’s super easy. You know it’s nine-thirty the mall is closing in in 30 minutes that kind of stuff.
16:56.91 Matt Watson
A.
17:11.83 William Santana Li
Um, or you’re driving by Starbuck if you want to have some fun with it. You know happy father’s day or you’re driving by Starbucks and you know time for coffee that sort of thing but it gives the guards an ability to remotely monitor an area because remember a security guard and unarmed. Off duty officer is about eighty five bucks an hour an unarmed guard depending on what you want him or her to do is about 15 to thirty five bucks an hour ah depending on which machine you pick. We’re somewhere in the three to nine dollars an hour so that dramatically changes the economics.
17:44.52 Matt Watson
Oh ah, yeah, well yeah, and I was gonna say your robots can do so much more than a security guard can do so my nephew is one of those security guards that make like twenty bucks an hour and.
17:50.11 William Santana Li
And the capabilities.
18:02.90 Matt Watson
He had a job where his whole job was to sit and stare at like cameras all day, and it was like at a corporate you know corporate office. He’s on Tiktok I guarantee it he’s chasing. You know he’s watching videos on Tiktok or chasing girls online or something.
18:06.52 William Santana Li
Yeah, and after 8 minutes he’s completely not effective.
18:21.76 Matt Watson
And yeah I can only imagine it’s just a boring job. Let’s be honest, It’s just boring. It’s boring as hell. So I mean it’s a perfect kind of job that you could use robots to help do that. You know they don’t get bored. They’re just going to keep.
18:31.14 William Santana Li
Or said differently because you know a lot of people are like oh you’re going to replace all the guards or whatever. It’s like okay, can we please just stop and do some math first. So basic principle. You’ve got a million officers across the country. You got a million guards. Ah so that’s 2000000 humans but you can’t triple shift a human and they’re all running twenty-four seven so you kind of divide by 4 so at any given time you’ve only got 500000 people trying to secure 328000000 Americans across 50 states across a very large country like that math doesn’t work and that’s why. You know there’s so much criminal activity I mean look up ah go look up the Fbi crime clock, and you’ll be horrified as to what happens every 4 seconds or every 20 seconds um and so if we can possibly ah promote the guard quote-unquote.
19:17.30 Matt Watson
Um, yeah.
19:27.22 William Santana Li
You know, most guards it’s 100 to 400% employee turnover rates. They can’t keep the guards in the job because it won its horrifying job to if it is a job and then two they don’t have the tools to do their jobs. But what if we were to was it. Your nephew did you say.
19:41.10 Matt Watson
Um, yeah, my nephew. Yeah.
19:43.87 William Santana Li
Okay, what if we told your nephew like hey we have these 7 security robots they now report to you and now you have the ability to actually do your job much more effectively because these things are so much more cost-effective. Maybe we can the guarding company or the client can pay you appropriately. Ah, that becomes a different conversation right.
20:01.89 Matt Watson
Yeah, and and and honestly being a security guard just sounds like a terrible job like I could I can only imagine like working at a mall and you know you get some irate customer at a store or Starbucks or whatever it is right and you got to call security and but like you got to get this jackwagon out of here. They’re just making a big scene. They weren’t they won’t wear their masks and you know we require whatever it is like just seems like a terrible thing to deal with.
20:24.66 William Santana Li
Well, it gets worse actually um, most people don’t know this I think the number 17 ah in about seventeen states. It’s illegal for a guard to put their hands on you, and in all 50 states contractually, they typically are not allowed to put their hands on you.
20:36.31 Matt Watson
Yeah.
20:43.93 William Santana Li
Why because we live in a very litigious society and the client or the guarding company doesn’t want the liability of an untrained human interceding and trying to play you know cop on Tv.
20:56.17 Matt Watson
Well, quick reminder today’s episode of Startup Hustle is sponsored by fullscale io hoping you build a software team quickly and affordably. So one thing I want to ask you more about was you know you started this company in Silicon Valley in 2013 building robots with Ai and self-driving and you know hardware all the software it takes I can only imagine that required a huge team and amount of effort. So were you guys able to build any kind of proof of concepts of this like without raising capital or did you guys have to first? You know, build out the big plan and go raise a bunch of money to even build like version. One of these like what? what was the kind of startup process of that getting to like an Mvp right? because you don’t just make an MVP of this in your garage I don’t imagine.
21:44.19 William Santana Li
Yeah, it’s kind of in-between so when we started to ah try to raise money for the company I’m like okay this is in the national security interests of the United States of America we want to make the country the safest country in the world. Packed field of technology I live here in Silicon Valley one ah $ 30000000000 goes into startups every year this is going to be an easy lift. We’ll get this financed and off we go, and I was told the following, “Hey Will you’re out of your mind. This will never work second. Its hardware and software are too complicated. Physical security is not an investment thesis. You need to go away. And so it took me 364 days to raise the seed round I just needed a million bucks to kind of just get going and see if we can.
22:20.90 Matt Watson
Yeah, yep.
22:38.84 William Santana Li
It was absolutely bloody painful. Um, so you know the positive side of it was you know the company’s nine years old you know the probability you know, 95% of startups fail. So the probability of starting a company getting it funded.
22:50.14 Matt Watson
Me.
22:56.36 William Santana Li
Growing it and then listing it on Nasdaq um, your I think my wife told me was something along the lines of ah the probability somewhere one in 350000000 or something stupid like lottery you won the lottery kind of levels. Um, but we were able to do it so we ended up raising. Over those nine years, about one hundred and twenty million dollars to build all the stuff from scratch from 35000 investors. No VCs, no PE shops, no hedge funds, and then subsequently listed it on Nasdaq.
23:15.63 Matt Watson
Wow.
23:21.85 Matt Watson
Wow.
23:30.85 William Santana Li
Ah, this past January under ticker symbol kscp and so we closed out the first very long chapter of getting this built from scratch and you know people start realizing they probably shouldn’t bet against us. You know so same management team that started the company kind of willed this into existence. We were told it would never work. Yeah, while it’s working all across the country. It won’t be effective. Yeah, well, I’ll go to http://knightscope.com/crime and go see how positive, and positive impact the machines have had on society, and now we have clients all ah, all across the country. So. Um, the next you know, the next decade is going to be really interesting as we grow Knightscope.
24:10.41 Matt Watson
So from when you started the company like you have the idea to the time that you had an Mvp that you could put in front of a customer and actually provide them a product. How long does it take you to get there is that two years? three years?
24:23.88 William Santana Li
Ah, that was so April Fourth of 2013 we incorporated the company may the fourth of 2015 so I guess what’s that over two years to get something ah at a paying client for a proof of concept which you know it was horrifying.
24:32.78 Matt Watson
Yeah.
24:40.50 Matt Watson
Which did not work very well.
24:43.84 William Santana Li
It worked it was just impossible to keep it running um without a lot of reengineering. But yeah more than 2 years
24:46.20 Matt Watson
Yeah, well and I think that’s the key thing that the listeners need to hear right? It took you 2 years to get from an idea to a product you could ship that still had a lot of bugs to work out, right? So it probably took you another year six to twelve months I would guess. To work out a lot of those bugs and and and really get it all down or maybe 9 years
25:09.91 William Santana Li
We didn’t start bailing in any or in earnest until probably 2017 we left. We started operating outside of California so you know that’s a good four-plus years and that’s a thing. It’s like. The problem I have with the way the companies are financed is it’s skewed. Um, I mentioned $130000000000 goes into startups every year about 80% goes into software. You know, maybe 10% into biotech and then 10% into other. Um, sorry, but that’s not how the world works you just don’t download everything from the cloud, and in ninety days you’re up and running. Um, I mean look at SpaceX and Tesla you know those were founded in 2002 and 2003 if I’m not mistaken.
25:50.30 Matt Watson
Yeah.
26:04.15 William Santana Li
You know it’s a couple of decades to go really build ah a serious company and you know these are times where you know you need serious people to work on serious technology and you need serious investors who are not looking for. You know the next photo-sharing you know, nonsense app.
26:05.90 Matt Watson
Um, yeah, yeah.
26:21.43 William Santana Li
You know life’s short. You need to be dedicating your time on stuff that’s meaningful. Um and not playing you know little games with ah with with with silly technology.
26:24.53 Matt Watson
Yeah.
26:30.63 Matt Watson
Well it’ so it’s you know you guys just solve a really world. Ah, ah, a real problem right? But it’s not sexy. It’s it’s not. It’s not the new late. You know it’s not cool right? but it’s a bit it’s a problem that needs to be solved.
26:44.58 William Santana Li
Um, yeah, and you know that’s there’s the rub. Um, to me I find it hilarious where you know there’s always this hardware is hard theme and it takes me off to the end degree.
26:56.45 Matt Watson
Yeah.
27:01.49 William Santana Li
So You’ve got most of these investors are ex software people X finance people and then they go oh hardware’s like really hard and that’s like a bunch of lawyers starting a hospital and then going you know surgery is kind of it’s so hard. Like you have no sector Expertise. Of course, it’s hard. Um, and that’s a big problem, and I feel for founders and entrepreneurs are trying to and do meaningful ah work and they shouldn’t have to you know pull teeth to get stuff financed. It’s just not.
27:19.70 Matt Watson
Yeah, yeah.
27:39.43 William Santana Li
It’s it’s not appropriate. Um and you know and a lot of financing um from traditional sources is highly toxic so you know, kind of need to be careful where you get the capital a lot of founders and entrepreneurs spend way too much time on product-market fit. And no one ever asked them. Did you ever spend 5 minutes thinking about capital to company fit where did you get the money to do what you’re trying to do and is it the right kind of money to make sure that you can actually not be the 95% of casualties that? And that ends up failing.
28:18.20 Matt Watson
Well so talk to me more about it. Took you a couple of years to kind of get this first and Mvp out and you talked about it. Took you a year to raise you know a seed round of you know, roughly million dollars or whatever. What. Where did the tide turn for you of like hey we built this Mvp now people see value in this thing we’ve got a few customers now? It’s easier to raise capital did that ever did the tide ever turn there or was it always just difficult.
28:41.21 William Santana Li
The night I kind of half-joke. You know I started this I was seven feet tall I’m four foot 5 now like it is bloody painful throughout the entire process…
28:52.79 Matt Watson
It never got easier.
28:56.11 William Santana Li
No, you know I’m not proud to say this I’ve done probably more financial engineering than actual engineering which is which is not healthy. Um, but I am determined as my team is to will listen to existence and make sure that we can make the change that we’ve told everyone that needs to happen. So I mean that’s important one important point I Always try to um, ah you know make obvious for founders and entrepreneurs is whatever you’re working on you kind of need to pick something. You’re not just passionate about because this is really hard and. You know when everything’s going backwards and you know people throwing rocks and banana peels everywhere like you kind of need to be able to plow through it and you’re not going to plow through it if it’s not something you’re deeply madly in love with you have to be you know.
29:45.20 Matt Watson
Yeah, exactly yep.
29:52.16 William Santana Li
You have to do the irrational illogical and sometimes stupid things to make sure that at three o’clock in the morning when you know all hell is breaking loose that you’re going to have the stamina to make it through I mean it’s the most important thing is don’t ever quit. And don’t ever let anyone tell you know if you know that something needs to happen. Um, and people are just not seeing it, and you’ve thought it through, and you know not every cockamining the ideas they’re right thing to work on, but you can kind of see the other side you’re going to have to figure out. How to get all the naysayers to say you know? Okay, let’s go do this now. I mean might imagine if I close 35000 investors. How many people told us no and you got to be willing to get up the next morning and get back in the ring and get kind of half-joke with folks like you want to know the founder’s diet. The founders’ diet is you get punched in the face for breakfast you get kicked in the stomach for launch and then you got body-slammed for dinner and then you got to wake up the next morning all smiley and get on the media interview. The recruiting thing. Financial analyst thing a call with whatever regulatory thing and you just got to keep plowing through it and you got to do that for not a week, not a month, not a year, but you got to be able to you know do that sustained for a decade or so.
31:14.89 Matt Watson
Yeah, I’m glad you just said all that because that’s what people need to hear, right? I mean people you definitely got to have the passion to keep going through the ups and downs, and there are a lot of ups and Downs. And I’ve been there but most people just don’t realize it. It’s not a job I mean it’s It’s not like oh I had a bad day. Whatever it’s it. Yeah, it’s no, It’s not just a job if you’re a founder of a company. It’s way more than just a job. You can’t just walk away from the problem you know.
31:33.42 William Santana Li
Um, but you got to have a screw loose to be doing this. This is not a normal rational thing to be doing.
31:46.82 William Santana Li
Yeah, and things go bad things go sideways almost every day and you know quote unquote the analysts don’t care the Regulators don’t care the lawyers don’t care the auditors don’t care your clients. Don’t care your suppliers don’t care your team doesn’t care and sometimes your family may not be.
31:49.11 Matt Watson
You.
32:06.22 William Santana Li
In Tune with what you’re doing either and somehow the whole world’s against you are you know?? Ah neutral which is sometimes worse and you have to figure out how to get from a to B Um, and that’s why you need to work on stuff. That’s really important. Um that you’re willing to kind of. Ah, do the irrational, illogical, and stupid things to make sure you get to the other side.
32:28.81 Matt Watson
So No Doubt business is always hard, and it’s always changing and there’s always new challenges but’s but at some point in time you get past some of these harder stages, right? and it becomes a little more fun anyways and you can you know. Like I know my first company, we got to a stage where like we were sort of kicking ass and taking names like we had problems that we had challenges right? but it wasn’t as stressful anymore. Do you feel like you guys have got there are you at that point.
32:54.74 William Santana Li
No, the stakes are higher. It’s just the order of magnitude of problems is different. Um, but you’re still like I need we need to get revenue up, we need to get cost down. We need to keep our and you know we’re publicly traded. So. You got to keep all the filings and regulatory stuff. The non-glamorous things machine going. You need to recruit awesome talent. You need to retain awesome talent. You need to put you know technology plans in place and kind of see in the future where you want to be. Do you have enough production capacity. What are we going to do with the facilities. How do we get rid of this supplier. How do we onboard this new vendor I mean it’s you know it’s a never an ending onslaught of a workload. Um, I think this the subjects change. Um, but to me it’s you know it’s equivalent of. Ah, hundred simultaneous equations that you’re trying to solve, and oh by the way while you’re trying to solve them the equations changing. Um so it kind of gets really really hard and the stakes get higher right.
33:59.74 Matt Watson
So you guys are publicly traded. So I um I googled your stock you know ticker and I’m looking at here. So is this right? It says your guys is um, it says your was your quarterly revenue is like is it like a million dollars a month or a million dollars a quarter but you guys will still burn in a lot of.
34:18.83 William Santana Li
Ah yep I mean we’re you know like I mentioned that but couple hundred companies have worked on autonomous technology collectively they’ve delivered all about 0 I think our lifetime revenue is on the order of you know, just north of 14 or around fifteen million bucks last year we did about.
34:19.38 Matt Watson
A lot of cash.
34:24.81 Matt Watson
Um, yeah.
34:38.31 William Santana Li
Ah, three-point three million um and topline revenue and we’ll continue to ah to grow it. Um and things are you know, kind of looking up long-term I think we’ve got a shot to build ah a $30000000000 company um, that has a wide portfolio technologies to help the department of homeland security department of justice the 19000 law enforcement agencies and 8000 private security firms actually do their jobs so long-term prospects this is going to. Ah, you know, take time and impaired to spend the next. 2 or 3 decades making sure that we can have a shot at making the US the safest country in the world. Yeah is Drew damn hard. But I am yeah.
35:14.37 Matt Watson
So what you’re saying is this is really damn hard I mean even though you’re publicly traded Now you guys are you’re still in the thick of the fight of it’s you know, still into still trying to get it.
35:27.35 William Santana Li
And you know we just announced. We just you know we just announced a hundred million dollars um committed equity facility with B Riley that will allow us to continue to grow. But you know we’ve got an unbelievable team who have a lot of sex or expertise. Um, you know our finance accounting team I think collectively I’ve done 7 Ipos and 22 secondaries like that’s not normal. Um, you know our chief intelligence officer. She’s an award-winning technologist. Um, we’ve got a lot of ex-law enforcement military folks on the team.
35:51.24 Matt Watson
Wow.
36:05.15 William Santana Li
Some awesome roboticists. Um, and you know we keep making progress and again you got to let never let anyone tell you to know and you just keep flying away and then people start realizing like me, you know, probably shouldn’t bet against those guys like they’re determined to…
36:21.14 Matt Watson
Yeah.
36:23.46 William Santana Li
Ah, make sure this is successful and they’ve got a track record of doing what they said they’re going to go do so.
36:27.65 Matt Watson
Is this a very competitive space? You guys have major competitors.
36:31.48 William Santana Li
No, not really um, this is ah again, a really hard set of technology. I wouldn’t I wouldn’t say that I think it makes it hard because security and law enforcement are really hard to sell into.
36:37.78 Matt Watson
Nobody is as crazy as you.
36:47.20 Matt Watson
Yeah.
36:49.35 William Santana Li
The technology is really hard and then the financing of it is kind of nonexistent right? We’re not ah um, so you put those 3 things together. It’s really hard I’ll put it in a different context. Um, you know.
36:55.81 Matt Watson
Yep.
37:03.90 William Santana Li
Folks always ask well, why should we? you know be looking at Knightscope and say 3 simple questions. Ah, 1 do you believe that self-driving autonomous technology robotics to Ai and electric vehicles are going to massively change the world in the next Decade or 2 binary question. Yes, or no um and Knightscopes are literally at the intersection of that. So ah, so that’s the first thing second is you know everyone investors always worried about you know will the market collapse for what you’re doing will this ever. You know I don’t know station wagons coming back flip phones coming back or not or that sort of thing I can assure you the market for crime will never collapse.
37:39.75 Matt Watson
Um, yeah.
37:41.92 William Santana Li
It’s not like 7000000000 people are going to wake up tomorrow morning all start behaving. Um, and then lastly, you’ve got a management team and the collective team that have you know, been able to show you put the capital in like we’ll actually produce so you know we don’t we obviously the technology can always be improved. We have you know a.
37:54.16 Matt Watson
Yeah, yeah.
38:01.86 William Santana Li
30-year roadmap ahead of us of what needs to be done but we don’t really have a technical risk. We don’t really have a market risk so it just comes down to execution. Um, and that’s why we’re wanting to grow the company methodically and carefully, you know, not the silly hockey stick nonsense that people like to put on a PowerPoint looks really good in a.
38:17.96 Matt Watson
Yep.
38:20.56 William Santana Li
Powerpoint deck. But then you got to go execute. It is not you know then reality hits.
38:23.90 Matt Watson
So what? what is your goal? What I mean is your goal to grow 40% a year like what? what is your goal?
38:28.16 William Santana Li
Ah, the goal is to secure the US. Um, we don’t provide earnings guidance because obviously we’re at the bleeding edge of technology and no one in the history of mankind has ever done this before. So it’s a little disingenuous to say yeah I’m going to predict the future in the next three or four quarters
38:34.30 Matt Watson
Okay.
38:47.73 Matt Watson
Yeah, sure so when people buy your product is it all a subscription-like oh I pay $10 an hour to use it like kind of like what you mentioned earlier, or do they like oh no I have to write a check for a hundred grand and I buy this thing.
38:48.12 William Santana Li
When no one’s ever done this before. So.
38:59.63 William Santana Li
Um, it’s similar to you know when you hire guards that typically they pay on the monthly basis or whatever we have some clients that do pay all ah upfront. But we’re typically running 24/7 it’s of it’s it is a subscription as you noted.
39:13.89 Matt Watson
Okay.
39:15.96 William Santana Li
Um, and it’s all-inclusive. So hardware-software decals telecom data storage ah maintenance support 24/7 um that sort of stuff all is all included so you got 1 throw to choke for us to handle it like our clients don’t have time to.
39:32.64 Matt Watson
Yeah, well so does that make it so it’s a pretty easy barrier to entry for them of like okay, yeah, okay, it’s a few hundred dollars a month or a few thousand dollars a month and it’s it’s not a. It’s not a crazy capital expense for them to get your product to get your service.
39:32.72 William Santana Li
Go set up the Robot maintenance service division right.
39:47.41 William Santana Li
Yeah, that’s a good way to think about it. Um, you know it’s a lot if they already have guards. They know how much that can be and if it’s a cost reduction versus that it gets ah a lot easier entry point.
39:54.82 Matt Watson
Yeah.
40:00.88 Matt Watson
But that’s got to make it very capital. Um, expensive on your end to basically finance the devices, right? You have to make the devices and you’re basically selling them as a subscription. So it’s very capital intensive for you.
40:14.30 William Santana Li
Um, it’s all about cost of capital. So last year we announced a $10000000 funding facility to make sure that we’re not tying up our precious equity to finance assets out in the field. So we’ve got that arrangement in place and it’s working just fine.
40:29.26 Matt Watson
Yeah, yep, it’s just the different business models. You have different decisions right? like you, you’ve got to you got to build these things and you got to sell them. But there’s a lot of capital upfront to build them. Yeah.
40:33.97 William Santana Li
Um, yeah. Yeah, but I mean the economics get really interesting. So on average you know 1 contract may be on average across the different machines maybe seventy eighty thousand dollars a year. Um. And over 5 years You’re going to generate you know well north of $ 300000 of revenue um and if the margins then look like huh per unit economics look like luxury automotive right? It’s almost a brand new luxury car every year. But your margins look more like a software as a service company this ends up getting kind of really interesting.
41:12.22 Matt Watson
Yeah, yeah, it’s It’s always a joke. It’s like you give the needle a way to sell the drugs sort of thing, right? like you, you guys have to pay all the money to get the devices out there. But then they have to keep paying for it. They keep paying for it. Keep praying for it.
41:26.71 William Santana Li
But you got to create value right? And at one point there’s a tipping point like you know this silly example would be do you think? ah, a real estate developer would ever be allowed today to build a new building without a smoke alarm or fire alarm like you would look at me like why are we having this conversation.
41:30.42Matt Watson
Yeah.
41:40.25 Matt Watson
Right.
41:46.59 William Santana Li
Ah, so you know 5 1015 years from now at some point you know someone the liability is going to shift. Oh, you didn’t want to pay seven bucks an hour to properly secure your facility with the most advanced technologies capable like you’re liable like you were. You’re reckless for doing that.
41:52.39 Matt Watson
Yeah.
41:58.16 Matt Watson
Um, yeah. Yeah, well so do you think that is more of an I’m not just the market change of like oh yeah, everybody does this like every mall in the country has this service like why wouldn’t you have this. It’s just like becomes a standard tool.
42:03.84 William Santana Li
So at some point in time, there is that to be meaning.
42:16.27 William Santana Li
Oh yeah I mean it’s it’s everywhere. it’s power utilities, um it’s malls it’s commercial real estate. It’s casinos. Its manufacturing plants ah logistics facilities airports rail gas stations warehouses I mean it’s hospitals. It’s pretty much everywhere across the country. Um, and yeah, there’s there needs to be a new way. Listen, the country’s over two hundred years old we’re in our 46 presidents the first role of government is to protected citizens.
42:49.12 Matt Watson
Um, yeah.
42:51.85 William Santana Li
Somehow we have a $2000000000000 negative economic impact every year and no one gets fired like hello. We need to fix this I don’t think the founders of our country. You know speaking of founders I don’t think the founders of our country ever expected us to build a society. We’re going to work going to school or going to the movie theater literally.
42:57.63 Matt Watson
Um, yeah.
43:10.20 William Santana Li
Came with the risk of being shot or killed like that’s just not okay.
43:12.50 Matt Watson
Well once again, a reminder that today’s episode of Startup Hustle was sponsored by Full Scale helping you build a software team quickly and affordably. Also, be sure to find the Startup Hustle chat group on Facebook and join the chat. There’s always some interesting conversations going on there with other founders and entrepreneurs. You know, Will, what I love about your company is you guys are solving a really hard problem, and it’s a problem that needs to be solved. It’s not necessarily sexy or cool. You know it’s not Instagram. It’s not Facebook. It’s a utility that everybody needs. You’re solving a real real-world problem. But it’s a really difficult problem to solve and thank you for trying to solve the problem.
43:48.92 William Santana Li
There.
43:50.75 Matt Watson
I mean I totally understand what you’re trying to do I see it I get it. Um, you know it’s like the markets have to not really maybe Market’s not but like cultural you know cultural change around like oh yeah, everybody has a robot that helps do security. Why wouldn’t you have one of those right? like it makes total sense to me.
44:02.77 William Santana Li
Exactly and I appreciate you guys having us on the show. Ah, for those of you that want to go check out the robots and actually see them in real life. Just go to http://Knightscope.com/roadshow we’ve got a crazy what I kind of call a robot aquarium. Running around the country. Um, we’ve done like maybe three dozen stops so far where people can come and see and touch and feel the robots and talk to our sales team to kind of better understand the capabilities and technology.
44:35.89 Matt Watson
All right? Well, thank you so much. Any other final words of wisdom for other entrepreneurs that are listening to the show today.
44:43.33 William Santana Li
You got to pick something that you really love and stick with it. Don’t let anyone tell you know you just got to got to keep powering through it, and you know one little trick I use is um, something I call negative fuel. Like there’s so many haters. There’s so many people that want you to fail. So so many people that could help and don’t and you just need to use that so you can power through um and it’s then maybe it’s i’ll show you or maybe it’s the New York in me or whatever. But. Um, you need to kind of use all that because it’s a lot It’s a lot of negativity. A lot of no, no, no, that’s stupid. No, no, no, it will never work. No, no, no and you know it does feel really sweet when ah you actually are able to achieve what everyone said was supposedly. Quote unquote impossible.
45:37.59 Matt Watson
Just gotta keep fighting the fight I love earlier what you said the ah 3 mills a day were what were those again remind everybody. Yeah.
45:43.26 William Santana Li
Oh the founder diet. Yeah, we should do an infographic or something. So you get punched in the face for breakfast, you’re kicked in the stomach for lunch, and then you have body slam for dinner.
45:56.13 Matt Watson
That’s it all right? Well, we’ll end it there. Thank you so much. This is Will Santana Li talking about Knightscope. And thank you so much everybody and we’ll see you next time. Thank you.
46:08.13 William Santana Li
Let’s see on the other side. Thank you.