Formic CEO and co-founder Saman Farid
Robotics companies have joined other industries in feeling the economy’s pain, but Formic, with its robotics-as-a-service (RaaS) platform, is an outlier. The company, which rents out robots for $8 to $30 an hour, is accelerating automation adoption for US manufacturers.
Formic recently reported increasing its customer count 70% QoQ following a $26.5 million Series A round in January. It also increased its headcount 35%, and brought on Amazon alum Karl Barry as head of robotics monitoring and maintenance.
CEO Saman Farid, a former Silicon Valley venture capitalist, noticed a glaring absence of robotics when visiting warehouses, factories, and construction sites despite innovation in the field, and he wanted to do something about it. As the co-founder of Formic, his goal is to make deploying automation as easy as possible for companies.
One of the challenges of adopting robotics is that it’s often a heavy lift for outfits that have to shift focus away from their core operations to make it happen. It requires technical expertise in choosing the right bots, spending a hefty amount of upfront capital, and performing ongoing maintenance.
“We’re proud of the fact that for 67% of our customers, Formic’s robot was the first robot they ever had,” said Farid. “It validates our thesis that we’re making automation accessible.”
In an interview with Insider Intelligence, Farid talks about how Formic’s service is making waves in multiple industries and how it can be a game-changer for US manufacturing.
The following has been edited for clarity and brevity.
Insider Intelligence (II): What industries does your customer base represent, and how are they integrating RaaS into their operations?
Saman Farid (SF): Our most common customers are producing fast-moving consumer goods—things like food and beverage and shampoo. The next big segment is plastic injection molding, where factories are making plastic parts that go into things like golf carts, lawn mowers, and plastic cups. The third big category is metal fabrication. These customers make parts for aircraft, defense, or automotive.
These facilities have extreme labor shortages, with 20% to 30% unfilled roles and 200% annual turnover. So for every job in the factory, they’re hiring twice a year.
II: What are the benefits of RaaS versus companies deploying their own systems. What are the drawbacks?
SF: It allows factory owners to focus on what they’re good at, which is running a factory. We’re good at making robots and keeping them up and running. The other big benefit in addition to higher capacity and throughput is that it results in an improved work environment for their teams. As things get better, they become more competitive globally and can start winning bids that used to go to China, Vietnam, or other places.
Because we’re managing robots for many factories, we benefit from the economies of scale. So it’s cheaper for us to buy, run, maintain a robot, and hold inventory because we’re doing it for 100 factories.
One potential drawback is that as a relatively young company some might ask themselves, “Can I trust these guys?”, “Are they going to disappear one day?”, “Should I rely on them for something so critical?” I think it’s a fair question we’ll get when we’re two years old.
II: Given that these are rental machines, how do you ensure that they’re properly maintained?
SF: We have our own technicians and remote monitoring software that allow us to look at the performance of every single robot—cycle rates, vibration, temperature—and we respond to things as questions come up. That means we’re proactively in charge of running a system and making it work.
When somebody sells you a robot, you have to figure out how to keep it running. You paid them and now they’re gone. Unlike them, we have skin in the game and are at risk if a robot goes down, because we don’t get paid. So we have a very big incentive to make sure that the robots work. We’re not just selling them something and walking away.
II: Is your service a stepping-stone strategy for companies embracing automation?
SF: What we’ve seen with most of our customers is that once they’ve gotten a robot from us, they never want to buy a robot again because it’s just so much easier.
Our customers generally fall on two ends of the spectrum:
II: What’s your vision for the future?
SF: In the world overall right now there’s a severe shortage of basically everything. The quality of life for humans over the last few years has plateaued because we don’t have enough production capacity. Our goal is to create a world of abundance—we want there to be enough of everything for everybody. The only way we get there is to increase production capacity.
I think American manufacturing in particular has suffered over the last 50 years. It’s become a lot harder for manufacturers to survive in America, and at the same time, we see an unprecedented need to bring manufacturing back here. COVID-19 was like a shock to the system where we realized that we can’t depend on the global supply chains in the way that we thought we could, and there’s also a security aspect to it.
We’ve seen that demand for bringing manufacturing back to America has shot through the roof, but there aren’t a lot of new solutions in terms of how we can do that. We realized part of our mission is to give American manufacturing a chance to be globally competitive again.
This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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