The following interview is a conversation we had with Saman Farid, CEO & Founder of Formic, on our podcast Category Visionaries. You can view the full episode here: $60 Million Raised to Build the Future of Robots-as-a-Service (RaaS)
Brett
Hey, everyone, and welcome back to Category Visionaries. Today we’re speaking with Saman Farid, CEO and Founder of Formic, a robotics platform that’s raised over 60 million funding. Saman, how are you?
Saman Farid
I’m great. Thank you so much for having me on here, Brett.
Brett
No problem. Super excited for our conversation. Let’s go ahead and jump right in. Talk to us about what you’re building today.
Saman Farid
So we’ve built the world’s first on demand robot workforce. So if you run a factory of any sort, you can call us, and we’ll show up with a robot to fill your empty headcount, and we’ll start doing work for you on an hourly basis. So the promise of the robot revolution is here, and we’re trying our best to make that a reality as soon as possible.
Brett
Take us back to the founding of the company. October 20, 21st off. Pretty interesting time to start a company. It’s six months into Covid. To take us back to those early days.
Saman Farid
Yeah, we did start right in the middle of COVID The backstory was, I was a venture capitalist prior to this. For about 15 years, I was investing in a lot of robotics and AI and machine learning companies. And so, on the one hand, had this kind of incredible optimism for the things that robotics and AI were enabling. And I think a little bit naively and naively optimistically, which is how I think most people in the tech industry are. I thought that now that the technology works, it should be proliferated, and it should be everywhere. And then when Covid hit and we had all of these supply shortfalls, and were going to grocery stores and there were empty shelves, it prompted me to ask some questions around why and what was happening.
Saman Farid
And as I spent more time with these manufacturers of the most basic products that we use on a day to day basis, I started to realize that there was just such a shortage of labor available that there’s currently one and a half million unfilled jobs in manufacturing looking for people. During COVID that number was significantly higher, and 10,000 baby boomers per day are retiring out of the manufacturing industry and are not being backfilled. There’s these factories that are fully functional, ready to produce stuff, but desperately short staffed to produce the products that we need and want. And what I realized was that despite the fact that the robotics technology works, there’s still this missing step in terms of getting it to a place where it’s useful for the people who need it the most. That was really the founding hypothesis Formic.
Saman Farid
We said, is there something that we can do to make it easier for people to adopt robotics and automation? Is there anything that we can do to help speed up the robot revolution that we joke about? And so, yeah, those were kind of the founding ideas. We pulled together a few people. We pulled together some early funding. We were really lucky to have some fantastic investors and team members join us on those early days, and were off to the races.
Brett
What was it like when you transitioned from being a VC to being a Founder here? And I see earlier in your career, you were a Founder. So you’re a Founder, you’re a VC, and I’m a Founder again. What was it like making that transition back to being a Founder?
Saman Farid
Yeah, I think there’s. When you’re a builder, there’s an itch that can never get scratched. By being an investor, I think constantly was thinking about things that I wanted to build, the things that I wish existed in the world but didn’t. And as a VC, it’s extremely satisfying because you get to meet all these incredible entrepreneurs. You get to learn from them. You get to see their journeys. But what I realized is that being a VC is a job I can do when I’m 60. Until then, I should really spend all the energy that I have building stuff. And so, you know, it was something that I was craving to do for a while.
Saman Farid
And then at the same time, I think when I was an investor and I saw this challenge around robotics and automation, I realized that this was a, you know, a $10 billion or bigger opportunity. And if I didn’t jump on it now, I would regret it for the rest of my life. And so those two things together really pushed me to start formic, and it was, like you said, a really weird time. Not only was it kind of smack in the middle of COVID when there was a lot of uncertainty in the world, I was actually also expecting my first child right around then. And I think I had my first child two months after we started the company.
Saman Farid
So, really, by all bets, it probably wasn’t the best time to start a company, but I think when you know you have to do something, you do it. And I’m extremely glad that I did and took the leap to start the company.
Brett
I had something somewhat similar, but just on the other end of it. I started a company three months before we had our first baby, and it was a hard conversation to have with my wife and kind of make the case for that, but she was very supportive, and I think there is no, like, perfect timing. I think that was like, the crux of my argument is, like, there’s never going to be a perfect timing. There’s always going to be reasons that it’s not now, but I feel like it’s not an easy way to live life, and I think you’ll end up regretting a lot if you do live that way.
Saman Farid
Without a doubt, without a doubt. And I think there’s a lot to say about the unsung heroes of startups, which are the spouses and families of founders who really make it possible to do what you do.
Brett
Totally agree. I’ll be happy to share this with my wife as well so she can get a shout out. You can do the same. We’ll be in a good spot.
Saman Farid
Will do.
Brett
Now, let’s talk about just the state of robotics. So how have you seen robotics evolve since you first started really investing here?
Saman Farid
Yeah, so I think robotics is one of those things where the promise of robotics has always been at the forefront for everybody in the tech industry, right? We watch movies and Sci-Fi and that’s a source of a lot of inspiration. And every few years, you know, there’s this kind of question that everybody asks around, like, why, you know, why aren’t there more robots? You know, you go to the typical farm or construction site or factory, and you don’t see any robots. And today, you know, we’re seeing that again in the form of humanoid robots. People are getting really excited by the fact that maybe the humanoid form factor is really what’s needed to crack the code. And so robotics technology has gotten significantly better over the last few years.
Saman Farid
Without a doubt, computer vision and deep learning have allowed computers to understand the physical world. Autonomous driving and things like that have actually trained a whole generation of suppliers, whether it’s people who build lidar sensors or cameras or chips, to provide kind of all of these infrastructural components that really are necessary for building a robotics company. So on the one hand, you know that we are in the middle of massive change, which is really exciting on the other hand, if you look at robotics adoption in the past, there actually is a few industries that really did wholesale kind of start adopting robotics really quickly. One of those is the automotive industry, where up until today, since about 30 years ago, they’ve been aggressively adopting robotics and industrial robotics. And they also have built really large internal engineering capabilities.
Saman Farid
They are currently, I think, in the US, about 80% of robots that are being sold are sold to the automotive industry. So it’s not that no adoption is happening, it’s that it’s really very much focused on automotive industry and the very big companies. Everybody else has really struggled to adopt robots at scale. And so what we realized there is that it’s not actually a capabilities problem at its core. There’s really an accessibility problem around the adoption of robotics technology. And so we looked at other industries where the same thing was true, and we found that this is actually a very common theme in the adoption of new technology. There’s usually one or two industries that are really good at adopting, and then it takes a long time for proliferation to happen, amongst others. One example of that is with servers.
Saman Farid
There was a period of time where if you wanted to have access to email or build a website, the only way that you could do that would be to buy $50 to $100,000 of servers, bring in a fiber optic or d one line or whatever at the time, build a big air conditioned room in your office, and all those things cost a lot of money, require a lot of expertise. And so there was a very small number of people who had access to be able to do all of that. And it wasn’t until hosted services or cloud services became much more prominent that we saw adoption at scale. Most people in the world who have email addresses or have websites don’t run their own servers. And that ranges from the small individuals all the way up to large corporations.
Saman Farid
A lot of very large companies in the world. Netflix is one example. They’re an incredible company, incredible tech company. They’ve got fantastic engineers. But despite that, they’ve chosen to use AWS to provide all their cloud services. I think that’s a common theme that we’ve seen in a lot of industries where to really get good at adopting new technology, you need to build special capabilities. And that didn’t really exist previously in the robotics world.
Brett
You know, one thing that I just find fascinating still, and it hasn’t gone away. Every time I get into a waymo, I am excited, like, I feel like a little kid, because I’m just so mind blown that like, this technology is here. I feel like, you know, for my. The first 30 years of my life, everyone was talking about this technology was coming. Now it’s finally here. What I thought was interesting is I was watching Dara, the CEO of Uber, on another podcast, and he was talking about, even if these robots and these cars are ten x safer than a human driver, that’s not enough, because the human expectation here is 100 x when it comes to safety and things like that. Do you see something similar?
Brett
Do you think about robots in a similar way, that the safety standards and how safe they are, it has to be 100 x higher than a human?
Saman Farid
I would say. I think in the manufacturing industry, the requirement is not quite as high. Obviously, the safety requirements are very high. But in terms of performance, because there’s such a shortage of labor, even if a robot performs at 50% of the speed of a human or 50% of the quality of a human, I think there’s still a lot of people that would adopt robots. The labor shortages, it’s hard for people to grasp, if they don’t spend time in manufacturing, how dire the labor shortage is today. And so I think that out of that desperation, people are willing to accept a lot in order to adopt a lot more robotics. I mean, safety is a non negotiable, of course, but safety really isn’t the biggest problem when it comes to robot deployments. In manufacturing, performance really is a much harder thing to beat.
Saman Farid
And so, yeah, what we’re seeing is that the robots that we’re deploying are significantly faster and stronger and better than human performance. But even then, I think the demand for adoption is just so high.
Brett
What’s the state of the commercialization efforts here? Is this fully deployed customers are using it? Is this an R and D? Where are things today?
Saman Farid
Yeah, so we are deployed currently in about 100 factories across the US. So we’re making all kinds of products, everything from, you know, matcha powder that ends up in Starbucks to nachos that end up in Chipotle, and all kinds of grocery products that end up in automotive and aerospace and defense, metal parts for aircraft. We make plastic parts for drilling and mining equipment. So we are truly already in the field, already in production, already in deployment, in a large number of facilities, and we’re seeing that kind of usage data continue to rise every single day.
Saman Farid
We monitor all of our robots that are in the field on a minute by minute basis, and we get to see what their cycle time is and what the errors are, and we’re really proud to have this kind of fleet of deployments that are in the real world doing useful things, making products that probably are in your cupboard, in your house somewhere.
Brett
It’s such an interesting answer because I feel like a lot of the other robotics companies that I read about, even some of the robotics companies that I have on the show, they aren’t there with their technology. It’s very much an R and D. It’s very much a conversation of, here’s what is possible with our technology. What was your. I don’t want to say your secret, but, like, how did you make that a different answer? Like, how were you able to answer it in that way? Like, what did you focus on? What did you get right to have this deployed?
Saman Farid
Yeah, I think we really made a big focus. Not to get overly enamored by the technology itself. You know, there are a lot of advancements happening in robotics technology, but what we realized is that the number one thing is performance and reliability for our customers. So the typical factory runs two shifts a day, and so they need really high uptime. If your robot goes down for any reason, you can make an excuse and say, oh, my technology is not mature enough, or the sensor broke or whatever it might be. If your robot is down even 2% of the time, what that means is you’re dropping hundreds of boxes a day or hundreds of parts a day. And so we really focused from the beginning on reliability.
Saman Farid
We said, let’s not necessarily go and find the newest technology out there for every kind of robot in the world. Let’s go find the things that are the most reliable and choose the path that leads to the highest robustness for our customers. And that turned out to really be a differentiator, because that’s the number one thing our customers care about when we deploy robots, is, can it do the job and will it go down for any reason? And if it does, you don’t even have a chance. So I think a lot of these robotics companies that you’re talking about, they come out of academia or they come out of large tech companies or even coming out of software companies. And in software, there’s this mentality that you can kind of iterate really quickly. In academia, there’s this mentality that the coolest technology wins.
Saman Farid
I think in the real world, what we found is neither of those are true. With robotics, you don’t really get the chance to iterate quickly once you deploy something, if it doesn’t work, then you’ve just lost that customer. Even if it’s down for ten minutes, you’ve lost that customer. You have to build for extreme robustness. For the people coming from academia, they may say, well, there’s all these new advanced tools and new advanced ways of solving these problems, but actually, when you boil it down, most of them are not ready for the performance specs that we need. We often actually get academics coming to pitch us, and they say, oh, I’ve built this new tool or new algorithm that allows me to do the thing that you’re doing way faster.
Saman Farid
When we look at their performance numbers, they’re very proud that they say, oh, yeah, it works with 98% accuracy, which sounds really nice. But actually, when you look at a manufacturing facility, if you’re doing, let’s say, 10,000 operations per day and you’re only 98% accurate, that means you’re dropping hundreds of parts per day, making hundreds of mistakes per day, which is just completely unacceptable in a manufacturing environment. So you need to have 99.98, you know, percent or higher performance, which is when you tell that to somebody in academia, they’re typically shocked, right? They’re like, that’s unrealistic. That’s impossible. There’s all these different issues and challenges, and so I think people are just not as knowledgeable about what the standards need to be in a production environment.
Brett
I want to ask a little bit about messaging. There are so many great messages on your website that I want to unpack. So I’ll start with try before you buy. A, like, how do you pull off try before you buy? When we’re talking about these big robotic arms that are going into these manufacturing operations, like, how do you do try before you buy there?
Saman Farid
Yeah. So one of the things that we’ve had to do very early on is build a level of productization into these robots that makes them easy to deploy and easy to program and easy to redeploy so that we don’t incur a lot of cost. Actually, to be able to do a single deployment and be able to do it quickly, that’s very different from the traditional robotics mentality, where it’s these very heavy, very engineer heavy deployments where you had to spend hundreds of engineering hours to get a system up and running. We’re very focused on making them fast and easy. That’s very different. The other thing that we’ve had to be able to do is build a really sophisticated capital stack. So if you’re spending venture capital dollars to go and buy hardware, this business model is completely not feasible.
Saman Farid
It’s really important for us to be able to work with different kinds of pools of capital that have different needs and different amounts of flexibility. And so we’ve been able to put together $250 million plus of debt facilities that we use to finance these deployments. That allows us a certain amount of flexibility around our working capital and deployment capability, that allows us to be more flexible than what people are used to. So there’s that, and there’s also 100 things in between. How we price things, how we build our maintenance network, how we vet projects before we actually deploy something to ensure that they don’t get returned. There’s a hundred little operational details that need to get sorted out before you can actually effectively offer that offer, make that kind of an offer with confidence.
Brett
What about the pay for productivity? That was another message that I thought was fascinating. How does that work? And talk to us about that idea to innovate a totally different business model, because that’s what I think is very interesting here, is it’s not just an innovative product. It sounds like it’s a completely innovative business model as well.
Saman Farid
Yeah, absolutely. I think one of the things that is a very common failure mode in robotics is that somebody convinces somebody else that this robot is a really great idea, and then they buy it. And then two months later, they regret it. Either it doesn’t work or it doesn’t perform as promised, or the needs change and they have to program it or reprogram it. Generally what that means is that these users of robotics are stuck paying for the same thing over and over again. You pay $100,000 upfront to get it to work, and then something changes, and you have to go and pay another $50,000 for somebody to reprogram it for you. You pay another $50,000 for it to, you know, to change some piece of the hardware. And it’s this kind of never ending, bottomless pit of money.
Saman Farid
And what we found is actually a lot of our customers, before we show up, they have a room somewhere in their factory that is essentially a robot graveyard. Somebody, they bought a few things, they didn’t work. Everybody was disappointed, and they kind of swore off robotics. And this is one of the problems in american manufacturing, is because there’s all these failures. People are not adopting new technology, and as a result, we’re ending with much lower productivity in our factories. So what we realized is that the only way that we could really drive adoption quickly was if we focused heavily on changing that status quo. And that meant putting our money where our mouths are and guaranteeing performance and guaranteeing throughput in a way that nobody’s done before.
Saman Farid
That’s something that’s easy to say and easy to talk about, but practically is very difficult to do, because it means we need to build a nationwide maintenance network. We need to build really high quality monitoring tools for all of the robots. We need to design the systems for robustness, and we need to vet the projects effectively beforehand. And on top of all of that, we need to be able to use AI and intelligence to really quickly fix issues. When they come up, we can’t say, oh, some part broke, and now we’re stuck waiting for five business days until the new part arrives. We have to build in enough robustness and intelligence that we can detect those things long before that they become issues and resolve them. So all of those are second order implications of these promises that we’re making to our customers.
Saman Farid
But the flip side is, luckily, what we’re seeing is that really makes all the difference in the world when it comes to adopting robotics. We are providing the only solution out there that actually guarantees performance and guarantees throughput. And that means that we are able to provide robots to a whole class of customers that previously never thought they would adopt robotics.
Brett
When it comes to the market category, then how do you think about the market category? Is it pay for productivity? Robotics, is that the category, or what is it?
Saman Farid
I think the category is labor filling empty headcount at these factories. How we do it is irrelevant as long as the product that we offer is close enough to labor, that we can actually accomplish that need. And so, in my mind, kind of that pay for productivity is part of making the robots close enough to a labor product that we can go to customers and offer that.
Brett
What about fundraising? So, given that you were a VC before, and I built this company, like, what have you learned about fundraising? And then what advice would you have for founders who are trying to build hard tech?
Saman Farid
You know, I think that the more deep tech your product is, the less people there are that are gonna understand it. And so, as a result, you know, I think that what that means for fundraising is that it’s really not about convincing somebody that your idea is good or right. It’s really about finding those investors that understand your issue or are willing to understand your issue and what you’re trying to solve for. And I think that there’s a lot of wasted breath by founders who spend time having these repeated conversations with investors about why what they’re building matters and why it’s important. And in reality, that’s often wasted breath if they believe it, you’ll have them quickly and early. And if they don’t, no amount of convincing is going to get them to the finish line.
Brett
As you reflect on the journey so far, what do you think has been the most important go to market decision that you’ve made?
Saman Farid
That’s a good question. I think one of the most important go to market decisions we’ve realized is that hiring technical salespeople is a bad idea. And I think that was something that sounds a little bit like a truism, but in robotics and automation, that’s quite controversial. I think a lot of people really believe that in order to sell something as technical as a robot, you really need somebody who can understand manufacturing, understand robotics, understand all of the technical aspects of it. And that’s something we believe for a long time as well. It wasn’t until a lot later that we realized that was mistaken. I think we can supplement our salespeople with technical solutions engineers. What we can’t afford is somebody who doesn’t understand our customer and our customers pain points and our customers needs.
Saman Farid
And so we really pivoted towards hiring much less technical sales people, but instead focus on salespeople that really understand our customers and where they’re coming from. And it’s made a world of difference.
Brett
If you think ahead the next, let’s say, twelve months, what’s your top priority or top priorities?
Saman Farid
We’re really building up our customer success function right now. We’re seeing a lot of upsell opportunities within our existing customers. As we deploy a few robots, we see that we’re really, once they see the potential, the possibility of this, we’re seeing them kind of come back for a lot more. So we’re building up a really strong customer success function. The other thing that’s a high priority for us right now is building general market awareness. I think we are now very convinced that once people know about us and what we do and how we do it, we have a very high conversion rate across the board. And so now we’re focused on improving that awareness across our different customer segments.
Brett
Final question for you. Let’s zoom out three to five years into the future. What’s the big picture revision look like here?
Saman Farid
The big picture vision Formic is that we are instant on demand, available workforce for every factory in the world. And so we want them to be able to call us. I don’t know if you ever watched that movie irobot with Will Smith. So, you know, there’s that company, you know, in the movie, it’s a big, evil corporation. You know, we’re going to be the left, not evil version of it.
Brett
Right.
Saman Farid
But providing a workforce for kind of every job, every task, as soon as you need it on demand, is really a core part of what we’re trying to do here. And so what that requires is us to adopt a lot of different kinds of technology to increase our deployment footprint, our maintenance footprint, our general kind of operational muscle. But I think this is something the world really needs. If we want to live in a world of abundance, we need manufacturing facilities that are operating at full bore, we need manufacturers that are competitive globally. We need to increase the kind of quality and diversity of the goods that are available.
Saman Farid
And manufacturing is upstream of every other industry, whether it’s agriculture, whether it’s construction, whether it’s the military, whether it’s healthcare, none of those industries exist if you can’t build the parts and components that they all need. And that being the case, I think there’s just so much importance in building a strong manufacturing base and it’s something that inspires us and our team every single day.
Brett
Amazing. I love the vision. I really love this conversation. Before we wrap up here, if there’s any founders that are listening in, they want to follow along with you and your journey. Where should we send them?
Saman Farid
Yeah, you can just find us on Twitter or Slash X at go Formic. You can go to our website, formic.co . And you can find me also on X at Saman Farid.
Brett
Amazing. Thanks so much for taking the time.
Saman Farid
Thanks for having me.
Brett
All right. That was awesome, man. Really enjoyed the conversation.
Saman Farid
Thank you so much, Brett.
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