Fighting crime through robotics with William Santana Li

Interviewee

Bill Li, an American entrepreneur with over 30 years of experience and a deep range of expertise gained from several global assignments in the automotive sector and a number of startups. He is presently the Chairman and CEO of Knightscope, developer of crime-fighting Autonomous Security Robots (ASRs).

Transcript

Bill Li: Greetings from Silicon Valley. Thanks for having us. I'm a former automotive executive. I spent 10 years at Ford Motor Company, 12 different jobs, four different continents. If you look over my LinkedIn profile, I kind of look unemployable. During that time I kept getting new jobs and new assignments. I worked on four continents, was able to, you know, work in, in Japan with, with Mazda help set up a pan, a new plant in Florida. Brazil was stationed in Ford of Europe. My second and last job there, I, as director of mergers and acquisitions. My last job Ill advised I was the founder and chief operating officer for a subsidiary I built for Ford. Convinced the board to release a quarter billion dollars to me to do a rollup in the use parts industry. And for those in the audience that might not know, what an up is, is basically buy one company, buy a similar one, buy a similar one, and then you have one big one that looks like the one that you initially bought. So I bought 22 companies in 11 months, and had about 600 plus employees doing about 150 million in sales. And that was my first kind of entrepreneurial thing. They gave me the entrepreneurial bug. Fast forward to Knightscope, this April we'll be celebrating our 10th anniversary.

I think the statistical probability of founding a company, getting it funded, growing it, listing it on nasdaq, and then in the same year buying another company is, you know, not, not, doesn't happen very often as most startups, you know, 95% of them end up failing. And so I'm, I'm grateful to our very awesome team that has relentlessly been working for the last decade on building some profound new technology. So we have this crazy mission to see if we can make the United States of America the safest country in the world. And we've built a new groundbreaking set of capabilities to give officers and guards really smart eyes and ears for them to do their jobs much, much more effectively.

These autonomous security robots that we build are a unique combination of self-driving, autonomous technology, robotics, artificial intelligence, and electric vehicles. So four really hard things and we thought to make it really hard is just combine the four really hard things into one really, really hard thing. But we've got it working. We've generated millions and millions of dollars of recurring revenue for a recurring societal problem, which is crime and terrorism. We're getting close, I think here about operating nearly 2 million hours across the country. And you know, when we started the company back in 2013, I was told the following, a Hey Bill, you're outta your mind. This will never work. Its hardware and software are too complicated. You should pick one and physical security isn't in an investment thesis, you need to go away. So we ignored all those people and did what we said we were gonna go do. And now we're just in the process of scaling up the company and continuing to grow.

Elisa Muñoz: Wow, a really interesting background. Thank you so much for sharing.  I know that last December you guys signed three new contracts and that two of those clients are with colleges. So what was that transition like?

Bill Li: What we're doing is extremely difficult. You know, it requires a lot of resources and a lot, you know, like most companies, never enough time, never enough resources, never enough budget. But we've just been continued to to execute and you know, we've grown not only with the schools, but commercial real estate, corporate campuses, hospitals, casinos, manufacturing facilities, logistics facilities, ba basically anywhere you see indoors or outdoors, mostly outdoors where you might see a police officer or security guard patrolling is an opportunity for, for night scope. And yeah, we've been putting out a new announcement almost every week. Multiple contracts going, we're scrambling right now the covid supply chain nightmare. Joe was crazy last year. Now we have a different problem, which is we've got probably 4 million worth of backlog orders and we're, we're trying to get all these machines built and, and deployed, but, but we're working through it.

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Elisa Muñoz: I'm glad to hear that. And now that you're mentioning the pandemic and that's the supply chain issues, how did you manage to solve them?

Bill Li: Well, one of the things I like about founders and entrepreneurs, they usually have a screw loose and they don't care what the problem is. It's like, oh, there's a problem, but how are we gonna fix it? Doesn't matter if it's supply chain recruiting, governance issues, funding issues, whatever it is. Like, okay, it's a problem, alright, how do I fix it? And for us, and this doesn't apply to everyone, but for us to resolve the supply chain issues, one, you need to be nimble. Like I, I remember some attorneys asking us, like right when the pandemic kind of started, like, so exactly how many days are you off in terms of your plans? And it's like, do you know how this works? You, you can't do that. We just sent out a quote for, I don't know, a hundred GPUs and the vendor says it'll be, you know, a 52 week delivery and then we're like, yeah, that's not gonna work. And then a week later they quote and say 26 weeks and then two weeks after that they send us two thirds of the shipment and then a month after that, the rest of it showed up. How are you supposed to plan around that? You can't, so you gotta be nimble first. Second, we ended up with multiple brokers around the world, finding two over here, 20 over there, 30 over there, sometimes paying a premium to get what you want.

Sometimes if we had the capital to do it, we would buy ahead even though we probably shouldn't have been storing that amount of inventory, but we knew it was gonna be a problem. So like, just take care of it. Now sometimes we design the part out or switch the supplier. There's a whole host of things and you gotta be able to look at different bits in the toolbox and, and figure out which one to, to address. And the problem that you fixed last week is not gonna be the problem this week. Right. And so you gotta be able to keep pounding at it. And that's what founders do. They just, just keep pounding on it until they get what they want.

Elisa Muñoz: Wow, it sounds like you are, you have to be all hands on deck, right? And especially not only being the founder and CEO but also, I mean, how do you organize the operations team, and the engineers? How's your day-to-day life?

Bill Li: Manage chaos? So one thing that makes things really hard is we actually design everything. We do all the engineering pretty much in-house, all the mechanical, electrical, firmware software. We build the machines ourselves, we physically build them ourselves in California, we deploy them and then we support them 24/7, 365. So it's pretty vertically integrated. So that leads to a lot of challenges and opportunities.You gotta be able to, you know, switch from a organizational structured discussion and workload that I just had before we got on this call to be able to have a chat with you and then go work on investor relations for an hour and then go deal with another fire and then go work on a proposal for an awesome new client.

You gotta be able to, to do everything, but you also have to be able to guide and rely on an awesome management team. Yeah. You know, like any family or any company, you know, teams have issues, you know, not everyone's perfect, including myself. And, but you gotta be able to work through your strengths and weaknesses and you know, we've got a lot of teammates that have been at the company for 10 years, for six years, for four years and continue to, to have at it. And you're gonna go through ups and downs, but you find out who's for real when things are down, right? Yeah, it's a little silly when you're recruiting, like you're gonna interview somebody for 60 minutes and then you know, you've got a really good assessment of how they're gonna operate.

You really don't know, you know, maybe 3, 6, 9, maybe 18 months from now and then, but you do really find out when, when things are awful, when you're in a pandemic, your supply chain broken, everything's not working, and then you find out who steps up and it's, it's very surprising. You find out who's for real when the chips are down and it's an interesting human trait.

Elisa Muñoz: Wow. Thank you so much for sharing. And talking about purchasing during the pandemic, wasn't it hard to find the pieces in order to build a robot?

Bill Li: Yeah, but if you have ahead of operations who is fluent in mechanical engineering in production, help build satellites for, for 15 years, knows a little bit about cars, has been at it for four plus years and has a network of folks like you need that multi-talented person to be able to, you know, be empowered and you know, here's the budget, go and sometimes make hard decisions with him or her and you just gotta be able to have seasons. People do this and you know, what we're doing is not normal. And in the history of mankind, no one's ever done this at scale. So we're literally an uncharted territory. I mean, you can look at Bloomberg's recent article about, you know, a hundred billion went into self-driving technology, autonomous technology is a couple hundred companies working on it. Collective revenue close to zero if not zero. No one shipped anything. And I believe night scopes, one if not the only company in the world operating 24 7, 365 level five autonomy with real clients in the real world generating millions of dollars of revenue. And so what we're doing is technically difficult, but you also have to have the stamina and a relentless nature to, to keep pounding till till you get what you want.

Elisa Muñoz: Are you guys planning on expanding anytime soon? I mean, since you have a background of four continents, I don't know, maybe Asia or something like that?

Bill Li: Not in the near term and that gets a lot of people frustrated or excited. I've worked on four continents, I kind of know what it takes and what to do. What I've said publicly is basically once we've secured the US and we're in all 50 states and we're bored out of our mind and we have nothing else to do and we have 500 million cash on hand, we can start looking at other countries. But until then, absolutely not part of me even though I'm the, you know, kind of crazy founder too, to go drive getting all this stuff built, I'm also kind of the chief risk officer. 95% of startups fail and part of it is the CEO is not willing to say no. And the answer is no for now. But you never know in the future. But we need to focus on execution and executing on the mission that we had our 35,000 investors back us to get to this point.

Elisa Muñoz: Such a realistic answer. Thank you so much for sharing Bill. And last but not least, do you have any advice for future entrepreneurs starting on this path?

Bill Li: The one that I kind of continue to focus on, I'll, I'll actually give you two. The first one is, founders should really pick something that they absolutely love or are, are ideologically attached to or possessed or just laser focused on, on winning and getting what they want done because the journey is extremely painful. I always kind of joke, if you want to know what a the diet is for a founder, it's for breakfast, you get punched in the face for lunch, you get kicked in the stomach and then for dinner you get body slammed and then you have to wake up the next morning, be all smiley, get on camera and, and talk to someone like yourself and just keep doing it over and over again. You've gotta have a little bit of a screw loose too, to be doing something like that. And so whatever you're fighting for, you better be willing to be up at three in the morning making the most excruciating decisions, forcing what you want to happen. And it is emotionally taxing, it's psychologically draining, it's mentally will mess with you physically, I'll mess with you. So you better pick something you really love that you're willing to do the irrational, illogical and sometimes stupid things to make sure that you get what you want done for, for the company that you founded.

The second one I would give you is most folks, so the way we raised the capital we, I raised just north of 120 million from 35,000 investors to, to build all this stuff from scratch. No VCs, no hedge funds, no PE shops, just, you know, before the public listing. And one of the things that founders are often odd or told is you need to focus on product market fit, product market fit, product market fit. No one, because most of the people in the ecosystem that provide the financing never discuss capital to company fit. What is the type of capital that you actually need for what you are trying to accomplish? And you know, there is a time and place for, for venture capitalists, but that's not the end all be all. And probably 99% of the time is the wrong answer.

So you need to go do your homework and think about what is the kind of capital that will help me get to where I need to go and not have conflicts. Poor execution in inability to be flexible, you know, bad governance structures like, you know, oh let's sell the, let's sell a board seat to the highest bidder in a financing round. What the hell kind of way is to set up a governance structure is that, oh, you wrote the largest check so therefore you are qualified to sit on this board, go away. And so most people won't tell that to a founder because most of the people that provide the capital have their own little club as to how they, you know, take advantage of companies and founders. So just, you know, have the founder really think about where they get the capital.

Elisa Muñoz: Thank you so for being super real. I think that's something I value and our audience values the most from a founder. This was great Bill!

Bill Li: All right, thanks for having us. Be good. Take care.

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