Latest / Automated with Brian Heater / iRobot CEO Gary Cohen on Turnarounds, Feature Wars, and the Future of Roomba

Transcript

iRobot CEO Gary Cohen on Turnarounds, Feature Wars, and the Future of Roomba · Automated with Brian Heater

• 0:00
  SPEAKER_01: We think is a really strong relationship that the brand has with consumers.
• 0:04
  SPEAKER_01: I mean, people name their roombas, they have parties with their roombas.
• 0:07
  SPEAKER_01: We get pictures all the time of kids and pets playing with roombas.
• 0:11
  SPEAKER_01: It is synonymous with the category.
• 0:12
  SPEAKER_01: When we do well, the category does well.
• 0:14
  SPEAKER_01: When we drive the category, when we come up with new products, we advertise the entire category grows.
• 0:19
  SPEAKER_01: When we just compete against our competition with feature wars, again, we're just going after a very small segment of the marketplace that's only going to maybe trade up a little bit, but we're not bringing new consumers in.
• 1:00
  SPEAKER_00: We also recently spoke with Mehuul Nariwala from Matic and previously featured Ruby designer Joe Jones in the automated newsletter.
• 1:10
  SPEAKER_00: iRobot is a cornerstone of the American robotics community, both in terms of cracking the consumer market and employing some of the industry's top names.
• 1:20
  SPEAKER_00: If you have followed the news lately, you know that the company has been struggling uh quite a bit.
• 1:26
  SPEAKER_00: This week we are speaking with CEO Gary Cohen about shepherding iRobot through the chapter 11 process and its recent acquisition.
• 1:35
  SPEAKER_00: It's a great conversation.
• 1:37
  SPEAKER_00: You'll learn a lot.
• 1:38
  SPEAKER_00: I learned a lot.
• 1:38
  SPEAKER_00: Everybody learns a lot.
• 1:40
  SPEAKER_00: If you're enjoying the show, please like and subscribe.
• 1:42
  SPEAKER_00: And don't forget to subscribe to the newsletter over at automated.fm.
• 1:48
  SPEAKER_00: And uh with that, please enjoy this interview with Gary Cohen.
• 1:53
  SPEAKER_00: We talk a lot about what's coming up next in automation on the show.
• 1:57
  SPEAKER_00: But if you really want to see the future in motion, you've got to be there in person.
• 2:03
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• 2:11
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• 2:17
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• 2:24
  SPEAKER_00: We'll see you there.
• 2:26
  SPEAKER_00: So I understand that you're like me, a bit of a music guy, a bit of a music person.
• 2:32
  SPEAKER_00: I have a music podcast.
• 2:33
  SPEAKER_00: I interview a lot of musicians, and obviously there's this um, there's this thing when you're a pop musician about uh having like the your big hit early on in your career, right?
• 2:44
  SPEAKER_00: And then it kind of can doom you.
• 2:46
  SPEAKER_00: Um and I'm wondering if early on when you had sort of started off in this business world, whether you were worried that the Mach III Razor would be that for you, whether it was all gonna be downhill after the Gillette Mach III.
• 3:00
  SPEAKER_01: Not at all.
• 3:01
  SPEAKER_01: I had ambitions of grandeur well even before Mach III.
• 3:05
  SPEAKER_01: Uh no, I just love the game.
• 3:07
  SPEAKER_01: I love growing brands, I love being part of businesses.
• 3:11
  SPEAKER_01: And uh when I was at Gillette at the time, we were on a roll, but we already knew what our next generation product was gonna be.
• 3:17
  SPEAKER_01: So I had a little insight into the future.
• 3:20
  SPEAKER_01: And our goal was always there's a better way to shave and we'll find it.
• 3:24
  SPEAKER_01: I have to say, Mark 3 was awesome in terms of everything we did.
• 3:27
  SPEAKER_01: It all came together, and it was such a gratifying experience to be part of.
• 3:33
  SPEAKER_01: But as soon as we finished, we went on to the next thing to start to develop how we could be bigger and better.
• 3:38
  SPEAKER_01: And that eventually led to fusion, which you know was still out in the marketplace.
• 3:42
  SPEAKER_01: So I'm very proud of what we did.
• 3:44
  SPEAKER_01: But you know, it was for me, it was always just part of the journey.
• 3:47
  SPEAKER_01: Was there a Mach 4?
• 3:49
  SPEAKER_01: There was a Mach 4, right?
• 3:50
  SPEAKER_01: Not by us.
• 3:51
  SPEAKER_01: Somebody tried to beat us.
• 3:53
  SPEAKER_01: We it was the Razor Wars.
• 3:55
  SPEAKER_01: Everybody was trying to if you remember from Saturday Live, I think there was a 10-blade razor that they uh they were showcasing.
• 4:02
  SPEAKER_01: But uh no, we went from uh three to three to five.
• 4:05
  SPEAKER_00: I remember that very distinctly, and and I I feel like maybe there's like a lesson to be learned specifically in the Razor Wars that um, you know, maybe when it comes to innovating a product, you can't just keep adding more and more razors.
• 4:18
  SPEAKER_01: Aaron Powell Yeah, I mean there's a careful balance between uh end benefits and features.
• 4:24
  SPEAKER_01: Uh I'm dealing with that now.
• 4:25
  SPEAKER_01: We call them the robot wars.
• 4:27
  SPEAKER_01: You know, our competitors just want to keep adding features and features, and we have this iconic global brand.
• 4:33
  SPEAKER_01: And we know the way to win is going to be able to, you know, make sure that we have the best feature set that we can offer, but also differentiate the brand and lean into the affinity that consumers have with the brand and provide benefits that consumers are looking for.
• 4:48
  SPEAKER_01: So uh when I came here, there was a fundamental change that needed to take place in my mind, which was make us a much more consumer-facing company.
• 4:56
  SPEAKER_01: And that's a cultural change, and that has to impact every function within the company.
• 5:01
  SPEAKER_01: And now I'm um communicating that to our new owners and our, you know, our new uh RD and manufacturing teams.
• 5:09
  SPEAKER_01: So uh it's just something that has been part of my DNA.
• 5:13
  SPEAKER_00: Aaron Powell That's interesting.
• 5:14
  SPEAKER_00: I mean, in what sense, obviously, you know, in a very broad sense, um the Roomba and robot vacuums generally are, you know, the most consumer robot or the most consumer robot that has existed.
• 5:25
  SPEAKER_00: But in in what way was iRobot not a consumer company before you joined?
• 5:30
  SPEAKER_01: Aaron Powell They had a great relationship with consumers because they were first in the business.
• 5:36
  SPEAKER_01: Um but you see it often with technology companies that um they want to develop technology sometimes for technology's sake or in electronics product lines.
• 5:47
  SPEAKER_01: People come up with different features and then figure out a way to market them.
• 5:50
  SPEAKER_01: Consumer-led companies tend to look at what are the consumer needs, what are the consumer pain points, and then develop products to deliver that.
• 5:57
  SPEAKER_01: Gillette was a very technology-driven company.
• 6:01
  SPEAKER_01: Um, and when you merge them both, that's when you can get great ideas.
• 6:05
  SPEAKER_01: The concept of three blades existed well before we launched Mach III, but we did a lot of insight work on what are consumers looking for.
• 6:13
  SPEAKER_01: And it wasn't until the magic came through of like, well, what is the benefit of three blades and what can that deliver?
• 6:19
  SPEAKER_01: And interestingly, three blades was actually a better shave and less irritating.
• 6:25
  SPEAKER_01: So when we developed that concept of three blades, better shaving, less irritation, that unlocked the consumer aha moment.
• 6:32
  SPEAKER_01: That's what I would give a good example of consumer-led innovation where you're taking sometimes technology and what the consumer pain points are and merging them together.
• 6:40
  SPEAKER_01: And that's what uh my goal will be with iRobot, is to take what the best of the technology can deliver, and in many cases, bring some of those consumer benefit needs and the pain points to develop a great product.
• 6:54
  SPEAKER_00: I don't know how much you know about uh uh my background as as a journalist, but prior to covering robotics as much as I am now, I was really covering consumer tech.
• 7:03
  SPEAKER_00: So I was doing you know phones and and gadgets and things like that.
• 7:06
  SPEAKER_00: Um and you know, those tend to exist, especially phones, those those exist on that year refresh cycle, right?
• 7:14
  SPEAKER_00: So we're all used to every year the big keynote happening, there being you know one or two new features coming out, them trying to sell some this new device.
• 7:22
  SPEAKER_00: Um obviously different than than uh industrial robots, uh robots in general.
• 7:27
  SPEAKER_00: But do you feel that that was something that uh maybe IBrobot was attempting to or starting to get caught up into, of just adding a new feature every year in order to get people to, I guess, refresh?
• 7:41
  SPEAKER_01: I think that and maybe a combination of not really uh addressing the competition or what the consumer needs were in the in the best way possible.
• 7:52
  SPEAKER_01: We had some great technology.
• 7:55
  SPEAKER_01: Uh, we had a great vision.
• 7:57
  SPEAKER_01: The the former CEO was a visionary.
• 8:00
  SPEAKER_01: Um he he was great.
• 8:02
  SPEAKER_01: As we started to get competition, however, they started to look at some of the maybe consumer pain points a little differently.
• 8:09
  SPEAKER_01: So, as an example, outside of the US, mopping was a very big uh segment of the marketplace.
• 8:16
  SPEAKER_01: And we developed the best mop that we could deliver to the marketplace.
• 8:20
  SPEAKER_01: The problem is consumers didn't want two vacuums or two robots in their house.
• 8:24
  SPEAKER_01: It's you know difficult enough for some consumers to have one of these devices in their house.
• 8:29
  SPEAKER_01: So two was just one too many.
• 8:33
  SPEAKER_01: Our competition figured out a way to put both of them together.
• 8:36
  SPEAKER_01: And initially, consumers were willing to make some of the trade-offs of not having the best mop and the best vacuum, but at least it was one single device.
• 8:46
  SPEAKER_01: And we were very late to the party because we missed that consumer insight that they didn't really want, many of consumers didn't want two devices in their marketplace.
• 8:55
  SPEAKER_01: And this was a time when the category was growing.
• 8:58
  SPEAKER_01: So to attract new consumers, sometimes you have to make it easy for them to get into the category.
• 9:04
  SPEAKER_01: So that's just one of several ideas.
• 9:06
  SPEAKER_01: We had the best technology in terms of navigation, but it required a lot of software engineers to develop the product.
• 9:13
  SPEAKER_01: And the vision was to be a connected home and to use camera-based navigation systems.
• 9:18
  SPEAKER_01: But those navigation, camera-based navigation was expensive and it had some uh it had some challenges to it.
• 9:25
  SPEAKER_01: Like one of them being like you can't run your robot at night.
• 9:28
  SPEAKER_01: So, like a simple task that consumers would want, you know, the products couldn't deliver.
• 9:33
  SPEAKER_01: So our competition started to use LIDAR-based navigation, which was simpler and it and mapped your home, you know, much faster.
• 9:42
  SPEAKER_01: And we were very late to the party.
• 9:44
  SPEAKER_01: So there were several technology areas that um we did not get into for strategic reasons.
• 9:50
  SPEAKER_01: And when you compound them all, you know, we became we had a deficit in terms of product offerings versus our competition.
• 9:58
  SPEAKER_01: So that was the situation um that I faced when I joined.
• 10:01
  SPEAKER_01: And we've dramatically made changes to address that.
• 10:05
  SPEAKER_00: Addressing the competition, I mean, to a certain extent, it sounds like that means you know, seeing some of these feature sets that are coming out that are being popular.
• 10:12
  SPEAKER_00: Obviously, you don't want to be chasing, you want to avoid that where possible.
• 10:16
  SPEAKER_00: Market fit is a big one too.
• 10:18
  SPEAKER_00: I mean, when we take the hundred-foot view and we look at what happened, um the market is just a lot more saturated than it was before.
• 10:26
  SPEAKER_00: Um, you know, you mentioned the the cost, uh Roomba's just start occupying the the top half of the market.
• 10:33
  SPEAKER_00: So um I assume that trying to bring price point down significantly and trying to compete down there was an issue as well.
• 10:41
  SPEAKER_00: But I don't know.
• 10:43
  SPEAKER_00: Was it possible for iRobot and Roomba to compete with the low end of the market?
• 10:48
  SPEAKER_01: You know, at the time we weren't competing at the mid or the high price.
• 10:52
  SPEAKER_01: So, you know, I I don't think that was really the issue.
• 10:55
  SPEAKER_01: Um, that said, the market really isn't saturated.
• 10:59
  SPEAKER_01: It's just we're talking to the same people that keep buying the same products.
• 11:03
  SPEAKER_01: Um the household penetration has somewhat plateaued in a market like the U.S., it's less than 20% household penetration.
• 11:12
  SPEAKER_01: So I've worked in low penetration categories before, razors being one of them.
• 11:17
  SPEAKER_01: You know, at the time when we started Mach 3, the um penetration of systems razors, which are the more expensive premium razors, was still relatively low, and we were converting people from disposable razors.
• 11:30
  SPEAKER_01: You need good technology and messaging.
• 11:32
  SPEAKER_01: And, you know, we went after a target audience that was fairly young with sampling and messaging.
• 11:38
  SPEAKER_01: And even then, you we grew household penetration, you know, by single digits every year.
• 11:44
  SPEAKER_01: That took many years to manifest itself into bigger household penetration.
• 11:50
  SPEAKER_01: I had the same thing with Oral B power toothbrushes.
• 11:53
  SPEAKER_01: You know, that's still it was still a relatively niche product with household penetration, but it took sampling, dental recommendations, new products, advertising to eventually get household penetration to increase.
• 12:06
  SPEAKER_01: Robots are in the same situation.
• 12:09
  SPEAKER_01: And so by just continuing to put features at the higher end of the price point, is only gonna either trade people up or bring in a relatively few number of folks.
• 12:19
  SPEAKER_01: I won't give you, you know, product ideas, but we need to grow household penetration if we're really gonna transform the category.
• 12:28
  SPEAKER_01: And that comes from taking a consumer mindset, not a technology mindset.
• 12:32
  SPEAKER_01: And you brought up mobile phones.
• 12:34
  SPEAKER_01: You know, we can argue whether Apple is the best technology, but I can tell you it's a very easy product to open, it's a very easy product to start up.
• 12:45
  SPEAKER_01: We need to take the robotic category and make it as easy as starting up an iPhone to really grow penetration.
• 12:55
  SPEAKER_01: So, separate from the arms races of features, if we can have the box opening experience, the setup, the uh challenges of getting your product to Wi-Fi connection, if we can minimize those pain points, those are examples of how we'll grow the category significantly.
• 13:14
  SPEAKER_01: And we've just started that journey.
• 13:16
  SPEAKER_01: So that's what I mean about being consumer-led.
• 13:18
  SPEAKER_01: It's not always about features and and you know, taking your your trying to win the arms race.
• 13:24
  SPEAKER_01: Yeah, you have to be competitive, but at the same time, we have an opportunity given our brand uh to really uh identify ways to unleash category growth.
• 13:34
  SPEAKER_01: And that's another major focus of ours.
• 13:37
  SPEAKER_00: It seems that's something you were also getting at, too, is that um, you know, you're only going to convert a very small portion of the market if um you know a large percent, most or all of your devices are over a certain price point.
• 13:51
  SPEAKER_00: So that you're you are going to have to address that lower part of the market.
• 13:54
  SPEAKER_00: I mean, that is what really to a certain extent, that is why Roomba succeeded in the first place, right?
• 14:00
  SPEAKER_00: They were the$200 robot to the$1,000,$2,000 Electrolux robot.
• 14:05
  SPEAKER_01: Aaron Powell Even then the penetration was so low, I don't think people made that comparative set.
• 14:09
  SPEAKER_01: It was really like this is a great new technology.
• 14:12
  SPEAKER_01: We never really were going after the low end of the market with the technology.
• 14:17
  SPEAKER_01: The market has segmented pretty significantly where you know even two to four hundred dollar robots are pretty good quality.
• 14:25
  SPEAKER_01: Um I would say it's the under$100 that, you know, a lot of it is just like cheap product that, you know, you probably wouldn't want to buy or doesn't work that well.
• 14:33
  SPEAKER_01: But I think within a within a good, better, best framework, even the entry level of what I would call good products are uh you know, deliver against uh, you know, some of the the needs that consumers have.
• 14:46
  SPEAKER_01: So as you get into the more premium sets of products that do everything from you know mopping and heat drying and air and and and and really cleaning the product well and making autonomous cleaning um really an opportunity for a lot of consumers.
• 15:04
  SPEAKER_01: That's when people are willing to pay premium price points.
• 15:08
  SPEAKER_01: Um but as I said, my vision is to both grow the category with attractive products at affordable prices, but at the same time come up with premium products that deliver on benefit needs that certain segments have that we'll pay a premium price for versus just you know loading products with features and trying to win a feature war.
• 15:31
  SPEAKER_00: So so what is it, you know, what what what did you maintain?
• 15:35
  SPEAKER_00: What what's still there at iRobot?
• 15:37
  SPEAKER_00: What is what is iRobot bringing to the table that is the kind of key differentiator that will continue to be the differentiator going forward?
• 15:45
  SPEAKER_01: Well, we have a tremendous commercial uh platform uh globally, and we've got a great brand and people that uh manage uh relationships with our uh major customers.
• 15:58
  SPEAKER_01: So what we have is a footprint that is in just about every major retail outlet in the globe.
• 16:05
  SPEAKER_01: We then also have our own D2C platform, plus, we have really strong relationships with e-commerce.
• 16:12
  SPEAKER_01: Um most of our competitors started out in the e-commerce platform, and that's where a major part of their volume came from, and now they're expanding into retail.
• 16:20
  SPEAKER_01: But we've got a footprint that is unlike any, and our retailers are very supportive of us and have saved a lot of shelf space waiting for us to address our turnaround situation.
• 16:32
  SPEAKER_01: So that coupled with the brand and real what I would consider really good marketing savvy will enable us to set ourselves apart and maintain what we think is a really strong relationship that the brand has with consumers.
• 16:47
  SPEAKER_01: I mean, people name their roombas, they have parties with their roombrass, we get pictures all the time of kids and pets playing with roombas.
• 16:54
  SPEAKER_01: It is synonymous with the category.
• 16:56
  SPEAKER_01: You know, despite some of the challenges we've had in the last couple of years when we, you know, have major promotions in the US, like uh at Prime Day, we have four of the five top SKUs in the marketplace.
• 17:08
  SPEAKER_01: So the the that brand affinity is something that we don't take for granted, but it's something that we need to leverage and make sure that we can build upon it.
• 17:16
  SPEAKER_01: In the world of organic social media and influencers and TikTok, we're there.
• 17:22
  SPEAKER_01: And those are areas that we're spending even more and more time on.
• 17:25
  SPEAKER_01: So just like we have to be good at technology, we have to be good at marketing.
• 17:29
  SPEAKER_01: We've got the teams, we've got the infrastructure, and now we just have to make sure we put the investment in the right places to continue to grow the business.
• 17:37
  SPEAKER_00: That's really interesting because I I don't know that I've heard that before specifically, not just about um aerobot, but just generally this idea of like holding on to shelf space at retailers.
• 17:45
  SPEAKER_00: Is is that uh not common, but that that is a thing that happens that that uh some of these big boxers they have faith in a company and that you've had these conversations that we're gonna turn around, we've given you this timeline, and then we're gonna start you know seeding our products to your your shelves at a certain point in the next like two years?
• 18:03
  SPEAKER_01: Uh well, people don't give you that much time, but they'll give you a little bit of time.
• 18:07
  SPEAKER_01: And and they've been tremendous in work and have worked with us.
• 18:10
  SPEAKER_01: But it's an annual what have you done for me lately?
• 18:12
  SPEAKER_01: So the products have to deliver.
• 18:14
  SPEAKER_01: We know that our retailers, whether it's in the US or Japan or in Europe, they they want us to win.
• 18:20
  SPEAKER_01: Um, they want to have a brand that when consumers come in looking for a Roomba, that we're there.
• 18:25
  SPEAKER_01: When we're not there, the category doesn't do as well.
• 18:28
  SPEAKER_01: So when we do well, the category does well.
• 18:31
  SPEAKER_01: Uh when we're in Japan and we've got, in many cases, 50 or 60% share of retail space, um, when we drive the category, when we come up with new products, we advertise the entire category grows.
• 18:43
  SPEAKER_01: When we just compete against our competition with feature wars, again, we're just we're we're we're going after a very small segment of the marketplace that's only going to maybe trade up a little bit, but we're not bringing new consumers in.
• 18:55
  SPEAKER_01: In many cases, as the original product in the category is the leader in many markets with retail space, we have an obligation to bring to our retail partners category growth stories.
• 19:07
  SPEAKER_01: And that comes with good new products and it comes with investment.
• 19:11
  SPEAKER_01: And in some cases, products that are gonna help us grow the category that we're working on right now in Japan.
• 19:17
  SPEAKER_01: We're gonna launch a product in about a month that we think is gonna be a game changer in terms of helping grow the category, and we've developed a product that's unique to Japanese consumers' needs.
• 19:28
  SPEAKER_01: And we also know that that product has legs globally, but we're gonna start in Japan first.
• 19:34
  SPEAKER_01: So those are just many examples of how we're gonna help grow the category and how we're gonna uh address um help the retailers and help ourselves at the same time.
• 19:43
  SPEAKER_00: Aaron Powell Has iRobot done that before?
• 19:45
  SPEAKER_00: Has iRobot specifically launched in Japan prior to the States?
• 19:50
  SPEAKER_01: Aaron Powell Not that I know of.
• 19:52
  SPEAKER_01: I mean there have been times where maybe product might be available in Japan first, but yeah, I don't think we've had a like a Japan first launch that I know of.
• 20:00
  SPEAKER_01: And you know, the company's been around 30 years.
• 20:02
  SPEAKER_01: There may be something in the archives, but not that I know of.
• 20:05
  SPEAKER_00: Historically, you know, Japan has been, I would say, quicker, at least more interested in embracing um robotics and technology.
• 20:13
  SPEAKER_00: And a lot of this is a big part of we talk about the aging population there, right?
• 20:17
  SPEAKER_00: Uh they've been more bullish about this idea of care robots, robots in the home.
• 20:23
  SPEAKER_00: Um is that ultimately where you see a product like Roomba fitting in?
• 20:31
  SPEAKER_01: Well, if you just think about how Japanese consumers live and their environment, um, you know, it's a combination of physical space and then also demographics as well.
• 20:43
  SPEAKER_01: And those are examples of what I would say like consumer pain points and consumer-led innovation that will allow us to develop products.
• 20:50
  SPEAKER_01: Um and then being vertically integrated lets us address those needs even faster versus our you know former model, where if you have to partner with somebody, it takes a little bit longer to develop those products and develop those features.
• 21:06
  SPEAKER_01: Um we shifted to our new model about a year or two ago to be faster, um, to get products delivered to the market faster, and also to get a better cost base so we could reinvest in the brand.
• 21:18
  SPEAKER_01: And now that we're vertically integrated, we've got that plus speed plus better quality that we can deliver faster.
• 21:25
  SPEAKER_01: So you just talked about Japan.
• 21:27
  SPEAKER_01: You bring that same analogy to the US.
• 21:30
  SPEAKER_01: There are many consumer uh needs that consumers in the US have that are parallel to the Japanese consumer, but many that are even different.
• 21:39
  SPEAKER_01: Homes are bigger.
• 21:40
  SPEAKER_01: You know, we need to make sure that the products perform better in an environment that has a larger home size that is maybe even different than Europe.
• 21:47
  SPEAKER_01: And, you know, at some point you want to have a product that meets the needs of everybody because it's efficient, but there are other times when it may be more practical to have a product for a specific market that takes advantage of the needs that those Consumers have, and then in some cases it will it will parlay itself to other areas.
• 22:05
  SPEAKER_01: So um I've got many ideas.
• 22:08
  SPEAKER_01: There's no end of ideas that we had.
• 22:10
  SPEAKER_01: In fact, if you talk about our history of innovation and you know the founding team that started iRobot, um there the ideas were endless.
• 22:20
  SPEAKER_01: In some cases, you know, if you go to CES when you see computers with arms and legs, there isn't one idea that hasn't been developed by the scientists at iRobot.
• 22:30
  SPEAKER_01: In many cases, they weren't practical to commercialize, or in many cases we had commercialization challenges ourselves because of the way we were organized or some of the challenges that we were facing, you know, either either pre-Amazon or during the Amazon dependency period.
• 22:46
  SPEAKER_01: We stopped innovating, we stopped commercializing ideas.
• 22:50
  SPEAKER_01: And so now I'm getting us back to being both consumer-led, being fast to market, but also commercializing ideas quickly.
• 22:58
  SPEAKER_01: And Japan is an example of that.
• 22:59
  SPEAKER_01: So this product that we're gonna launch in Japan, we had in our cupboard for several years.
• 23:05
  SPEAKER_01: We just did not deliver against it.
• 23:06
  SPEAKER_01: Either couldn't develop the product the ideally we wanted, or the cost base might have been too high.
• 23:12
  SPEAKER_01: So we were able to address that very quickly within a year, and now we're launching a product.
• 23:16
  SPEAKER_01: That pace of innovation is gonna be required to both get to market fast, but you know, keep up with our and in many cases surpass our competition.
• 23:24
  SPEAKER_00: Aaron Ross Powell iRobot ran into the issue that uh it seems like every single uh company that's attempted to a certain extent to break into uh home robotics has ultimately run into of you know how much are we how much are we a research company, how much are we a a commercial company?
• 23:41
  SPEAKER_00: As you said, you've got three brilliant people coming over from from MIT.
• 23:46
  SPEAKER_00: You go to your Bedford offices, I assume that maybe this is still there.
• 23:49
  SPEAKER_00: You've got the museum up front, you've got the baby doll, you've got the Mars Rover, the teleoperation robot, everything else, as you said.
• 23:56
  SPEAKER_00: They try their hands in everything.
• 24:00
  SPEAKER_00: Uh you know, not not for not for lack of of of trying, but it it it is an incredibly difficult thing to both try to be uh you know a research lab, an innovator, and then continue to scale and then be a large mainstream commercial entity at the same time.
• 24:21
  SPEAKER_01: That was and is a challenge.
• 24:24
  SPEAKER_01: And you know, at the same time, you had competition that was coming in that almost had an advantage of, you know, they had the entire Chinese market to play and to get better and to refine the product line.
• 24:34
  SPEAKER_01: And that was an entire market that was closed to us that you know made even innovating and commercializing more difficult.
• 24:40
  SPEAKER_01: So we didn't always have an ability to test out some of these ideas that we had.
• 24:45
  SPEAKER_01: Um, I've got a whole back room of lawnmowers that you know haven't seen the light of day.
• 24:51
  SPEAKER_01: I've got many adjacent categories that we have worked on that haven't seen the light of day or that never really got commercialized.
• 24:58
  SPEAKER_01: And when you think of the brand that we have uh and the partners that we have globally to be able to help us commercialize these products, there's no reason why we can't get some of these ideas to market faster.
• 25:09
  SPEAKER_01: And now that we're vertically integrated, we'll get the cost curve down.
• 25:12
  SPEAKER_01: Um we've got the ability to get into China now that we may not have had before.
• 25:17
  SPEAKER_01: So there's a lot of benefits about our new uh partnership and new organization that will enable us to both compete, but also bring new ideas to market faster.
• 25:28
  SPEAKER_00: Now, when you say you've got a whole room of lawnmowers, you're talking about the Terra lawnmower that was introduced, I think like maybe 2019 CS, 2020.
• 25:36
  SPEAKER_00: So obviously came out, showed what looked to be a pretty fitished product.
• 25:40
  SPEAKER_00: I met with Colin at CES that year.
• 25:42
  SPEAKER_00: Global pandemic hits, that's a bit of a problem.
• 25:45
  SPEAKER_00: Sourcing products, things get really expensive.
• 25:48
  SPEAKER_00: The Amazon thing happens.
• 25:49
  SPEAKER_00: Obviously, a lot of different dominoes have fallen.
• 25:51
  SPEAKER_00: We haven't really dates keep getting pushed back.
• 25:54
  SPEAKER_00: We haven't heard much from it.
• 25:55
  SPEAKER_00: When you say you've got them in the back room, what does that mean to have them in the back room?
• 25:59
  SPEAKER_01: Well, we've got a lot of you know products that had been invented and and close to commercialization that are sitting around that we still are testing, that we still have developed.
• 26:10
  SPEAKER_01: But um, as I said, a lot of those products needed a better cost curve, or they now, you know, now with technology that has lapped some of those ideas, we'll probably make some enhancements and modifications that take advantage of the latest navigation and and the latest cost curve to be able to bring those to market.
• 26:27
  SPEAKER_01: So um, but we have good IP on a lot of those categories as well.
• 26:32
  SPEAKER_01: So, like I said, the the I I gotta give Colin and the team a lot of props for their inventiveness and their ability to come up with a number of ideas.
• 26:40
  SPEAKER_01: And I think, you know, one of my goals will be I'd be nothing prouder than to take some of these ideas and see them, you know, come to light and see them uh hit the marketplace.
• 26:51
  SPEAKER_00: Aaron Powell This was a good lie that Colin always had every time you know you'd interview him.
• 26:54
  SPEAKER_00: He would say I only had success as a roboticist when it became a vacuum salesman.
• 26:59
  SPEAKER_00: You really do want to start diversifying the portfolio as soon as is, I guess, plausible.
• 27:04
  SPEAKER_01: Aaron Powell Nothing really has changed from the turnaround plan that we put together last year.
• 27:09
  SPEAKER_01: It may have just gotten pushed out a year due to some of the external challenges that we had, but it's really solidify the base, start to grow into uh and expand into new markets uh within our core category and then eventually get into adjacency.
• 27:27
  SPEAKER_01: So like a three-step process.
• 27:29
  SPEAKER_01: And that third step has to come fairly quickly because you know that demand is there, and we don't want to miss uh the opportunity to take the brand and bring it into new segments, but we have to do it thoughtfully and we have to do it within right investment levels.
• 27:43
  SPEAKER_01: You can't just put a product out in the marketplace anymore.
• 27:46
  SPEAKER_01: The brand still is going to require investment, it's still gonna require promotion because just about every segment we would want to go into, there's a there is some competitor that may be there first.
• 27:56
  SPEAKER_01: But we know that with our technology and the brand that we'll be able to make meaningful inroads.
• 28:01
  SPEAKER_01: And we do have some IP um that exists, and we also know that we can develop great IP with our new partner to be able to help differentiate us.
• 28:09
  SPEAKER_00: Aaron Powell You alluded to the the Amazon deal before, you know, and and I I think the words that you you used were something along the lines of um having stopped innovating.
• 28:18
  SPEAKER_00: You know, a lot of that was everything was invested in that deal going through, right?
• 28:22
  SPEAKER_00: I mean, it right.
• 28:23
  SPEAKER_00: All and I I I spoke to Colin.
• 28:25
  SPEAKER_00: We had him on the show not long ago, and I I don't think he particularly liked my choice of words, but I said, you know, were there essentially too many eggs in that basket that if it didn't go through, what did that mean for the future of the company?
• 28:38
  SPEAKER_00: Um what what was the future, was iRobot's future ultimately too invested and having to have that deal go through to continue to exist?
• 28:49
  SPEAKER_01: In hindsight, it's always easy to like be a Monday morning quarterback.
• 28:53
  SPEAKER_01: I think the it was so certain that the deal was going to go through, and then at the same time, there were so many requirements put on the deal from the partners in terms of what we could do and not do that I think Colin may have felt a little bit um compromised in terms of what he could actually do as a plan B.
• 29:11
  SPEAKER_01: And the reality is plan B didn't really start to look like it was needed until pretty late into the process.
• 29:17
  SPEAKER_01: As he would even tell you, there really wasn't a lot of sound logic behind the deal being, you know, not approved.
• 29:24
  SPEAKER_01: You know, if it was a 10% chance, why, you know, do a lot of alternative investment when that wasn't the case, especially when you have a partner that's willing to go with you pretty far into the process.
• 29:35
  SPEAKER_01: History will kind of judge it.
• 29:37
  SPEAKER_01: I mean, you know that if you talk to Colin, you know, there were some strategic missteps along the way that were in place before the Amazon, you know, situation.
• 29:47
  SPEAKER_01: And then when you stop innovating, you've got those issues plus the combination of not innovating for a couple of years.
• 29:52
  SPEAKER_01: So it was about a five-year period where competition was almost allowed to make inroads and take over certain market segments.
• 29:59
  SPEAKER_01: Um, and that's unfortunate, but I don't think you know that plan B would have materialized unless like it was we just said, like, we got to stop this acquisition, we have to move on and do something else.
• 30:10
  SPEAKER_01: And I don't think there was ever a time where, you know, either side felt that that was the right thing to do.
• 30:15
  SPEAKER_01: So all I can do is say, you know, I got to pick up the pieces, move forward, and pivoting as fast as we could.
• 30:23
  SPEAKER_01: And, you know, frankly, that's what I'm most proud of.
• 30:26
  SPEAKER_01: You know, I'm a I'm a consumer guy at heart, and we were able to quickly flip and clean up, you know, the post-Amazon issue, get the company set up for, you know, the future, change the whole model of the way we develop products, and develop a whole new product line in less than nine months and get it launched and win prime day of 2025.
• 30:48
  SPEAKER_01: We did it all in like less than a year.
• 30:51
  SPEAKER_01: And so now to then say, okay, how do we take that and set ourselves up for the next future, which is a partnership that has us vertically integrated, that to me is, you know, uh both a save of the company, but also continuing on this path of the of the uh the turnaround.
• 31:06
  SPEAKER_01: So, you know, you talk about maybe a five-year area, uh five-year period of issues that we've been uh able to dramatically turn around.
• 31:15
  SPEAKER_01: And I think that's what I'm most proud of, and um both with the management team and and um you know the employees that we have, because that's our goal is to kind of make Colin proud of all the work that he built, all the that great foundation, and and save this company and grow this brand and and take us onto a new new path of growth.
• 31:34
  SPEAKER_00: One thing that that he that he and I like one 1000% agreed on is that like you were not given an easy job.
• 31:41
  SPEAKER_00: You you were you stepped into something extremely difficult.
• 31:44
  SPEAKER_00: And I I've had this conversation with you know a lot of folks, certainly like in my my job at TechGrunch, you know, CEO coming on at like Peloton, for example.
• 31:53
  SPEAKER_00: There are a lot of examples of people coming into companies that have been successful that maybe have been struggling and and trying to do this turnaround.
• 32:01
  SPEAKER_00: Um and I always have to ask them, you know, why?
• 32:05
  SPEAKER_00: Like what was it about this challenge that made you want to step in and have, I assume, you know, like a couple of years worth of sleepless nights?
• 32:13
  SPEAKER_01: Good question.
• 32:14
  SPEAKER_01: I've done it before, and I do get a certain energy of being part of a team that can turn around a business and that I can apply, call it the Gillette Playbook or some of the brand building that I've used in the past.
• 32:28
  SPEAKER_01: Uh it's not my first CEO role.
• 32:30
  SPEAKER_01: I've been part of a turnaround uh before.
• 32:34
  SPEAKER_01: And so there's a certain skill set and energy and mentality that you need to have.
• 32:38
  SPEAKER_01: Um, you know, a couple of other things.
• 32:40
  SPEAKER_01: I'm Boston born.
• 32:41
  SPEAKER_01: I knew about iRobot.
• 32:42
  SPEAKER_01: You know, I would drive by the company headquarters all the time.
• 32:46
  SPEAKER_01: And I even knew some people that used to work at the company and some folks on the board.
• 32:51
  SPEAKER_01: So I had this emotional connection to the business, um, separate from just my turnaround shops and my interest in trying to jump into this.
• 33:01
  SPEAKER_01: Uh I love jumping into the fire and building and rallying teams towards a vision.
• 33:07
  SPEAKER_01: And I felt this, you know, from day one, I felt this great loyalty to the brand, but also to the people and to the team.
• 33:14
  SPEAKER_01: Um, they were so passionate about the mission that Colin had set up that, you know, we're gonna change the world through robotics.
• 33:20
  SPEAKER_01: It reminded me of my early days with Gillette, you know, there's a better way to shave and we'll find it.
• 33:23
  SPEAKER_01: It was that same mentality of we're gonna conquer the world.
• 33:26
  SPEAKER_01: And and people felt that they still wanted to be able to do that, and they felt that we had the abilities to do that.
• 33:32
  SPEAKER_01: So even to this day, if you know, people say, like, why did I join?
• 33:35
  SPEAKER_01: It was because of the brand, our ability to innovate and the people.
• 33:39
  SPEAKER_01: And, you know, I get this great energy from building teams and being part of teams that can turn things around.
• 33:46
  SPEAKER_01: So yeah, I mean, call it, you know, crazy, but that's why I did it.
• 33:51
  SPEAKER_00: You're also coming in for a CEO who was also the founder of the company and who had been there the entire time.
• 33:56
  SPEAKER_00: You know, so you you are you are an outsider, you know, and he was I mean, the there's again, there's always like a really difficult give and take here.
• 34:04
  SPEAKER_00: I talked to a lot of CEOs, I talked to a lot of technical founders.
• 34:07
  SPEAKER_00: They have to make that decision early on whether or not they stay on and, you know, become an executive.
• 34:12
  SPEAKER_00: You know, to a certain extent, I I guess you must have felt like a bit of an outsider.
• 34:16
  SPEAKER_00: Maybe you were maybe regarded as such.
• 34:20
  SPEAKER_00: Was it was it difficult to sort of convince people that you were that you know that you knew the business or that you were going to sort of learn the business?
• 34:29
  SPEAKER_01: Aaron Powell When you come into these situations, there's a certain level of humility that you need to be able to become a servant leader, which I think I am.
• 34:38
  SPEAKER_01: The last thing you want to do is come in and tell people we have all the answers.
• 34:42
  SPEAKER_01: One of the probably benefits of my career, even when I was at either Gillette or Proctor, I've worked in so many different categories that it's the business process and it's the ability to run a company that is paramount, not just the, hey, I'm a Razor guy.
• 34:56
  SPEAKER_01: You know, there aren't too many Razor companies in the world.
• 34:58
  SPEAKER_01: So I wasn't going to go to another Razor company.
• 35:00
  SPEAKER_01: But my point is I've worked in capital-intensive businesses, I've worked in liquid-fill commodity businesses, you know, I've worked in Asia sourcing businesses with infant care.
• 35:10
  SPEAKER_01: Um, they all have different dynamics to them.
• 35:13
  SPEAKER_01: And it's the ability to run a business and figure out a strategy, a strategic plan and fix a company that to me is the is paramount.
• 35:21
  SPEAKER_01: So, yeah, I mean, I worked in watches at Timex.
• 35:24
  SPEAKER_01: Every company I've gone into, you know, whether it's Oral B or Watches or even in the auto industry, I'm an outsider.
• 35:31
  SPEAKER_01: And people say, What do you know about cars?
• 35:33
  SPEAKER_01: And it's like, I don't know a lot, but maybe that's a good thing.
• 35:37
  SPEAKER_01: Because you can look at the business from an outsider's perspective and say, Why are you doing this?
• 35:41
  SPEAKER_01: And if you do it in a polite way versus coming in with all the answers, um, people will embrace it.
• 35:47
  SPEAKER_01: And so for me, it was setting the vision that we've got this great brand, we're gonna innovate, we're gonna turn this business around.
• 35:53
  SPEAKER_01: I've done it before, and we're gonna do it again.
• 35:56
  SPEAKER_01: And you then have to give people those checkpoints along the way, the, the, the measures that say, hey, see, it's being successful.
• 36:03
  SPEAKER_01: You know, we had to reduce the size of the company by by 50%.
• 36:07
  SPEAKER_01: We had to change the business model, we had to launch new products.
• 36:10
  SPEAKER_01: We we said that the only way we're gonna be able to invest in the brand was to improve gross margins.
• 36:15
  SPEAKER_01: So by the end of last year, when we started to put points on the board of, hey, we are expanding the gross margins with this new product set.
• 36:23
  SPEAKER_01: We are holding shelf space, we are growing, we did have a successful prime day.
• 36:27
  SPEAKER_01: Those are the proof points that then give people confidence in the vision, or at least confidence that, you know, I know what I'm doing.
• 36:34
  SPEAKER_01: You know, you have to win the hearts and minds of people.
• 36:37
  SPEAKER_01: You can't just show up and say, this is how we're gonna run the railroad.
• 36:40
  SPEAKER_01: That's at least my that's what's been my success formula.
• 36:44
  SPEAKER_01: That's worked for me, and you know, I'll continue to to operate that way.
• 36:49
  SPEAKER_00: Yeah, I mean, I've I've had to let people go in jobs before, and even at a small scale, like it's easily one of the most difficult things that I've ever had to do in in my life.
• 36:59
  SPEAKER_00: And I I just as far as like regaining confidence, especially at a large scale, that has to be how how how do you do that?
• 37:07
  SPEAKER_00: How do you get people back on your side and how do you convince them that yeah, this is in fact, we're we're back on the right path.
• 37:13
  SPEAKER_01: Well, you know, it's not just me.
• 37:14
  SPEAKER_01: You know, I I like I said, I I set a vision, I I communicated that vision, I met with people, but I also either brought in some folks, but also identified some crown jewels of talent that we had at iRobox that we promoted, that I brought on to my leadership team that went through this battle with me.
• 37:34
  SPEAKER_01: And I couldn't be prouder of the leadership team as well as the uh employees that we have.
• 37:40
  SPEAKER_01: So you can't do this alone.
• 37:42
  SPEAKER_01: Uh, I've learned that many times in my career.
• 37:44
  SPEAKER_01: You need a strong team, you need a good vision.
• 37:46
  SPEAKER_01: I had a very supportive board that allowed me to pull the levers that I wanted to pull.
• 37:51
  SPEAKER_01: And they knew the situation we were in, they knew the challenges, they knew the history.
• 37:55
  SPEAKER_01: And so they were very supportive.
• 37:57
  SPEAKER_01: To this day, going through battle with the team that I have is what actually made it um manageable.
• 38:03
  SPEAKER_01: Um, because they always say it's lonely at the top as a CEO.
• 38:07
  SPEAKER_01: But, you know, if you have a strong team around you, you can delegate, you can have them share the vision as well, and that's what's important.
• 38:13
  SPEAKER_00: I understand that you know that you do have to navigate optics internally.
• 38:16
  SPEAKER_00: And but I'm I'm actually curious, you know, obviously like there's optics for people like us, and then there's the optics, like there's the Wall Street optics, but at the end of the day, like how much do how much does an average consumer who's walking into a Best Buy to shop for a robot vacuum care that that company has been gone through the Chapter 11 process?
• 38:34
  SPEAKER_01: Aaron Powell Not everybody knows it.
• 38:36
  SPEAKER_01: And in those cases, they just want to know that they've got a product that they can trust and that they can rely on.
• 38:41
  SPEAKER_01: And for those that do know, we have to reassure them that we're still here, we're not going anywhere, and we're gonna be able to delight them and deliver products that they need, and that you know, we're gonna be here to fix the product if they have issues, and that we're gonna be here to sell them accessories if they need it.
• 38:55
  SPEAKER_01: So there's that message for you know, PR communications, even you know, sessions like this with you that will reassure, you know, that I use to reassure consumers that you know we're not going anywhere and you know we're gonna continue to develop great products for them.
• 39:09
  SPEAKER_01: So we use that in our and you know, messaging and advertising and social media and public relations, all the different touch points that we we can get our message out.
• 39:19
  SPEAKER_00: Yeah.
• 39:20
  SPEAKER_00: I mean, obviously, and then the other thing that immediately raises concerns from people is kind of any mention in and around China when it has to do with either manufacturing or privacy concerns.
• 39:29
  SPEAKER_00: It sounds like it's clear to me that as you know, when when you did do the Chapter 11 turnaround, that you've been very sort of proactive on the messaging around that.
• 39:38
  SPEAKER_01: Aaron Powell Without a doubt.
• 39:39
  SPEAKER_01: I mean, and that was a true partnership with with uh Piscea.
• 39:44
  SPEAKER_00: We wanted to make sure that thank you for pronouncing the company's name before I had to say it out loud.
• 39:48
  SPEAKER_01: Oh, okay.
• 39:49
  SPEAKER_01: Um, it's been it was a partnership earlier.
• 39:53
  SPEAKER_01: You know, as you know, we were working with them for a few years before um as a supplier as well.
• 39:58
  SPEAKER_01: Yeah.
• 39:59
  SPEAKER_01: And uh we said like we need to lean into privacy and we need to make sure that consumers are comfortable.
• 40:06
  SPEAKER_01: So we've set up this governance board in this process where all and and you know, we had very, very strong protocols for protecting data.
• 40:15
  SPEAKER_01: Same with Europe.
• 40:16
  SPEAKER_01: So all of our cloud servers are US-based.
• 40:19
  SPEAKER_01: We use AWS for our um for our cloud you know support, and all that data is housed there.
• 40:26
  SPEAKER_01: We really don't have data on individuals that we look at on aggregate.
• 40:30
  SPEAKER_01: We can find out how people are using products, how many are active, how many are not active, where the pain points are from missions, how many you know are not successful.
• 40:38
  SPEAKER_01: So on an aggregate basis, we get a lot of that data that we use for RD and development.
• 40:43
  SPEAKER_01: But even then, we said that data has to stay in the United States, and they were very supportive, and we set up a governance board just to ensure that.
• 40:53
  SPEAKER_00: So we're we're we're at about time right now, so we can close on this.
• 40:55
  SPEAKER_00: But you know, let let's let's say we can let's say it takes us another year to sync up our schedules, which you know sounds optimistic as far as uh you know how long it took to get this thing going, or let let's say let's say it takes two or three years.
• 41:08
  SPEAKER_00: We we we do this podcast again, or two or three years.
• 41:10
  SPEAKER_00: What does the successful iRobot look like two or three years from now?
• 41:14
  SPEAKER_01: Aaron Powell The KPIs are well established.
• 41:17
  SPEAKER_01: We're gonna continue to grow market share in the markets where we have uh major presence, like the US, Japan, Europe.
• 41:23
  SPEAKER_01: We're gonna gain back market share in some of the markets that we lost share to many years ago, like a like a Germany or Northern Europe.
• 41:31
  SPEAKER_01: And we're gonna expand into new markets that we have been hesitant to go into either because of investment, you know, during the Amazon period.
• 41:38
  SPEAKER_01: And that means, you know, markets outside of uh Western Europe and also means you know, we're going back into China with new products.
• 41:47
  SPEAKER_01: It means having a good, better best strategy.
• 41:49
  SPEAKER_01: It means delighting some of our premium consumers at the high end with a really good couple of products that meet their end benefit needs that I'll be able to talk to you about in a year or two.
• 42:00
  SPEAKER_01: And then by then it will probably be uh talking about a few adjacencies that we've entered that uh we're very excited about, you know, some of the early performance that they've had.
• 42:11
  SPEAKER_00: Do you think I'm gonna be able to have an iRobot lawn more before the next time we talk?
• 42:15
  SPEAKER_00: A year from now, two years from now?
• 42:17
  SPEAKER_00: I would hope so.
• 42:18
  SPEAKER_01: If not, uh if not, something you can try, is something you can try that's commercializable.
• 42:23
  SPEAKER_00: Okay, fair enough.
• 42:24
  SPEAKER_00: Gary, thank you so much.
• 42:25
  SPEAKER_00: All right, take care, Brian.
• 42:26
  SPEAKER_00: Thanks.
• 42:28
  SPEAKER_00: Thanks so much to Gary and iRobot for that conversation.
• 42:32
  SPEAKER_00: Thanks to you as always for tuning in.
• 42:34
  SPEAKER_00: If you're enjoying the show, please like and subscribe.
• 42:37
  SPEAKER_00: Don't forget to check out our newsletter over at automated.fm.
• 42:41
  SPEAKER_00: We feature exclusive interviews every Thursday morning.
• 42:45
  SPEAKER_00: Uh, we have a lot of great interviews coming up on automated with serve robotics, boss of dynamics, physical intelligence, kinessi.
• 42:53
  SPEAKER_00: We've got the uh head of the computer science school over at Carnegie Mellon University.
• 42:59
  SPEAKER_00: Lots of good stuff.
• 43:00
  SPEAKER_00: As always, thanks for joining us, and we will see you next week for another episode of Automated.