Rahim Rahemtulla: Hello everyone. Welcome today to this SVIC interview. I’m your host, Rahim Rahemtulla. Joining us today is Erik Schluntz. He is the co-founder and CTO at Cobalt Robotics. We’re going to be talking today about entrepreneurship for today and tomorrow and I’m sure Erik’s going to tell us all about that. And so, Erik, thank you so much for joining us today. It’s a pleasure to have you on the show.

Erik Schluntz: Absolutely. It’s a pleasure to be here.

Rahim Rahemtulla: And so, Erik, as I said in the introduction, you’re the co-founder at Cobalt Robotics, but before we go into the work you do at Cobalt and talk about the robots you have there, I just want to ask a little bit about entrepreneurship. So perhaps, to start, tell us a little bit about your own journey and your own decision to become an entrepreneur? How did that come about for you? Erik Schluntz: Absolutely. So, I’ve known that I wanted to be an entrepreneur since right before college. I originally thought I was going to be an engineer and was very excited to build new products that would make the world a better place. And then, right before starting college, I worked at a very small company as an intern and basically an engineer. But as soon as I got there, I realized it was a three-person company and I ended helping them not just with engineering, but fundraising, marketing, everything. And what I realized that summer was that it wasn’t just building a product to change the world that mattered, it was building a company that built a product, because eventually this small company wasn’t able to succeed, not because of their product, but because of everything surrounding the product. And that’s when I really realized that I needed to take a more holistic picture if I wanted to have an impact.

Rahim Rahemtulla: And so, where did it go from there? As you said, this was before college and this is where you caught the bug. And you did go on to college – you were at Harvard, if I’m not mistaken – but you did drop out at some point because you wanted to go off and make your own company. And so presumably, at that point, was it a difficult choice for you to drop out, to put your education on hold, I suppose? Because you did go back and finish.

Erik Schluntz: Yeah, it was an interesting experience. So I went to college knowing that I was interested in entrepreneurship and knowing that I would eventually want to start a company. I still studied engineering because I knew that that would be one of the most valuable skills for me as an early entrepreneur. I ended up starting a company with a friend, we got some early traction and decided to drop out to go through Y Combinator. And, at that point, I think the decision was actually quite easy. One of my favorite things about Harvard is that they make it very easy to leave and you can always come back, so they really try to de-risk taking the leap of faith and trying to start something. And I knew that the things I would learn, even if everything went badly doing my own company full time, I would grow tremendously as an entrepreneur.

Rahim Rahemtulla: Absolutely. And I’m really interested in this process you talk about, about learning, about becoming an entrepreneur. Looking back on it now, what are the sort of skills that were the ones that you needed to have? Because, of course, you were obviously becoming an engineer and so the technical skills might have been there, but of course, when you run a company, there are so many other things to think about – management, finance, human resources, and so on. So what was it like for you to learn those skills?

Erik Schluntz: Yeah, that’s an excellent question. I think the most important skill for an early entrepreneur to learn is – and that I continue to learn to this day – what to focus on and where to spend your time. So, in the very beginning, in college, I spent a lot of time trying to talk to other entrepreneurs, go listen to speakers, go to pitch competitions, and really try to understand the order of operations and how you start a company. You can’t start a company just by writing code in the basement; you have to go out and find users and find customers.

And I think throughout my first company, I truly realized how important it is to focus on the right things. And you can be doing work that feels incredibly important, but if it’s in the wrong order, it’s basically wasted. So I think that’s the most important thing for an entrepreneur to learn: where to spend their time and then getting better at thing as they go. And that’s better engineering skills, better sales skills, better management skills.

Rahim Rahemtulla: And so, gives an example of what you mean about doing things in the wrong order. You might be doing good work, but not necessarily in the right places. Tell us a bit more about that.

Erik Schluntz: Yeah, so at one point during my first company, after I’d already dropped out of Harvard, we were at that point, I think, sales-limited. We had our initial product mostly done, but me and my co-founder were engineers. We loved coding new features and we really didn’t like doing sales that much. And every once in a while, we would get some new idea for a feature and we would drop everything and start coding it up. And we had to remind ourselves, “Hey, is this new feature really what’s holding us back as a company?” “No, it’s sales.” Even if we do a great job coding this new feature for a week and it’s a good feature, that’s going to be a waste of time because we weren’t doing sales, which is the most leveraging thing for us. So it’s really hard to hold yourself accountable and not do what’s fun but do what’s important.

Rahim Rahemtulla: And I’m wondering, Eric, how do you look at the idea of innovation, in a sense? I mean, where do your ideas come from? For example, what separates me or anyone else from becoming an entrepreneur? We all have ideas, potentially, but is there something special, do you feel, about the ones that are successful? Is there something special about the way they look at the world, the problems that they decide to focus on?

Erik Schluntz: I believe so. I think what’s more important than focusing on an idea is focusing on a problem. I think I learned this really well and then, for my second company, we – me and my current co-founder – we decided to do an entirely different process than most entrepreneurs. So we actually started Cobalt with no idea of what we’re going to work on and decided instead to look for a problem rather than an idea. So we went out and we did interviews of lots of different people from lots of different industries and asked them about their daily jobs, asked them what they worked on, what the worst parts of their jobs were, what they would want to change about them.

And we really wanted to find not some idea – because an idea exists in your own head but might not be applicable to the rest of the world – but find a problem that a real person and a real customer had, and then focus on solving that. I think doing that you avoid the most common trap of coming up with an idea that no one wants. And that’s, I think, a pitfall that many, many entrepreneurs fall into today, where they come up with an idea and they code in their basement and never actually go and prove that it’s a real problem that they’re solving.

Rahim Rahemtulla: And I think about this, Eric, in the context of a lot of the clients that we have at SVIC are big corporations and big companies, established companies and it’s really important for them now to innovate, especially with so many new technologies around at the moment. And so we have this phrase, this concept of intrapreneurship – you probably know about this – when you’re working within an organization and you’re trying to drive innovation from inside. And I just wonder what your thoughts are on trying to make this process happen when you’re already inside a big organization. Do you think the same lessons apply, where you really have to look outwards and you might have great engineers and great people who have great ideas for what you do as a company, but that’s not necessarily what people want and it’s not necessarily the kinds of innovations you need. So do you feel like going outside then, in that context too, is the way to go?

Erik Schluntz: That’s a slightly different situation. I think it depends on whether you’re starting from ground zero, like a new entrepreneur, where you don’t have an existing product or an existing customer base. I think for an intrapreneur, someone trying to create innovation within a company, you have the tremendous advantage of already having a big customer base and already having products and hopefully real problems that you’re solving with those products for those customers. So I think you don’t have to start entirely from scratch with someone outside, but I do think you need to be focused on the customer and focused on a real problem that you’re solving, not trying to do something new for newness’ sake. I think the biggest problem I’ve seen with intrapreneurship is being able to really embrace failure. For an entrepreneur, it’s easy to bet everything on a new idea. And most of the times that won’t work out, but it’s okay because, as a single person or two people, you don’t have a lot to lose.

It’s much harder for a bigger established company to bet everything on a new crazy idea. And they probably shouldn’t. So I think what’s important is being able to set up small limited ways for a company to experiment and not be scared of failing. Because entrepreneurship is a messy process; everyone sees the winners, but 90% of companies are going to go out of business. And so for an intrapreneurship program, a company has to really be okay that 90% of their internal projects are going to fail. And that’s not bad, that’s just par for the course.

Rahim Rahemtulla: And what’s been your own experience with failure? You’ve had, obviously, good success now with Cobalt Robotics and your other company previously, but were there a lot of ideas that you also pursued which didn’t work out?

Erik Schluntz: There were a few. So my first company, Posmetrics, got acquired and I went back to school after that. Between that time and starting Cobalt, I experimented with lots of different ideas because I always knew that I was looking for another company to start.

And so, for a few years, I was playing with different things, talking to different people. I never really pursued many of them very far and I think this goes to another core concept of entrepreneurship, of making sure you fail fast. If there is an idea that’s going to fail, you’d much rather it fail in three weeks, so you can move on, than fail in two years and you’ve wasted two years. So I think how I like to approach this I call hypothesis-driven testing. So when you’re working on a startup idea or startup problem, you need to constantly be thinking about, what are the risks here? How can I disprove those risks? And it’s not about building something, but thinking, what could go wrong? And how can I just prove those things? So maybe the risk is, “It’s hard to build a robot like this. I need to prove that I can actually build this.” Or “It’s hard to get someone to buy a robot like this, it’s hard to do sales. How can I prove that I can do sales once I have these things?”

Rahim Rahemtulla: So breaking it down into these small points of validation, I suppose.

Erik Schluntz: Exactly, exactly. And really thinking about what is the validation that’s needed, not just the work that needs to get done eventually.

Rahim Rahemtulla: Thank you, Erik. And I want to get on to that little robot behind you, for sure.

Erik Schluntz: Yeah.

Rahim Rahemtulla: Or maybe not so little, actually. But just before I do that, I just want to say, I have to mention, of course, that you were in the Forbes 30 Under 30 list for 2018, so one to watch, for your work in enterprise technology at Cobalt. And one phrase in reading the Forbes article which stood out to me was that they described this cohort of 30 Under 30s having ambition but also impatience. And I was just wondering how you felt about that. You seem like an optimistic guy and you say you had some failures, but generally, you’re focused, and you’ve achieved success. But I was just wondering, this idea of sort of ambition and impatience, it draws me a picture of someone who wants to change the world and has a lot of ideas and is really just pushing to make those happen. I mean, do you see yourself in that characterization at all?

Erik Schluntz: I definitely do. I think ambition is something that’s very common between me and my other peers in entrepreneurship. I think you really need to be ambitious and have a strong desire to change the world. Otherwise, there’s no reason to do this; it’s way easier to get a nine to five job. But it’s more fun to do this, I think. I really enjoy waking up every morning and knowing that what I’m building here is going to help drive the future of robotics forward and help people.

In terms of impatience, I think that’s definitely a double-edged sword. I think there’s good impatience, where you are going to go and you’re not going to wait because that’s what the standard thing to do is, you’re not going to wait to start a company till you’re out of business school because that’s what your parents did. So I think it’s a matter of really questioning when people tell you to wait and not taking their word for default. There’s other times where you need to be patient, where you’ve proved your initial hypotheses and now it’s a two-year grind through product development and sales. And you need to have patience through that and be able to push through tenaciously and not get bored and go try to do something else. So I think it’s a mix of basically being patient at the right times and being impatient at the others.

Rahim Rahemtulla: So it’s definitely a complex cocktail, I think, of different strengths, character traits, I suppose. But Eric, let’s just talk a little bit about that robot behind you. And so you spoke earlier about how you and your co-founder went out and talked to people and tried to really get a sense of what are the real problems out there and come up with a solution to them. So tell us, what was the problem that you found that Cobalt Robotics is the answer to?

Erik Schluntz: Yeah, absolutely. The person we talked to was a security director at a company in San Francisco and he told us how hard it was for him to provide nighttime security for his company. It’s very hard to find nightshift people and it’s very expensive. In order to have full coverage for your building, with lots of different satellite offices, it can be incredibly expensive to have guards in all those areas. And so we designed a robot that would basically work alongside human guards to help provide a better quality of service, where the robot can patrol autonomously 24/7 looking for anything out of the ordinary and video call in a human guard to help resolve a situation as needed. That way, your best guards can be in multiple places at once and responding with a friendly customer service face to any events that might be happening in your organization, instead of sitting under-utilized in an empty office building all night.

Rahim Rahemtulla: And what’s the reception been like for these robots, putting them into real-life situations? Have they achieved what you hoped they’d achieve?

Erik Schluntz: They have, yeah. We’ve been very happy, and our customers have been extremely happy with our robots so far. Many of our customers are asking for more robots to expand their coverage into other offices, which is always a great sign that we’ve been providing real security value and helped resolve a lot of incidents and increased situational awareness to help our customers protect their assets.

Rahim Rahemtulla: And these are smart robots, as I understand. Is there an element of artificial intelligence at work here?

Erik Schluntz: There absolutely is. So the robots themselves are running a lot of artificial intelligence and machine learning in order to detect what is normal and what is a security anomaly in a space. So they’ll learn what common sounds are, what common people are, what looks unusual in order to raise an alert to one of these human operators. Just like a human security guard, they’ll learn what looks normal in a building and what is something that suspicious to investigate.

Rahim Rahemtulla: Right, so they do learn over time. So you can put them in a new environment and, over time, they will understand the specifics, I suppose, of that environment, the nuances and be able to react accordingly.

Erik Schluntz: Absolutely.

Rahim Rahemtulla: And Erik, this all kind of puts me in mind of a question around artificial intelligence, which I think we hear a lot today, which is about the future of work and how, as humans, we are going to interact with artificial intelligence and with smart machines. And I think your security robots, in a sense, they kind of epitomize this thinking, this dilemma we have about replacing humans with robots. And I’m really curious to know what your views are on this. Do you have any sense, of this fear of the rise of the machines and we’re all going to be out of jobs? Somehow, I have a sense you don’t share that apocalyptic view.

Erik Schluntz: No, I don’t. So robots replace tasks, not jobs. And I think robots in lots of industries will change what jobs look like and will make humans more efficient and better at them. But the reason I’m optimistic is that humans are still really good at a lot of things and robots are good at different things. So I think the best solutions happen when humans and robots work together, both using their strengths. Just like you would use a calculator to help do your taxes. You don’t want to do all this multiplication yourself. But robots are still bad at handling complex situations, interacting with people and making smart and nuanced decisions, so that’s where we really want to have a person involved.

So Cobalt is creating a lot of jobs right here. I’m actually sitting in our robot operation center, where we have robot specialists working every night and on weekends to help supervisor our fleet of robots.

Rahim Rahemtulla: Thank you, Eric. And so I think we are probably just sort of running out of time, unfortunately. So to draw our interview to a close, I think, just as a sort of final thought then, I suppose robots probably won’t ever make good entrepreneurs given what you’ve told us about that the mix of characteristics and human traits that entrepreneurs need and the decisions and the judgments which, of course, go into that. But so, looking ahead for your yourself as an entrepreneur, someone who I think is one of this young generation of entrepreneurs now going forward to change things, what for you is – I suppose maybe it’s a two-part question – what is for you the problem out there, the big question, the big problem that you still want to solve? What’s your philosophy, I suppose, going forward?

Erik Schluntz: Absolutely. So I’m incredibly passionate about robotics and bringing robots to help more people in the world. And I think that robot definitely have a bad rap right now, but the way I see it is that robotics is a tool that can help leverage and magnify what a single person can do by themselves, in the same way that electricity or computers can. And I really see that Cobalt driving the field of robotics forward, making the robots more commonplace, improving how humans can interact and work alongside robots is going to make the world a much better place for everyone.

Rahim Rahemtulla: Thank you, Erik. Well, there we are, ladies and gentlemen. Erik Schluntz with his vision for a human robot world that is going to work beautifully and in harmony, we wish him all the best with that mission. And Eric, I think the last thing to say then is just to thank you very much for joining us today and being on the program.

Erik Schluntz: Absolutely. It was a pleasure.

Rahim Rahemtulla: And to the viewers, thank you so much for joining us today. I hope you’ve enjoyed our talk. And while you’re here, I just want to remind you that, if you are interested in the talk I’ve had today with Eric and you want to maybe get closer to the technologies that are in Silicon Valley today or the ones that are emerging like robotics, perhaps you want to engage with startups like Cobalt Robotics, whatever your business, here at SVIC we can help you get in touch with the technologies, the startups, the innovation that’s happening today in Silicon Valley. We can custom-make a program for your industry. So do check our website siliconvalley.center for details of that. But I think, on that note, that’s where we’ll wrap things up today. So from me and from my guest today, Erik Schluntz, the co-founder and CTO at Cobalt Robotics, we say goodbye for now. So, until next time, goodbye.