Rent-a-Robot to Fix Labor Shortage in Silicon Valley

Rent-a-robot companies are persuading small businesses to automate by leasing robots with installation and maintenance included. Better technology and the necessity to pay greater wages to employees have resulted in a spike in the sales of robots to large corporations across the United States. However, due to large upfront expenditures and a lack of robot engineering ability, few of these robots make it into smaller factories.

As a result, venture capitalists are supporting a new business model that reduces the risk and startup expenses of having these robots by leasing them, shouldering the installation and maintenance, and then charging companies by the hour or month for their use.

The Cons of Rent-a-Robot

While it may appear ideal, the business model is not without its risks. The leasing model places a significant financial strain on robot entrepreneurs, who face the danger of losing a contract or accidentally altering a product. Smaller manufacturers frequently have limited batches of highly specialized items that may not warrant the use of a robot, and Silicon Valley Robotics, an industry body that supports robot businesses, claims that funding has historically been a hindrance.

Nonetheless, several well-known investors are on board, including Tiger Global, this year’s largest investor in technology startups which has sponsored three subscription-based robot companies in the last seven months.

The Market for Rent-a-Robot

Garry Tan, a partner at Initialized Capital, sees low loan rates, a convergence of cheaper and better robot computer vision and artificial intelligence technologies, and the danger of US-China supply chain conflicts driving interest in robot subscriptions. “It’s at the intersection of three of the major megatrends that are driving all of society right now”, Tan had explained.

Westec Plastics Corp, a family-owned plastic molding plant in Livermore, California, received its first robot in January 2020. They now have three, called Melvin, Nancy, and Kim, from Rapid Robotics, which charge $3,750 per month for the first year and $2,100 for the second year.

Melvin operates 24 hours a day, all three shifts, and that replaced three full operators, President Tammy Barras had said, adding that the one robot alone saves her roughly $60,000 in labor expenditures each year. Because of what’s going on around the globe, her company had to raise their pay dramatically this year, but fortunately, Melvin doesn’t request and require a raise.

Bob Albert, whose family owns Polar Hardware Manufacturing, a 105-year-old metal stamping firm in Chicago, was sold on Formic’s pitch of paying less than $10 an hour for a robot against more than $20 an hour for his average human worker. This month, he observed as a robot arm took a metal bar from a bin, spun it around, and placed it in an older machine, which twisted the metal bar into a 42-inch door handle.

Albert, who was happy with the preliminary findings, stated that if the robot performs extremely well, they’ll use it a lot, and if it doesn’t work out, neither of them will fare well.

Robots vs. Human Workers

Rapid Robotics creator and CEO Jordan Kretchmer expressed that some are skeptical about the benefits of rent-a-robots. He explained that a lot of times they’ve come in and there’s a graveyard of robots that their prospective client has purchased in the past.

Jordan added that robots are simple and they do great work when they’re in the hands of the right people.

Barras, who employs 102 people, believes that robots can’t replace humans currently since they can only execute repetitive, simple activities such as picking up a round plastic cylinder and stamping a corporate emblem on the proper side.