Latest / Exit Algorithms / AI, Focus, and Capital Efficient Growth: Rise Robotics CEO Hiten Sonpal | (#62)

Transcript

AI, Focus, and Capital Efficient Growth: Rise Robotics CEO Hiten Sonpal | (#62) · Exit Algorithms

• Pete Vera: Welcome to Exit Algorithms, the podcast where we decode what it really takes to unlock growth, streamline operations, and prepare your business for a high value exit. I'm your host, Pete Vera. And today I'm excited to introduce Hiten Sompal. He's a computer engineer turned robotics executive who's built bomb disposal robots for the military at iRobot, led the development of... the Roomba lawnmower called Mobot, became president of Electric Sheep Robotics and is now CEO of Rise Robotics, a company that ran the number one Reg CF race of 2025. Hinton, super excited to have you here. Welcome to the podcast. Hiten Sonpal: Thank you, Pete. So excited to be here. Pete Vera: Yeah, I can't wait ⁓ to pick your brain a little more. I've done a good amount of research myself. But yeah, there's a lot to unpack here. Do you mind sharing, we can start off to share a bit about your background, where you're from and maybe some of your career journey and how you ended up at Rise. Hiten Sonpal: Sure, yeah, I was initially born and raised in India, came to the United States to study computer engineering. And then after I graduated, worked for a consulting firm, developing electronics. And one of the clients that we had, one of the projects that I was working on had, it was like a three-person theme. DARPA was funding it, iRobot was the prime, and we were doing the development. And the robots we were working on were called PacBots. They were supposed to be soldier portable systems. And then 9-11 happened. and the robots that I was working on, the prototypes got deployed at ground zero. And at that point, I decided that I wanted to find a way to work for iRobot because they were doing cool stuff, saving lives. And within a few years, I found my opportunity, moved to Boston and joined them. And then I had two separate careers at iRobot, first eight years in their government business where we shipped 1200 robots, saved well over 1200 lives, both on the US side and also civilians in Iraq and Afghanistan. And then I spent another eight years in their consumer business where teams that I led generated over 9 billion revenues, shipped 9 million units, sorry, 2 billion revenues, 9 billion units, 2 billion revenues, 9 million units across 20 products. Pete Vera: Yeah, very impressive. ⁓ And so neat. How was that transition coming from India to corporate America? Hiten Sonpal: Well, I came as a student, which is when it's the easiest ⁓ because ⁓ when you ⁓ join a university, you're a customer. so everyone at a university is excited to make the lives of students easier. And there's a support system and so on and so forth. And so the acclimatization to US culture was easy. ⁓ I'll say one other thing that made it very easy to decide to stay in the United States was that it felt like more of a meritocracy than the India I grew up in at the time. Things are changing in India as well, they keep changing and India's become more of a meritocracy because you can see that in the growth rate and so on. But at the time, the United States was a breath of fresh air and I was excited about using my skills and my abilities to be successful. Pete Vera: Yeah. ⁓ definitely. And you made the most of the opportunity, clearly. Yeah, I would love to hear also about your time at iRobot. ⁓ I read, you know, COVID did not treat the company well, and you were along the ride for that ⁓ part of the company's history, right? Hiten Sonpal: Thank you. That's right. So we had finished the Room Buffer for your lawn, product that you talked about. And we were getting it ready to launch. All the pieces had been done. And we had the final sort of validation units. And we completed the validation. And we were ready to hit go. And we were asked to pause. And then 2 thirds of my team was let go because of COVID. And what happened because of COVID is that companies that were building consumer products couldn't get them from China initially because the virus was spreading there. And then once the virus came to the United States, even if they had product, they couldn't sell them in retail stores because stores were shut down. then Amazon, which is one of the biggest channels for retail at the time and still is, right, was only shipping diapers and bottled water initially because people were staying at home. And so they needed those essentials and the grocery stores were closed and all that stuff. So it was a very difficult time for iRobot and they had to make some tough decisions and they decided to protect the core of the business at Rumba. And I happened to be leading an expansion project to the business. So that part got cut off and so, or paused. And ⁓ so that's when I decided to try something different and get into entrepreneurship. I asked iRobot if I could try to see if I could salvage the project through external funding. And they gave me the permission to go do that. And so I looked around and spoke to a lot of VCs. And that was kind of my first taste of entrepreneurship. And in the end, I was able to put something together, but the deal just never came through. And I found myself a free agent, joined a couple of startups. then in that process, found myself as CEO or president of now the third startup that I'm running. Pete Vera: Wow, yeah, quite the journey. you know, it seems like a blessing in disguise almost with iRobot there. Were there any lessons you learned from your time at iRobot that you've taken with you to your new ventures? Hiten Sonpal: Yes. mean, there are a lot of things about iRobot that were incredible. I met so many incredible leaders in the company. ⁓ Colin Angle, of course, who created iRobot. Helen Greiner, who was also co-founder. She then went on to start two other companies. ⁓ She was actually one of the people that I reached out to when we wanted to spin out, when I wanted to spin out ⁓ the Roomba for your lawn business. It was called Terra. That was the product. And I actually asked her to be CEO because I figured that she'd be better fundraiser than I would be, and I was right, to trust in her and kind of her instincts. ⁓ Rodney Brooks was the CTO of iRobot. He ran one of the labs at MIT, and he's since then started two companies himself. ⁓ Let's see, who else? There are a couple of other folks, ⁓ well. Pete Vera: Thank Hiten Sonpal: There was Christian Surda, he was the CEO briefly, and then he became CEO of SimpliSafe. ⁓ There are ⁓ several other folks who gone on to start their own companies. And so iRobot has been fantastic in terms of developing talent, robotics talent in the Boston area. When the company was doing well, so these were all people who were getting experiences the company was growing and then found opportunities. But I think, and now the company isn't doing as well, but. All the folks who have left are going to see this ecosystem. So I think five to 10 years from now, Boston is going to be just a tremendous place for robotics companies. Cause there's all this talent out there that has been part of a successful organization understands what it takes to make things work. ⁓ I robot also had an incredible culture. ⁓ you know, there was a, it was a family environment and, ⁓ there really were no jerks in the company. They did a really good job of hiring, which I thought was incredible. And within that master culture, but the sort of the superset culture, I was able to build a subculture for my teams that kind of built on that, which was fantastic as a leader to start with something that was already good and then try to get it to be great. So that was an opportunity I had as an emerging leader in the organization. And finally, I joined IROI before it went public. And so after the company went public, I was able to, again, as an immigrant, not coming with. Pete Vera: Mm. Hiten Sonpal: the guy who saved a lot of money, being part of our robot, having it go public created the opportunity for me to buy my first home, put the payment down on it. So I have nothing but positive things to say about my time there. was just incredible. Pete Vera: Yeah, ⁓ that's awesome and it's great you had a good experience sounds like a good launching pad you know for your the rest of your your career. ⁓ Hiten Sonpal: Yes, for me and many others. Pete Vera: Yeah, I'm excited to see the, you know, really the beginning and years to come where Rise will be. As you grow the company, I'm curious, you know, what is some of your strategies for growth, being such a capital intensive ⁓ business, right? How have you decided when to hire new employees or? you know, take on funding for growth. I'd love to hear your philosophy around that. Hiten Sonpal: Yeah. So one of the things about running a business or a startup is that you have to make sure you stay in business, right? The only way you fail, if you caught something, if you find an opportunity that you think is real, like if you found something you believe in, you have some unique tech, you have some moats and you have a big market, you just need enough ad bats to be successful. So the first thing is being fiscally responsible in the business and making sure that you continue to have chances to keep playing. because the only way you lose is if you run out of money. So the first step when you're losing money is to make sure how can I do this in the most capital efficient way possible. So when I joined the company, one of the things I did was kind of review the strategy of the business. And strategy to a lot of folks seems like this ephemeral thing, but the essence of it is resource allocation. Where are we going to put our money? And for me, and also for the board, but our goal was to get products into market fast. And so what I did was I basically looked at, there's a model called the three horizons model. It's an outdated model that McKinsey uses or used to get, to convince companies to invest more in the future. They basically said, the model said you need to spend 60 % of your research and development dollars in things that you're going to get to market in six months to two years. You need to spend another 35 % in things that are going to go to market between two and five years. But then beyond that five year horizon, you need to put in five to 10%. You can't ignore that because if you ignore that, those five years are going to come by very quickly and then you won't have a product line. And so that model is used to convince people to invest in the future. When I joined Rise, it was backwards. We were spending a lot of money on things that were going to be coming onto market five years. Pete Vera: Mm. Hiten Sonpal: process of getting them into market involved a B to B to B process, which would just take a long time. And so what I asked the team to do is to stop working on projects that were going to take that long and instead took all the chips and put them on Horizon One, which is we're only going to work on things that get into market in the next six months to two years. So that's been our focus. And for anything that was longer, We insisted that our customers put some skin in the game. So if our customers weren't willing to put in investment dollars and join development to get projects across the finish line, it just didn't make sense for a startup to take investor money, spend five years on something only to have the customer go through a reorganization as an example, which large companies do every 18 months or so, go through a reorganization or you're a champion to retire or leave. And then all of a sudden you don't have anything, right? So it's a... Pete Vera: Mm. Hiten Sonpal: It's, yeah. So that was so focused and focusing on the near term was a big part of what I did. And then the other part was just making sure that we were spending efficiently. And so the team now is actually smaller by 20 % than I took over, but our productivity is between 50 to a hundred percent higher than it was when I took over. Pete Vera: Wow. Yeah, that's powerful. Man, great, great, takeaway there. Really great insight. How do you, what was part of your strategy to make your team so productive? Hiten Sonpal: Well, you there's just normal attrition where you have people that leave and every time that happens, you get a chance to reassess how you want to run the business. One of our biggest losses was a ⁓ program manager that we had in the company and she was incredible. She was just making so many things happen, juggling so many balls. And she got an opportunity that we could not to run a portfolio, which we didn't have. Right. So she was running programs of programs. ⁓ So we can really match that. And she left and we had to figure out what we were going to do. And there was also a gap in engineers. And so what I decided to do was let's see if we can run this without a project manager, even though we had a superstar leave, a company in our size, less than 20 people typically doesn't have a program manager. you know, the founders and I'll manage to do all of this stuff in other companies. So let's see if we can, we can do something different. And in that process, I ended up cutting 40 hours of meetings because the project manager had to meet with all the people and the project manager had to meet with me and some of the team leads and there had to be discussions and things had to get sorted out. So that was the first layer of the onion. And then I solicited feedback from the team as to how we could improve things. And so we ended up cutting another five, ⁓ well, there's 40 man hours of meetings and we cut another, I'd say 10 to 15 man hours of meetings since then. And then we created a much more transparent system. And so all of that happened because we just tried to focus on making communications better. And we had this one person who was at the center of all of those communications and she was doing an outstanding job. But by streamlining the rest of the communications, we were able to get back to the same place. But now we had one free head count where we could go get another engineer. So we increased the velocity of the organization. We didn't lose anything because we were able to find ways to. Pete Vera: ⁓ Hiten Sonpal: to stitch that. And then a lot of that, a lot of the reporting and so on that a project manager would do, we just have to now do without. So we try to make things more visible. We try to have daily stand-up meetings where we get the team unstuck and we move things around. Now that I, and now I'm more embedded in the business. And so I can see that requests I make that should take two days or taking two weeks. And I can sort of pause the team and say, okay, this, I thought it was easy when I made the request, but. Pete Vera: Mm. Hiten Sonpal: it looks like it's taking too long. What do you recommend as an MVP that we could put in for now? And then once we get customer buying, we can come back and finish that feature. things like that to keep the momentum going. And so that's happened. as people leave, we kind of reassess and we say, how can we do this better? And then not in this particular case when the project manager left, but in most instances, the people that leave are the ones that are in the bottom half of the organization. And the new people we bring in are always in the top half, so we just set a high bar. So whether people leave or they come, the organization's productivity increases. Pete Vera: Yeah. Awesome. Well, thank you for that detailed response. A lot of good takeaways there. love that you get your team's feedback. think that's huge. ⁓ And slashing meetings. I was going to dive into that a little more. How do you ⁓ not have chaos when you're used to having these meetings? You mentioned some communication channels. Was there any software that you implemented or what's your strategy to reduce those meetings and maintain the communication? Hiten Sonpal: Yeah, so ⁓ some of it requires like maybe it's just a little bit of introspection. So I'll take a step back and talk about like project managers. Why do you have project managers in an organization? You have project managers in an organization because your organization is queued up. You've got people that have multiple tasks and they're working on multiple things. And then you need project managers to take projects and push them through the organization, right? Because they're solving for time. And then they're trying to find out, how do I get this done? And at each of those areas, they're basically pushing the project through the organization. ⁓ If a CEO can take more responsibility and start pulling the projects out of the organization, it's a very different mode of things operating. And the pulling is not necessarily me, but me connecting the team to customer inputs. The customer has a show on such and such date. What do we need to hit that show? And let's hold that. And okay, when the team says that a high level to me, without going into like a lot of planning, well, if you really want us to hit that, then these other two projects that you have us working on need to be low priority. And then the only thing I can do is say, yes, I accept. And then we've cut the amount of log jamming that happened strategically. So it's not that you have project managers trying to push things through the log jam in an organization. You just. eliminated the logjam by basically saying, I'm shutting down these four streets and we're not going to get that traffic in here. And we're to let these other four streets just run free. Right. And that's how you get better throughput to an organization. It's like getting rid of those stoplights and closing down some lanes, producing the amount of traffic. Pete Vera: Yeah, I love that. It's a great protocol. Yeah, reducing bottlenecks. Man, yeah, I think that can apply to a lot of businesses. So thank you. Thank you for sharing. Hiten Sonpal: There was a, no one's asking that question before. Thank you for asking. So if I was a little unsteady in that, answering that question, it because it was like, wow, this is, this is, this is an interesting question. I really want to answer it, but this is the first time I'm answering it. Pete Vera: All good, it was clear. Yeah, I also wanted to give the opportunity, is there any exciting projects you're working on? I know our listeners, a lot of them have a logistics focus. I saw your ⁓ belt draw, belt draw like system. I'd love if you could touch on that a little bit and the ROI behind ⁓ from implementing that. Hiten Sonpal: Yeah, so our core technology is a basement for hydraulics, right? And we call it belt hydraulics because it's built from belts. And I'll just take a few seconds to kind of explain our inspiration. Our inspiration is from human muscles. When you think about how muscles work, even when we're pushing, we're pulling things. are fibers inside the body that are pulling and contracting, even to get a pushing force. And because we have that kind of mechanism, it gives us three things. It gives us speed. Humans can move their arms very quickly as opposed to these robots that take time to spool up. ⁓ And they are very efficient. They imagine the amount of food we eat versus these battery packs that have to get put on these humanoid robots to try and do anything. ⁓ And then they're very durable. Muscles last a lifetime. And most mechanical equipment fails well before then. And I imagine I took those muscles and I replaced them with bladders. And I said, every time I want to move my arm, I'm going to pump blood on one side of the arm and try to push it open. Well, that's going to be very slow moving because I'm trying to move all this liquid. And then the pressure is going to push against every interface. And there's going to be wear and tear inside the body because of all the pressure that you're applying. And think about the inefficiency of moving fluid back and forth just to get an arm to move. It just feels like a lot of waste. Well, that's where hydraulic systems are today. And so with our hydraulic technology, we've basically taken all the advantages of muscles. And we use pulling forces instead of pushing forces to make things happen. And so our tech is three times more efficient than hydraulics. It's three times more efficient. And it's three times more durable. And that should come as no surprise. So let me just explain to you the difference in the mechanism. Inherently, hydraulics are going to leak because of all that pressure. And they are going to be slow. And they're going to be inefficient. ⁓ So these advancements have a lot of applicability across the board. We have three business areas. ⁓ Your listeners in logistics will really care about what we're doing for the Air Force and also for our lift gate. So I'll start with the lift gate business. We've partnered with a company called Anthony Lift Gates. They build hydraulic lift gates and they came to us and said, hey, we think your technology could be a good fit for building a hydraulic free lift gate because the biggest challenge with lift gates is hydraulic systems failing. And they're kind of a unique beast and installers don't want to install them. They don't want hydraulic oil in their shop. And it's different from the rest of the system. The reliability is a lot lower than the trailer or the semi-tractor. ⁓ And so we could match the reliability of the other systems by doing that. And so we entered into a partnership with them. And we built a belt-draulic liftgate that has no hydraulic systems in it, that runs faster than an hydraulic system, that doesn't have maintenance requirements like hydraulic system, ⁓ and really doesn't even have grease requirements. So we built what we think is the maintenance-free liftgate. ⁓ Business area why that's attractive is that 15 % of lift gates and large fleets get retired every year. So it's almost like a SaaS business. Once you acquire a customer, you have them for life. They'll be replacing one seventh of their fleet. In our case, probably one tenth of their fleet after we get through the first set because our systems will just last that long. But once we acquire a customer, we essentially have them for life. So it's very easy to grow this business. We just need to acquire customers and rack and stack them. And the same sales team can grow the business without you need to grow the sales team because your customers aren't really going to go back to a hydraulic system once they use a hydraulic free system. I don't know anyone that has a hybrid or an electric car and is saying, ⁓ I'm looking forward to going back to my gas guzzler. It just not happening. Pete Vera: Gotcha. Yeah. Yeah. And so it lasts a lot longer. It's faster. ⁓ Is there, yeah, like, is there an upfront cost, maybe investment that they have to consider? Hiten Sonpal: Yes, it is a little bit more expensive to start between, I'd say, 15 to 30 % more expensive, depending on what they're buying today. But the ROI, if you think about the speed and the productivity, is six months. If you just think about maintenance, it's roughly two to three years. Liftgates last seven years, so you can get it back in half the life of the liftgate. But then there are other benefits, too. We're very smooth. There's no jerking. The hydraulic system, if your liftgate gets jammed a little bit, on one side, then that side isn't going to move and the platform goes out of level and then suddenly the other hydraulic cylinder gives because it's basically powered through whatever the thing is and the operator is experiencing all this stuff. We don't have any of that because we're an electric system. We can close the loop. We know exactly the position of the lift kit. If this thing is stuck, we're going to slow down the other side. We're going to gently increase the pressure and as soon as it gives, we're going to back off on the electric power that we're applying because we can control that in milliseconds. or even less compared to a hydraulic system where the pressure can build in the hoses and the pump and so on and so forth. So we're able to keep the system completely level going up and down. ⁓ It's very slow, soft start, soft stop, no banging, clanging sounds. You can operate this lift gate at night. And so for lot of our customers, this opens up night deliveries in areas where they couldn't because the hydraulic system is going to make so much noise. yeah, ⁓ so just those are the benefits right off the top, just like any electric system. It's silent, smooth, precise acceleration. And it's also lighter because we've eliminated about 150 pounds of lead acid batteries. We run on a small lithium battery because we're very efficient. Our systems are 75 % efficient, the hydraulic core technology, compared to our hydraulic system, which is typically 25 % efficient. So it allows us to save batteries. we don't. expect any battery-related downtimes, which happen a lot in hydraulic lift gates because the batteries die and they kill the battery in the tractor or the truck, and now you have to come tow the machine. Pete Vera: Yeah, oh, fascinating. That's awesome. Would you consider that your flagship product? What's your plan with Rise in the next few years? Hiten Sonpal: Yeah, so when I joined, the business had three areas. ⁓ A few other things that I, as I mentioned, were long-term and so I wound those things down. ⁓ So we're talking about lift gates as being one business area. We're also doing work for the Pentagon. We recently won a $3 million contract extension. We're building them munitions handlers. So these are the, this is the ground equipment that's used to load aircraft that are going to run missions. And we built for them what An arm is a prototype ⁓ that can lift 7,000 pounds at a seven foot extension, 7,000 pounds being the weight of a cyber truck or a Ford F-150 Lightning. And it can basically lift it up and like manipulate it as if it's a rag doll, you know, it's very, powerful. And in fact, we were able to get that arm into the Guinness world record book for being the world's strongest robotic arm prototype. There isn't anything stronger than that that can actually manipulate 7,000 pounds at that extension. And so. Pete Vera: Mm. Hiten Sonpal: ⁓ On this basis, after seeing the outcome of that project, we got a contract extension to turn that into a vehicle. So we are, we won, so as I mentioned, a $3 million award in January, and then we're going to turn this into a system and then eventually get a production, hope to get a production contract to sell, call it 1,500 of these over the next five to 10 years, which is exciting. ⁓ And that's what we've done for the Air Force. ⁓ Last year, we also landed our first customer in the army. We did a very small contract with them, but they asked us for a phase two. So we submitted that and we're waiting to hear back from them. And then this year we reached out to the Navy and have found a champion there. So we're continuing to expand our business at the Pentagon. And then our third area of the business is to OEMs where we sell our core Beltraulic technology. And there I've been very mindful about staying away from sectors that I... personally find exciting like construction, because I like big boy toys, excavators, dump trucks and bulldozers. Those would be fun to get into. But that equipment gets a lot of abuse, which means that we have to do a lot of testing and qualification. Instead, what I've looked for is markets where they can meet us where we are today. And in that process, we stumbled on the oil and gas sector. And we're partnering with an OEM in that space. This is our first commercial customer. Their challenge is they're building natural gas compression pumps to deal with the recovery at oil wells and. ⁓ Their hydraulic systems follow up every 3 months. And so our technology is going to last at least 3 times as long and they have this pain point. An acute pain point that they'd like to address today. They have money they're willing to move their mid market, which is the kind of firms that startup should really work with. ⁓ And so we think this is going to be a great. beachhead market for us, and then we're going to start to take on some of the more complex sectors like mining and forestry and agriculture and construction. Pete Vera: Wow, that's really exciting. I can't wait to see those plans unfold. I imagine also getting those contracts helps with financing. You have the money upfront versus having to raise money. I did want to touch on that on this show is, ⁓ how did you decide to, saw, congratulations by the way, the top reg CF raise of 2025. How did you decide to go that route, crowdfunding versus venture capital? Hiten Sonpal: Yeah, when I joined Rise Robotics, one of the things that was interesting is we have 1500 followers, which is unusual for a B2B company. And I was just curious and I asked the team, you know, what's going on. And they shared that oftentimes a lot of the suppliers that would bring us parts and prototypes and so on would stick ahead in our shop, which you can see back there. And they were really excited about what we were doing and would ask us, hey, what is going on here? So we'd explain what we're building. And more often than not, the next question was, how can I get in on this? At that time we had no way for them to get in on it. ⁓ And then when it came time to raise money for the company, when I went to, when, when knocking on VC doors, they were all either doing AI or humanoid robots, or were really, or were giving me very bad terms to take their money, which would have really affected the previous investors. So I said, you know what, we have all these people that are interested in investing in the company, but can't invest. Let's see if we can find a way to get them in and we did some research. I had friend who had had some success with crowdfunding. So we ⁓ picked a platform, which you have to. The SEC requires that retail investors be protected and then startups have some ⁓ reporting requirements that are enforced by an intermediary. So in this case, we picked WeFunder. They are the largest Reg CF ⁓ platform in the United States and in the world. Really no one else has Reg CF. And we started our campaign. January of last year and we offered really good deal terms. We offered the same terms that we offered our previous round of institutional investors, something very similar to that to the public. so third parties that rate these deals rated our deal well. There's a company called King's Crowd that gave us a 4.7 star rating last year because they looked at the deal, they looked at the size of the market, they looked at the risk profile, and then they concluded that we're a good offering. And then they wrote us an investment memo that described all the reasons why they were choosing themselves to invest in the company, but also all the downsides. And we have that posted on our ⁓ campaign page so folks can read it and kind of get a sense of a third party's risk assessment in investing in our business. Because early startups are risky. ⁓ Things can go really well, but you can also lose all your money. ⁓ So yeah, so we did that. And so we got good ratings. then, you know, I've just been out talking to people, evangelizing the company, and that has helped some of our podcasts like this have gone viral where folks have heard it and they've said, wow, this is really interesting. And ⁓ then have reached out to us and so on and so forth. ⁓ and then by the end of the year, I was very surprised we had $5.7 million worth of interest. The SEC only allows people, companies to raise 5 million under XCF terms. You have to do a lot more paperwork if you want to raise more. So we closed our round at five and then we max it out. And then we took the 700K or so investors and we said, please wait, we're going to open another round. And a few weeks ago, we opened another round so that they could come in and we created some special terms for them for this round so that they could get the same deal that they got last time. We call them early bird terms. And I think we're half, about half sold out of our early bird terms. I can't give too many details here because the SEC says people have to go to the platform, read the whole thing. But what I can say is that half of our early bird terms are already sold out because we had all this overflow of folks that are trying to get in. So we're very excited that we have this. Now I you know, I joke, I have a sales team of 2,500 people because we've got 2,500 investors. Minimum check size is $250. Our average is 2,000. We have investors who put in 100K. Pete Vera: Yeah. Yeah. Yeah Hiten Sonpal: And so, yeah, we've got all kinds of investors that have decided that they want to back us. Either they like the climate story or they like the defense story, or they've had personal experience with hydraulic equipment. They don't want to touch it again. Don't want to deal with hydraulic oil. We've got professionals who understand that we have a huge market. And when you have a huge market, because you can pick your customer, the chances of failure are a little lower. Versus if you're starting a small market, you either make it or you don't. You have to have the perfect product, but Pete Vera: Yeah. Hiten Sonpal: As I mentioned, we decided not to go with construction because it was a harder problem. We decided to go with oil and gas because it was an easier problem, but also our oil and gas customer is running the systems 24 seven. So they're willing to pay more for every little bit of improvement we provide versus someone in construction was only running it six hours a day. So just finding the right customer in a big market can be such an amplifier. So a lot of professionals that have invested have seen that they've seen the market size and said, okay, if these guys can survive long enough to figure it out. they're going to win, right? So we have a number of those investors as well. It's been fantastic. And I get advice, I get questions. We run webinars for investors to hear what we've accomplished. And then we're putting out updates all the time. So folks that are invested in the company are seeing how much hustle we put in, how much work the engineering team is putting in to make things happen. And that actually has also helped the campaign be so successful. Pete Vera: Yeah, wow, that's awesome. ⁓ By really good opportunity, alternative to traditional finance as well. ⁓ And the investors, they get a, is it just debt? Or are you allowed to say? I don't know, I don't wanna encourage. Do they get any equity or is it just what's in it for them? Hiten Sonpal: They get equity. Yeah, they're actually investing in the company. They're owning a piece of the company. I cannot really discuss the terms. They'd have to go to our web page and then click on invest and they can read all the terms if they're interested. But your point previously about getting a deal, an early stage deal is really interesting. You think about what's been announced recently, SpaceX going public at $1.5 trillion, $1.75 trillion. Pete Vera: Yeah. Okay. Hiten Sonpal: But all the money that was going to be made on that deal, I think, has already been made. Companies are staying private longer, and the shares are exchanging hands multiple times before they go out to the public. And going public is the cash out event where people can, the early investors can make money. And so the retail investors are on the other side of that equation. They're the people that the money is being made off of. It's not like when Microsoft or Apple went public, that was fairly early and there was a lot of money to be made because there was a lot of runway. SpaceX's evaluation says we're going to own all of space, which is unlikely to happen. And it's going to take a long time, much longer than they predict. So in a deal like that, you're showing up so late to the game. Yes, all the risk is gone. You're not going to lose all your money. Most you can lose is half your money, right, in a deal like that versus an early stage deal like ours where if the company is not successful, is possible, you could lose all your money. But if it is successful, the upside is very different. Pete Vera: Hmm. Yeah. I love this conversation. There's a lot of ⁓ tunnels and, you know, get off track here. I know we're coming short on time. I'd be remiss though if I didn't ask your opinion on ⁓ AI. How are you guys using it day to day and ⁓ how do you see it affecting your industry? Hiten Sonpal: Yeah, so I'm a computer engineer by training. And actually, when I was in my undergrad almost over 20 years ago, I did a lot of AI based projects and the definition of AI continues to evolve. Anything that we can reduce to practice gets a name and then it's not AI anymore. So previously, chess playing machines were AI. And now we have a name for them. run these. They're called alpha, beta, minimizing, maximizing trees that you run. there's a name for that algorithm, right? And then you put dictionaries and so on and so forth. And then there's like machine learning, which is like its own kind of AI and all these, all these various definitions. But the latest kind of AI that we have that folks are crying, that seems very capable has a long tail. And so what that means is that you, you know, 80 % of the time you get what you want. And then 20 % of the time. It's not exactly what you want. then some portion of that, it's absolutely not what you want. And so ⁓ as an example, companies that are building autonomous forklifts or provide autonomous forklifts as a service typically have a bank of drivers that help the AI systems get unstuck. Now, every time they do that, they train the AI system and gets a little bit better, but you have, you need the human support to the human oversight to make sure that the AI systems are working. Where we plan is that we provide ⁓ systems to companies that are building those kinds of machines. So our systems out of the box are digital. They are force sensing. They provide force feedback out of the box. They provide orientation out of the box. They provide everything that you need to build a digital twin of the system. Once you have a digital twin, then you can have someone who can tele-operate the machine, which I mentioned is like the foundational layer, because the AI is going to have problems. And then on top of that, you can start building more and more autonomy. So we are... ⁓ more like a core element as heavy machines transition from being hydraulic, diesel-based systems to electric drive-by-wire systems to finally teleoperating autonomous systems. If you start with our tele-operating technology, you get the teleoperation drive-by-wire right out of the box. Pete Vera: What? Hiten Sonpal: and then you can build all the other things on top of that. Pete Vera: Yeah. have you used it to, you know, ⁓ on a company level ⁓ to make your team more efficient or? ⁓ Yeah. And I was, I'm really fascinated by, you know, the progression of robotics and how AI is just, you know, skyrocketing so quickly. This was a major theme at the the MODX Supply Chain Conference I went to in Atlanta a few weeks ago. ⁓ Yeah, I think I just threw a couple of things at you, but I'd love to hear your opinion on that. Hiten Sonpal: Yeah, so ⁓ the software team is completely using, our embedded software team is completely using AI. So we were using a chat GPT model. We recently transitioned to Claude and the team tells me that the productivity has gone up substantially. I'm sure that OpenAI will come up with another model and so on and so forth. But for now we picked Claude, we're testing it. It's working fine for us. Recently, my software lead told me there's a problem he was going to solve. It would have taken him two weeks and then. through Vibe, there's a lot of math in there. So Vibe coding it and then checking the output, he was able to solve it in two hours. So we get those kinds of productivity gains, not all the time, because there's a lot of hardware connected to our software systems. It's not just pure software, but we do get them enough that it's been worthwhile and our tempo has gone up just like other organizations. ⁓ On the hardware side, there's a little less of that. ⁓ There aren't as many great tools doing sort of AI based design on the mechanical side, but ⁓ Most of our engineers have either gone to MIT or one of the really elite schools here in the Boston area. And so they all know how to code, even if they're mechanical engineers or electrical engineers or what have you. And so they're starting to look at Cod as ways to do some simulation and modeling easily. Like if they can't put it into MATLAB, but they're like, I could write a program to do it. I can ask Claude, Claude could write me some code. can check it. If it looks right, then I can run a simulation on it and I can get some early results very quickly. trying to find ways, even though the tools aren't quite as mature in those disciplines, to accelerate the team. We want to be faster for the same amount of spend. Everybody needs to do that, especially a startup. Pete Vera: Definitely. Great insights. I know we have to go. I always ask this question at the end. If there was one takeaway, one thing to implement for a business owner trying to grow and scale, what would you recommend? Hiten Sonpal: I think the most important thing is focus, right? Because when I think about how you go faster in any organization, because scale is about speed, how do you go faster? It's really about focus. And if you're running three projects in parallel and you could run them serially, you're better off running them serially because you'll finish the first one, get to revenues and have the revenue coming in while you're doing a second one. Versus if you run three projects in parallel, All three of them might finish at the same time, but during that whole time, you have to either raise money or you're not reinvesting in other parts of the business. So doing things serially, where possible, makes a ton of sense. On the flip side, if there things you need to learn in the marketplace, then doing them serially doesn't make sense. You want to do as many of those things in parallel because you want your learning to be fast enough. But once you know what it is you're building, building them sequentially actually helps your business grow faster than doing them in parallel. Pete Vera: Love it. Great way to end it. Focus. And so many good takeaways. I love this conversation. If listeners found it as interesting as I did, where's the best way to connect with you? Hiten Sonpal: Yep, they can go to our website, rise robotics.com. If they're interested in owning a piece of the company, they can click on the invest button. Otherwise they can also find us on LinkedIn and they can find me on LinkedIn. My name is Hiten Sanpao. You can send me a link and I'll be happy to connect. Pete Vera: Great, I'll leave that in the show notes. Thank you so much for your time today, Hinton. I really enjoyed this. Hiten Sonpal: Thank you Pete, this was amazing.