This week:
Labor shortages drive robotics
Software and product DNA beats automation experience
Micro-step automation shows promise
Construction is a perfect market to build fast-to-revenue robotics firms due to its service nature
Leapfrog potential in emerging markets for robotics - yes or no?
Labor Crunch Accelerating Robotics Adoption in Construction
Labor shortages and inflation in Western/mature markets are creating a pressing need for robotics to improve productivity and keep costs down in the construction industry. As Patric explains, "If you look at the world, there's a world where you have a labor oversupply, but a qualification under supply. And then there's a world where you have a demand overhang." He argues that with severe labor constraints in mature markets, "if that under-supply becomes the new norm in these Westernized markets, then robotics is actually a key contributor to keeping inflation in check." Shubhankar adds that robotics can also provide more predictable outcomes by reducing reliance on fluctuating human workforces.
Software DNA Trumps Automation Experience
When evaluating construction robotics startups, Patric looks for "product people who acquire the knowledge about robotics much, much more than people who come from an automation and robotics background." He believes founders with a software product mindset are better equipped to build reusable, scalable technology stacks in a bottoms-up way, starting by automating the simplest but most valuable tasks. Shubhankar agrees this granular approach makes sense given the complex, uncontrolled nature of construction environments.
Micro-Step Automation Promising Strategy
Patric advocates granularizing workflows into micro-steps and only automating the least complex parts initially with modular tech stacks. As an example, he describes how a robotics system for drywall recycling could focus first just on precision cutting rather than attempting to also identify materials, move them around, stack pallets, etc. This focused approach increases the chance of success and allows startups to "discover the next best thing that you want to automate, adjacent to what you're doing."
Emerging Markets: Niche Adoption So Far
In emerging markets, Shubhankar notes growing use of robotics in remote infrastructure projects and high-value buildings where precision is required. However, he says most solutions remain tailored rather than scalable businesses so far. He is still waiting to see robotic systems that can "transcend this initial, very tailor-made use case and become something which scales." But in the future, as emerging economies develop, he expects an inflection point where robotics unlocks enormous value similar to the evolution witnessed in China.
Selling Outcomes Crucial for Monetization
Both agree robotics companies have an easier path to monetization in construction if they can sell actual outcomes or construction activities as a service rather than just leasing the equipment. There is revenue potential even in partial automation scenarios this way. As Patric puts it, "If you can build a robotics company that can put a wall in place, you can sell that as a service. You don't have to sell the robot."
Strong Need May Trigger Leapfrog Adoption
While predicting the timing of leapfrog robotics adoption in emerging markets is difficult, Patric notes it will likely require a strong market trigger. He wonders if surging demand for skilled blue-collar training precedes or follows the emergence of construction robotics startups in these markets. But wherever a pressing need emerges first, it can unleash rapid innovation.
Find more analysis on the Practical Nerds podcast
Subscribe to the NEWSLETTER here
Keywords: Construction Robotics, Construction Tech Startups, Modular Automation, Outcomes-as-a-Service, Construction Industry Trends, Inflation and Labor Shortages, Software Product Mindset, Blue Collar Skills Training, Emerging Market Leapfrogging, China Manufacturing Evolution