Bullish on Automation and Robotics, but not Humanoid Robots | Shahin Farshchi

Robotics hype is everywhere, but are humanoids actually the main event? Lux Capital partner Shahin Farshchi joins David to explain why the bigger opportunity may be AI-powered automation hiding inside factories, warehouses, and other industrial settings. --- 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium --- BANKLESS SPONSOR TOOLS: 🔓NEAR | TRADE CONFIDENTIALLY, GET 20% BACK https://bankless.cc/near-pod 🔑BITKEY | GET 10% OFF USE CODE: BANKLESS | #bitkeypartner https://bankless.cc/bitkey 📊BITGET | TOKENIZED STOCKS 2.0 https://bankless.cc/bitget-stocks 🎯THE DEFI REPORT | ONCHAIN INSIGHTS https://thedefireport.io/bankless 👑BANKLESS CONTENT MCP https://www.bankless.com/premium --- TIMESTAMPS 0:00 Is the Robotics Hype Justified? 2:02 Why Humanoids Aren’t the Main Story 8:14 Robotics vs. Automation 12:20 Specialized Robots vs. Generalists 19:24 Making Robotics Accessible 22:25 AI Unlocks New Robotic Tasks 24:52 Robotics’ Internet Moment 27:52 Robots, Jobs, and Cheap Labor 31:28 What Automation Does to the Economy 39:07 What Still Holds Robotics Back 42:30 How AI Actually Powers Robots 50:49 The Robotics Data Bottleneck 53:34 Robotics Companies to Watch --- RESOURCES Shahin Farshchi https://x.com/Farshchi --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

• 0:03Speaker 00

  Hey Bankless Nation. In this episode, I talk to Shaheen Farshid. He is a general partner at Lux Capital, which is a hard tech venture firm. They invest in frontier technologies, AI, automation, biotech, robotics, just to name a few. Not in crypto. This is not a crypto episode. I wanted to go learn a little bit more about robotics. And Shaheen is a veteran of automation and robotics. Automation is a very important word. There's a lot of hype and excitement about humanoid robotics. You know, the Tesla, Optimus Prime, the Figure robot. And Andrew Kang really came into the crypto industry, really talking about like robotics and humanoid robotics.

• 0:48Speaker 00

  And I wanted to learn, I want to learn about that. I want to learn about robotics and the investing space around there. Shaheen has been investing in robotics for a decade plus. And so he's seen a thing or two and he's been around a few hype cycles in robotics. And so he's just probably the foremost expert on this industry. And so I'm pretty honored to be able to host him on this conversation and just learn about a sector outside of crypto that's in frontier technology that I think is going to be very, very impactful from somebody who just knows all the ins and outs. And so with that preamble out of the way, Shaheen, welcome to Bankless.

• 1:22Speaker 01

  Thank you for having me, David.

• 1:23Speaker 00

  Shaheen, there has been a ton of hype around robotics. And I think a lot of people are learning about the robotics sector for the very first time. And so this is why I reached out to you and Lux, because I want to get a veteran on the show to ask a veteran what they think about the robotics industry. There's just been a crescendoing of hype. And while hype is exciting and it's fun and it's an opportunity to learn, it can also be dangerous. And so I think the first question I want to throw at you is, is the hype around robotics justified? What do you think?

• 2:00Speaker 01

  Yes, it's absolutely justified.

• 2:02Speaker 00

  Okay, okay. That's a pretty simple answer. So the hype around robotics, I think, comes downstream of like a lot of products or companies coming live with humanoid robots. Is that what gets you excited about robotics? The humanoid element, the Figure and Tesla Optimus Prime robots? Is that the same? Because that's my sector. That's what are getting people excited in my neck of the woods. Is that the same for you?

• 2:26Speaker 01

  No. So I'm not particularly excited about the humanoids. I'm excited about the most recent wave of innovations in AI and cheap manufacturing. And the ability to make things that are extremely complicated, systems that are very complicated at a very low price. So you combine the intelligence with the cheap manufacturing together and you have products otherwise wouldn't have been possible for certain use cases. Robotics is not new.

• 2:58Speaker 01

  Automation isn't new. We've had automation for decades, if not a century, with the advent of the assembly line, you know, with the creation of Ford. And so my view is that over the past, I would say 15 years, with AI in the form of convolutional neural nets in the early 2010s and the continued slope of cost reduction with robotic arms, we've seen a whole new wave of new robotics applications. And I think the humanoid robotics are a manifestation of that. But my personal excitement in robotics and automation isn't rooted in the humanoids.

• 3:43Speaker 01

  It's rooted in this more macro tailwind around the software that drives the robots and the commoditization of the hardware that the software runs on. If you rewind back to say the 1970s, there was a similar opportunity, a similar moment

• 4:05Speaker 01

  around the integration of microprocessors, which were the equivalent of AI of our time, into robotics. And that's how you saw robotics enter into, for example, automotive manufacturing. You had these robotic arms that had a level of intelligence in them that allowed them to be programmed to very fine specifications, to do very specific tasks like welding, riveting, gluing, painting, various types of inspections. And that's what began this rapid proliferation of robotics into the broader manufacturing setting. Whereas today, when you walk into most automotive manufacturing facilities,

• 4:51Speaker 01

  a lot of the basic steps in automotive manufacturing are completely automated. You don't see any people involved at all until the later steps where various parts of the interior, the wiring harnesses, the glass are starting to be installed in the vehicle. And what we're seeing today, to the point that you brought up, is a lot of the companies that sell into these larger companies also having the benefit of automation. So when you walk into a Ford factory, you see a ton of automation.

• 5:31Speaker 01

  But if you walk into the factory that sells the components that are sold into the Ford factory, you may not see as much automation because they don't have the budgets. They don't have the investment to be able to invest the way Ford can invest in its automation. And now what we're seeing with AI is just like how it is now easy for anybody to generate code, it's becoming as easy for anyone to program a robot. And these robots are getting very cheap. And so now you're seeing a lot of these companies otherwise didn't have access to robots. These industries otherwise didn't have access to robots now getting access to them in a way we hadn't seen before.

• 6:16Speaker 01

  So that's what catalyzes my excitement around robots, which may be slightly different than what's catalyzing yours or perhaps others' excitement around robotics. And I would just perhaps be in the minority of folks that probably, you know, I'm optimistic, but I'm not as excited about what we're seeing right now in humanoid robots yet as perhaps others are.

• 6:40Speaker 00

  I do want to talk to you about humanoid robotics, but I think maybe it's worth putting a pin in that and just saving that for later and really diving into what you just discussed right now. Maybe if I could just try and summarize your excitement is it's really about the integration of intelligence into automation. And inside of automation, it's in addition to that, intelligence is allowing for, you know, cost reduction, deflation for what it means to automate things. And so it's about the collision of automation and intelligence and also the accessibility of automation to be applied to more and more industries. And that's what you really get excited about as an investor

• 7:24Speaker 00

  and as somebody who is excited about like growing the GDP of the United States. This is a fair summary of your excitement.

• 7:30Speaker 01

  As an investor, David, many VCs are excited about, you know, giant markets and unfair advantages and monopolistic businesses in those markets. I'm particularly excited about opportunities to create markets where none exists. And what we're seeing with robotics is that markets for robotics are being created where markets for robots previously didn't exist for the reasons that you mentioned. The AI, the software, the commoditization of the hardware, which is now creating a market where one didn't exist. And there's companies out there that are in a position to now dominate those nascent markets.

• 8:14Speaker 00

  Can we try and define some terms a little bit? We're using robotics and we're also using automation. Are those the same terms? Are they different? And how should we think about these things when we were talking about this industry?

• 8:26Speaker 01

  Good question. So I look at automation as a solution to a problem. So there are many aspects associated with automation. There's a financing aspect associated to it. There's an engineering aspect associated with it, which has nothing to do with the robot. How do you engineer your factory floor and your workflows to be able to benefit from robotic participation? It is the physical robot itself. It's the software that runs on the robot. It's the systems that are put in place to maintain the robots and make sure that they're up 99.999% of the time.

• 9:07Speaker 01

  And so I view all of those resources culminating in the end goal of the automation of a task.

• 9:20Speaker 01

  To fall under that envelope of automation with the physical robots and the software that is running on that robot being a component of that. But that's a great question.

• 9:32Speaker 00

  Automation is the broad category and we'd need a bunch of robots to create the process of automation, but automation and robots are not the same thing.

• 9:43Speaker 01

  Correct. Robots obviously automates, but

• 9:47Speaker 00

  Robots do the automation, yes.

• 9:49Speaker 01

  Not just limited to, to robots.

• 9:51Speaker 00

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• 12:45Speaker 00

  packages and they're not fixed and they, maybe they can, maybe they're slightly more generalized than the car building arm. Is there a spectrum to discuss about the generalizability of robots? And are you particularly bullish on a, on a region of generalizability? Or is this not really a subject that is discussed much when it comes to robotics and automation?

• 13:07Speaker 01

  I feel like the automation solutions are as broad as the problem set. So as you stated, the problem associated with order fulfillment in an Amazon warehouse is very different from the problem associated with assembling the components of a vehicle. They're two very different problems and they demand very different automation solution. Now, I can see from the perspective of a founder or from the perspective of an investor in a company to be motivated to champion their investments or their company as the singular

• 13:50Speaker 01

  solution to all problems. There is an, there's an economic motivation in presenting that picture that, hey, I am building a widget that's going to solve every problem associated with automation and it has a human form factor because humans do many tasks, if not most tasks. I would argue that that is more of an economically driven argument more so than a practical one. The way I view the, the world and the way I view the opportunity

• 14:28Speaker 01

  is that specific applications are best suited to certain types of, of robotics and automation solutions. And so my expectation is that there will be an opportunity for a humanoid form factor machine that does some subset of tasks that are performed by humans today, but they will be one of many automation solutions that will take on many shapes and forms. So if you look at the robot that is used in the Ford factory today, that is an

• 15:09Speaker 01

  arm that has, for example, a welder end effector, it probably has zero resemblance to the robotic carts in an Amazon warehouse that shuttles boxes from one location of the warehouse to another for either stocking or, or order fulfillment. These robots have practically nothing to do with each other, except perhaps both being made from metal and plastic. And I think that's what having some computer chips in them and cameras on them, but that perhaps that's where the resemblance ends, yet both bring significant value to their

• 15:51Speaker 01

  end use cases. And so it's my expectation that those specific form factors will continue to proliferate alongside the humanoids, which will have their own place in the market. But I personally, as an N of one, don't see a single solution dominating all problems because I just don't think a single solution will be able to be best served to, to most problems.

• 16:22Speaker 00

  So would you say that there is the humanoid end of the spectrum and maybe one of the reasons why that's fun and sexy to talk about is that the form factor is going to be consistent across companies? And I mean, they look like us and so we can get excited about them. But I think what I just heard you say is that that's kind of going to be the only consistent form factor. And when we talk about the rest of robotics that it takes to create automation, the form factors are going to be highly heterogeneous and non-overlapping and specific and tailored to their needs. And one of the reasons why we need to make, one of the inputs that we need to make that world work is the deflation in costs of creating this whole

• 17:05Speaker 00

  industry in the first place, which we talked about earlier. Would you agree with that assessment?

• 17:09Speaker 01

  I would say yes, broadly. There are components that go into these robots that will be consistent across use cases. The cameras, the force sensors, the reduction gear sets, the encoders, the power management systems, the, the actual arms.

• 17:33Speaker 00

  The building blocks. The building blocks will be consistent.

• 17:35Speaker 01

  For example, if you look at a, a smartphone, it may have little resemblance with, for example, a, a laptop, a small inexpensive laptop. The use case for the cell phone may be very different from the, from the use case, let's say, for example, for, for an iPad. Yet a lot of the technology that goes into the phone, the arm-based processor, the memory, the Wi-Fi interface, the video driver, even the LCD screen itself. There are different form factors. They have different specifications, but they share the same basic technological

• 18:16Speaker 01

  architecture. Even their operating systems may share many, many thousands of lines of code, but they're used for very different use cases with a similar technology basis. So when you see a robotic arm that is doing welding, it may have the same motors, encoders, force sensors, cameras as the robot that's doing the riveting, but the robot that's doing the riveting may have a larger, for example, range of motion. It has a different end effector attached to it.

• 18:51Speaker 01

  And so it is engineered for that use case, yet that use case is very broad, but not as broad as doing everything for everybody. So I generally take issue with the notion of we're building a robot that's going to perform all tasks. Because I think it'll be very difficult for a robot that performs all tasks to be better than a robot that specialized to a certain task. And why would someone not use a robot that specialized in that certain task?

• 19:24Speaker 00

  And so on the specialization end of the spectrum, the specialization to generalization spectrum, I guess the bottleneck is if we indeed do have all of the raw ingredients that it takes to make a robot, we have the power, we have the actuators, the ball bearings, really the constraint is the ability to put them in the right package according to the actual task at hand. Is that the current constraint is great, we have the pieces, but we need to put them in the right shapes. And that part can be more difficult because there's more possible shapes to order all the pieces in than could,

• 20:04Speaker 00

  than, you know, there's so many possible shapes to order all the pieces that it's a little bit hard to bear. Is that, is that a fair assessment?

• 20:12Speaker 01

  And that's why you've only seen robotics proliferate in these larger industrial settings. Ford has tens of millions of dollars that it can deploy to companies who specialize in this. Companies like Honeywell, Thematic, Symbotic, Winrite, these companies who specialize in engineering robotic solutions for a particular use case. In Ford's case, it will be an assembly line. So the robots that, for example, put a sheet of aluminum into a stamp, the robots that take those sheets of aluminum, the stamped aluminum out of the stamp, put into another stamp. And then the robot that has a camera at the end that inspects the stamped part to make sure there's no defects. And then the robot that puts two pieces of stamped metal together.

• 20:56Speaker 01

  And the other robot, a third robot, doing the weld between those, those pieces of sheet metal, those stamped pieces of sheet metal. And then robots doing the riveting and the gluing and then lowering it into a bath of acid. And the robots that are doing the painting. So, so there is, there are many tasks that need to be automated, that need to be engineered by the integrator, which is extremely expensive. And there are few companies today that can afford to do that with the legacy technology that was available to us till today. And my enthusiasm is rooted to the earlier part of the conversation.

• 21:37Speaker 01

  And these robots becoming less expensive and the engineering that goes into making them useful becoming far more accessible, just like how anybody can now speak to a computer and generate code. I see a future where someone can speak to an interface powered by AI that will then program the robot to do a, a specific task rather than you having to hire an engineer to do that for you. And we'll see the more rapid adoption of automation in more and more settings that until now didn't have that access. So you're right, it is taking the individual components and building all the software

• 22:20Speaker 01

  and the tools that you need to actually make that system that you build for your use case useful.

• 22:25Speaker 00

  It feels like kind of building a developer platform of sorts in that we just, we have all the basic ingredients and we need to be able to allow people to tinker with, play with, you know, combine all of the pieces in order to suit their needs. And making this more and more accessible is going to find, allow the market to place automation in deeper, more niche, more specific parts of the market. So long as we can just figure out how to open up robotics to, and be more accessible. That's kind of what it feels like.

• 22:59Speaker 01

  And that's what companies are doing today, which fuels my enthusiasm. I'll give you an example.

• 23:04Speaker 00

  So, yeah, tell me about them.

• 23:05Speaker 01

  So if you wanted to develop a robot that does some kind of unstructured task. So when you're talking about welding two pieces of sheet metal together, it is a very structured task. You are, you are within the, you know, thousands of a millimeter. You know where this robotic end effector is going and you know exactly what it's doing. When you're talking about the less structured task, it becomes extremely challenging to develop automation for. If you fast forward to today, you have companies like Physical Intelligence that we invested in, that are building models that specialize in various unstructured tasks.

• 23:46Speaker 01

  And they're putting many of those models on open source repositories for roboticists to use and fine tune for their individual use cases. This is extremely powerful and a huge enabler for the community that didn't exist until very recently. So what would have required many PhDs and millions of dollars of funding and many years now can be achieved by an undergraduate student, maybe even a high school student, downloading and installing one of these models and fine tuning the robot to perform a specific task.

• 24:26Speaker 01

  Now, your question, follow on question could be, well, why don't we have robots everywhere today? It's that we still have some work to do to make these robots more reliable and to make them faster and to make them competitive with labor. And we can get into that if you'd like on the role that labor has in the proliferation of robotics.

• 24:52Speaker 00

  I do want to get into that. Let me ask you this one last question. It seems, I was going to ask you, are we on the cusp of something big in robotics? But it sounds like, and what I mean by that is that, you know, we have AI, we have, you know, decreasing costs of automation, feels like we have the raw ingredients. And so we're close, you know, we're close to a cusp. It kind of sounds like we're actually, the cusp is behind us. And actually the ball is materially rolling towards this direction. To your point, we don't, as me as a consumer, you know, somebody who walks around the streets of New York is not impacting my life yet.

• 25:31Speaker 00

  But in the factories, the frontier of this intelligence is progressing and progress is being made. We don't quite yet have the very high reliability that we need. But in terms of, you know, a step function change in progress in the world of automation and robotics, it sounds like that ball is already rolling and it's not, it's no longer an if. It's already like happening now. Is that correct?

• 25:56Speaker 01

  That's right. And the analogy that I like to use and the evidence that I have that points to the theme that you're sharing is compute. If you look at the seventies and eighties, people regarded computers as pieces of hardware. When you thought about a computer, you thought about what the processor speed was, what, how much RAM did it have? What was the, the graphics interface? That was what defined personal computing in the eighties and into the earlier nineties, into the early nineties. The rapid proliferation occurred that, that, I guess that, that tipping point occurred with the internet.

• 26:38Speaker 01

  And compute was no longer regarded as a piece of, let's say, capital equipment, something physical or, or a machine. It was regarded as a capability. You went on the internet, you consumed content, you stored your files and the physical hardware was completely abstracted away. I feel like right now we're in the equivalence of the early nineties of compute with robotics, where when you and I have a conversation, we're still talking about the physical robots. We're talking about the machine, we're talking about the plastic and the, and the bearings and the, and the, and the software. We're still not talking about the output of the machine.

• 27:22Speaker 01

  The emphasis is not on the output of the machine. The way the emphasis today is on the output of compute, which is evidence of this mass proliferation. So I feel like we are on that trend towards abstracting away the, the plastic and the metal and the cool demos and focusing on what these robots are going to do for us. And I feel like that is a direction that we're headed towards. And that's what, that's what makes me very excited.

• 27:52Speaker 00

  Let's go into what you were talking about a second ago with a, with a labor input into robotics. I'm actually not sure where this conversation leads. So I think I need you to actually take the reins here. What is significant about this part of this conversation?

• 28:06Speaker 01

  Yeah, so there's always this ongoing debate about the question of, of, of how robots affect labor. And there's

• 28:17Speaker 00

  Human labor, human jobs, are we going to be automated out of a job like this question?

• 28:21Speaker 01

  There's this general concern, which is a warranted concern, it's justified, that if you increase automation, then you are reducing opportunities for labor. And the enemy of, and the enemy of labor, the enemy of work is, is automation. And if you observe historical trends, you'll see that economies who benefit from more automation, who adopt more automation, tend to also benefit from less unemployment.

• 29:01Speaker 01

  And economies who do not automate tend to suffer from more unemployment. So that's been the general trend. And so I would say that the enemy here of both

• 29:17Speaker 01

  Labor and jobs as well as automation is cheap labor. So cheap labor here is the common threat or the common, let's say, enemy here. When you have cheap labor somewhere else, then you are now threatening the jobs or the employment in your market. And by the same token, when you have cheap labor available, then you're increasing the hurdle rate that automation needs to cross in order to be able to proliferate. And the observation that I've had is that when you automate,

• 30:01Speaker 01

  yes, you may be displacing jobs, but you are disproportionately creating higher quality jobs, where you have less churn, where you have greater worker satisfaction. We're investors in a company called Formic. And what they're doing is offering robots as a service. What they sell is not a physical machine. What they sell is the output of a machine. They abstract away the machine and they make it as easy for you as the owner or operator of a factory or warehouse to automate as it is for you to hire labor. And these customers are not deploying automation

• 30:46Speaker 01

  because they want to reduce their headcount or save money. They're trying to do this because they can't find workers. And these are jobs that have extremely high churn rates. And what they've actually experienced is creating more and more jobs that are higher quality, that do not suffer from the worker dissatisfaction and the churn that they experienced prior to adopting automation. And again, the enemy of all of this is not, the enemy of jobs and automation, again, is not the robots. It is the, it is the cheap labor, if that makes sense.

• 31:28Speaker 00

  Yeah, yeah, I think it does. And I think that takes us to where I want to go next, which is just the, the impact on the economy of a successful automation industry. I think you talked about it just a little bit. Now, we get more higher quality jobs. Yes, there may be some short-term dislocation of jobs, jobs from A to B. Perhaps there is short-term economic pain in some industries, but in the long, in the long term, and the trends point towards more higher-paying jobs. What about just like the rest of the economy? The cost of goods, the cost of food, the cost of like building a, a physical, like non-software, non-SaaS-based startup?

• 32:12Speaker 00

  Say, say the automation industry does everything that it hopes to do in the next decade. What would that mean for just the average consumer's life in terms of prices and just what you, what the impact on the economy would be?

• 32:26Speaker 01

  I mean, I'll give you the broad answer, and that would be more selection, more competition, and ultimately a benefit to consumers. So if a factory, so factories, for example, that our company Formic is selling automation into, they have more productivity, their workers get paid more. They generate from better unit economics and they ultimately are able to sell better products at better prices. And the benefit trickles down to the end customer. So it's my expectation, my belief, that if you're able to make automation simple enough to adopt and make it reliable enough,

• 33:09Speaker 01

  then everybody from the people that sell products to these automation customers, to the people that purchase the products from them, will ultimately benefit. And I think the key point here is educating our workforce. If we make sure that our workforce is educated and has the opportunity to grow their skillset, then they will be very well positioned for this future of more, uh, uh, higher-paying and higher-quality jobs. And so I think that's something that we as a society have to take upon ourselves to keep our workforce, to make sure our workforce is prepared

• 33:53Speaker 01

  for this new generation of work that's going to come about as a result of automation, as opposed to looking at it as, oh, no, jobs are being eliminated. So what do we do with our workforce? We should be more proactive about it.

• 34:06Speaker 00

  Is there a particular industry that you get really excited about when it comes to the potential of said industry with automation? Like agriculture, I could imagine, gets scaled. But I'm sure there's a handful of industries that is possible to talk about. Does one stick out to you as particularly exciting?

• 34:24Speaker 01

  Yeah, I mean, if you look at agriculture historically, agriculture is one of the first industries to be automated. And as a result of that, we went from, you know, food shortages to food being completely abundant as, as a result. You know, you look at industries like automotive, consumer electronics, these are industries that are highly automated. And as a result, you know, we have cars that are extremely safe, extremely efficient. And, you know, many of us have the benefit of either keeping our cars for 10 years, like myself, you know, that, that are reliable and run for a long time. Or we can go out and buy the latest and greatest car. And the newer the cars get, the cheaper they get and the more, more capable they get.

• 35:08Speaker 01

  And the more safe and efficient that they get. So these are all benefits that, that come to us. I feel like the zeitgeist today, David, going back to your earlier question about excitement, is around robots in domestic settings. So we're talking about companion robots. We're talking about Butler robots, you know, robots and, and household settings. I am a little cautious

• 35:41Speaker 01

  about those kinds of use cases for two reasons. One, because I feel like there's still a huge opportunity for automation in factory and warehousing settings. There is plenty of work to do there. There's plenty of opportunities to automate in those settings. And I feel like it may not be as sexy as a companion robot or a maid robot. But I feel like those applications are still very, very real. We're seeing the proliferation of autonomous cars. I mean, they are a fantastic example of a robot. There's a lot more room there.

• 36:25Speaker 01

  We still haven't, we were promised,

• 36:29Speaker 01

  you know, the, the big rigs and the trucks to become automated. They still haven't become fully automated. So we'll see, hopefully, in the, in the near future, more autonomous vehicles, autonomous trucks. And I feel like the, the future of a, of a humanoid robot tackling a, the challenges in a domestic setting, cleaning up after a child, helping an elderly person, doing basic tasks like emptying the dishwasher. I think we'll see that come, but I feel like that is further out. And I'm more excited about these nearer-term opportunities in more, I would say, industrial and commercial settings.

• 37:09Speaker 00

  Because those are the opportunities that scale to all of society in a very efficient way, right? It's getting a humanoid robot into everyone's home. That's like a huge last mile problem. There's huge constraints with the actual design of the robot. But I feel, I think one of the reasons why I think you're excited is that there are a few places where you can put robots and automation into that have just massive benefits for society as a whole.

• 37:37Speaker 01

  That's right.

• 37:37Speaker 00

  And so it's a little bit of the scalability of the effect, I think, is something that gets you excited about the automation side.

• 37:43Speaker 01

  I, I don't want to say easier because all these problems are challenging. But I feel like the problems are more constrained in these industrial and commercial settings. And the value proposition or the economics that are, that are, are more well-defined than, than robots going into a domestic setting. When you, when you, when you buy, for example, a piece of furniture, the, you know, my, you know, I may sleep on my couch, you know, every afternoon and take a nap. You may not even sit on that couch, you know, for months, depending on like, you know, how we look at couches. And so given the, the widely varying utility

• 38:26Speaker 01

  that consumers get from like these kinds of discretionary purchases, I think it would be challenging to introduce a piece of technology like that into the domestic setting. I think, I wouldn't say that it's That it's impossible. I'm just saying that it'll take longer than a lot of people think. And listen, like, I'm a huge robotics nerd. I was a big Star Trek fan. I, you know, I wish to be able to interact with a robot like, you know, Commander Data from, from, from series, from next generation. But like, I'm excited for that day, but I just feel like it's a little further out than what a lot of people hope.

• 39:08Speaker 00

  What are the constraints that are trying to be solved right now? Of the robotics automation companies that you guys have invested in at Lux? Is there a common denominator of problems trying to be tackled? Or what are the modern problems in the proliferation of automation and robotics?

• 39:26Speaker 01

  It really comes down to the breadth of applications, the reliability, and being able to demonstrate the unit economics to customers. Because you're talking about a relatively nascent product. Like, when somebody, when a customer buys, for example, a conveyor belt, or a package sorting machine, or an oven for their restaurant, there's very clear economics attached to that. When you buy, if you're, if you have a coffee shop, you buy a coffee grinding machine for $5,000 or whatever it is, it's very clear as to what the return on that investment is. When you're talking about a new product, a new technology, with a sample set of, you know, 10 customers who've used this before,

• 40:10Speaker 01

  it's much more challenging to be able to justify that return on investment. So I think being able to demonstrate value, being able to create us a, an opportunity for a customer to be able to properly underwrite is, is the challenge that a lot of these, this new wave of automation companies are facing right now. Perhaps more so than just technology, it's being able to quantify the value add for their customers.

• 40:38Speaker 00

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• 42:30Speaker 00

  I want to learn a little bit more about the intersection of AI and robotics. We have, we have AI now. We are now having, like, people talk about robots coming into the home. And I think the naive, simple thing to you do, to do in your imagination is like, oh, we've got LLMs. Let's put them into the robot, and now we have smart, generalized robots. While preparing for this interview, I've learned that that's not quite how it works. I wish it was that simple. Shaheen, can you explain VLMs and VLA's? And all the other details that we need to know about how AI actually becomes imbued in robots?

• 43:09Speaker 01

  So AI comes in many flavors. And if you look at the, the technology that's more commonplace today, when AI is being implemented in a robot on the field today, most of those robots use some combination of sensing with their cameras and radar and lidar, or whatever it is. And then they have a processing chain that tries to perceive their environments, which is segmenting the, the sky versus the ground, what the objects are, what object is movable? What object is not movable? What is the target object? They call that, in general, perception from what is being sensed from their sensors.

• 43:54Speaker 01

  And then there is planning, okay, so how do I, you know, reach for that object? If you're a car, what path should I take to get to the other side of the intersection? For example, if there is construction going on, on the other side of the street. And then there's the actual, actual actuation, which is, okay, now I'm going to activate this motor, activate that motor to execute on that plan that I've generated from my perception of the environment that I have collected from my sensors. So that is the, the, I would say, common AI-based workflow that exists in robots in the field today.

• 44:37Speaker 01

  I'm not intimate with the technology behind the Waymo vehicles, but my guess is that the way they operate today is somewhere along these lines. Now, what we're seeing with, with VLA's and VLMs is some flavor of using language to interpret a scene, and then generating language from that language to then take some kind of action. Yeah, now, I am, I am vastly, grossly oversimplifying this. And there's many people out there that can explain this better than I can.

• 45:22Speaker 01

  But the core of it is using language to interpret a scene, and then using language to come up with some plan of action, and then executing on that. And as you know, with us as individuals and animals, we don't necessarily talk through what we're seeing, and we don't talk through what we're going to do. There is, there's many other steps that come into play, and many other sensations that come to play, and many other pre-planned reflexes and heuristics that come into play. And many companies are trying to bake that into our, into their models.

• 46:06Speaker 01

  The jury is still out as to whether you can simply solve this problem with scale, to just make these absolutely gigantic models that rely on language alone to perform these tasks versus the more quote-unquote "traditional" approach, which is this sensing, perception, planning, action process, which was popularized, you know, pre-LLMs. I think the jury is still out as to how, as to what's going to come together. But it's my expectation that it's going to be some kind of hybrid of the two, if that makes sense. But I can suggest many people that you could bring onto your show

• 46:49Speaker 01

  that can give a pretty thorough lesson on how these VLA's and VLMs actually work.

• 46:56Speaker 00

  That would definitely challenge myself as an interviewer to go that far down the robotics and automation rabbit hole. But I do find it very interesting. I probably should have defined VLM and VLA, that's Vision Language Model and Vision Language Action Model. Would you say, is it fair to say, like, we got LLMs on the Claude Anthropic OpenAI side, and we have VLMs and VLA's on the automation robotic side? Or is it just not that clean?

• 47:21Speaker 01

  LLMs are basically, you know, chatbots. And then, and then VLMs and VLA's are basically interpreting a scene with language, and then taking action based on putting, you know, a set of observations and intentions through a model and generating a plan from that, and then converting that plan into action. So for example, okay, you know, taking a picture of a scene from a sensor, okay, like, here's all the objects in the scene by putting it through a vision language model, and then using language, like, basically a chatbot,

• 48:05Speaker 01

  to come up with some kind of plan of action based on the robot's goals, and then turning that language into, like, you know, motor actuations to actually perform some kind of task. Okay, you know, you open the refrigerator, okay, I want beer. Where is the beer? Oh, there is a beer. Okay, now you have to pick up the beer, you go grab the beer. So it's been shown that these, that these, that these work. But they're still relatively nascent relative to the more traditional approach, and they may not be as quick and they may not be as reliable. And so, again, the jury is still out as to how you can make them more reliable. Do you just continue to refine them and make them larger? Or do you kind of hybridize them with these more traditional approaches?

• 48:50Speaker 01

  And I'm not a roboticist myself, but I think it would be a great idea for your next guest on the show to talk about that.

• 48:57Speaker 00

  It seems like it's an important ingredient nonetheless to add to the generalizability and just the practicality of automation and robotics to fit into more spots in the world.

• 49:12Speaker 01

  Yeah.

• 49:12Speaker 00

  Because it seems like, it seems like you can take this VLM or VLA and apply it to a robot in different settings, and it just kind of works. Is that right?

• 49:21Speaker 01

  So the, the whole, the thought process behind these, these types of, like, language models is that, yes, they're more generalizable. You can teach them to do things by simply just, you know, showing them. The task, the same way you would show a child a task. That's the thesis behind them. And I'm really excited about them. I'm optimistic that over time, we'll figure out how to make them faster, more reliable, easier to train. Because right now, you know, again, you need a team of hundreds of engineers to teach a Waymo, for example, how to go from A to B safely. Is there a future where you can do the same with a VLA?

• 50:05Speaker 01

  You know, perhaps. But the question becomes, okay, how much does it need to be trained? To get to what level of reliability? Like, for example, I'm trying to teach my four-year-old how to write numbers. And, you know, some numbers she can write, like, after I show her twice. Other numbers, for whatever reason, she has a hard time, like, stopping when she's doing a curve. Like, for example, at the number two, you have to curve and then stop and do a straight line. That's the challenge for her. So maybe that challenge is limited to human children? Or maybe it's a limitation associated with neural networks, who knows? So that will be figured out in the near future.

• 50:49Speaker 00

  I would also imagine the chatbots had this very incredible advantage in that they just had to train on all the data of the internet, which was accessible to them.

• 50:57Speaker 01

  Yeah.

• 50:57Speaker 00

  I would imagine that robots and automation don't nearly have the same qualitative and quantitative amount of data to train how to move your arm to grab the thing with the right amount of force.

• 51:09Speaker 01

  So we are investors in X-Off, which is specializing in generating this training data for robotics. Physical intelligence, obviously, also has a huge capability around amassing this data internally for training these robots. So yes, you're hitting on a very good point, which is companies that are able to access and build these training sets for these particular applications will certainly be advantaged.

• 51:35Speaker 00

  Shaheen, this has been very exciting and very educational.

• 51:40Speaker 00

  How are you hoping that automation and robotics impacts, positively impacts, your actual personal life? So your day-to-day changes in your house gets an upgrade, your car gets an upgrade. Is there anything that you're, like, trying to get your hands on as soon as possible to have, like, a material improvement in just your day-to-day life?

• 51:59Speaker 01

  I'd like to have an autonomous car that is always available to me, rather than having to call a rideshare. But the reality is that you kind of have that today with Waymo. And you sort of have that today with Tesla's FSD. But I wouldn't mind taking it a step further, where the vehicle could figure out, you know, where to park and go off on its own, and for me not to have to deal with it. I think that, for me, would, and I'm just a big car enthusiast, I'm a car nerd. So having a car like that would be, to own, is something that I just, I personally find fascinating and exciting.

• 52:36Speaker 00

  What about how you think, like, automation actually enters the home, not the humanoid robots?

• 52:41Speaker 01

  Like a domestic robot? Yeah, yeah, yeah, yeah. So if it was just me, David, I would totally nerd out on having even a modestly capable robot, you know, in my home that could do simple things like, you know, turn the stove off, you know, or pour me a glass of water and bring it over. You know, just for the purpose of, you know, nerding out on something like this. I would find that just personally exciting. But, you know, being, you know, married and having two small kids, I just think it'll be, it's extremely unlikely that my wife would allow something like that in the house, until it's proven to be, you know, safe and never trip over a child or anything like that.

• 53:26Speaker 01

  So, you know, just for myself, just having a robot around that I can physically interact with would be a huge novelty and interesting.

• 53:35Speaker 00

  Of the companies that you guys have invested in at Lux, if listeners wanted to just go a little bit deeper about what we've been talking about today, are there any good companies that are doing something exciting that also provide, like, an educational opportunity to just learn more?

• 53:49Speaker 01

  They should absolutely learn more about physical intelligence. They should, they should check out the company, they should check out the models that they have available out there. They should also learn about Formic, which is deploying robots in real manufacturing logistics settings. They have hundreds of deployments across the country. Most of their customers had no automation before automating with Formic. And their goal is to be the largest employer of robots globally. We'd like to say the equivalent of US Robotics, and it will be of iRobot, but not evil. And so, you know, those two companies, they should absolutely check out.

• 54:27Speaker 00

  Shaheen, thanks so much for coming on the show today.

• 54:29Speaker 01

  Loved it, loved it, David. Thanks for having me.