These robots could cut delivery costs by 80% | Next Unicorns

13:59Alex Blumberg:another zero in that thing that's that's what that's what i want i want it yeah it's it's i think that somebody going like say a small business try to do this or you honestly even walmart they're they're going to go to a systems integrator they're going to they are going to pay at least like probably four or five times that so that's our costs um because we are the systems integrator it's all of our software we work in inside of all of these different separate systems and then bringing them together but that's the actual hard cost for the actual hardware so you can imagine like when you're doing 20, 30 ,000 orders a day.

14:33Alex Blumberg:And yeah, even if you are only making 50 cents, 60 cents, that's a pretty damn good bit when you're operating like 30 days a week, like per warehouse, the payback on that is very, very fast. No, all that checks out.

14:45Kevin Gibbon:I wasn't sure about the, the, how much volume you could push through a 30 ,000 square facility, but it sounds like if you make, as you said, reasonable profit at 10 K and that can scale up to 30, well then the economics look absolutely beautiful. And the repayment period for the investment is going to be, I'm not going to run the math in my head, but like less than a year. I mean, it's going to be pretty quick.

15:03Alex Blumberg:It's faster than that. Yeah.

15:05Kevin Gibbon:Yeah. Faster than that. Yeah. I was trying to be, but a loose, loose cap on that. Yeah.

15:08Alex Blumberg:No, I'll, yeah, that's a, that's a, that's a, that's a good number. Yeah.

15:11Kevin Gibbon:So I'm confused about one part there. Now I don't think we should have humans walking 47 miles in an Amazon warehouse, putting toothbrushes into little carts. I think that's pretty silly, but I'm not sure about why labor costs don't scale linearly with, uh, essentially volume. On your site, you guys talk about how labor costs kind of spiral as you grow. And to me, that doesn't make a lot of sense because if you have 10 orders, one person, then you do 30 orders. Three people, it seems kind of like one, two, three. What am I missing in that calculation?

15:40Alex Blumberg:Overhead as far as management and facilities costs. That's where you just pack on so much cost, but also the complexity gets really hard. Quality typically goes down. And so that's why you don't see a lot of, like a single 3PL really owning everything. Amazon's a great example, but that's because they do their own products, right? Like that's different. They're not doing it. They're not competing in the open marketplaces with all of these other providers. So there's a very long tail of like billion dollar 3PLs out there. And that's because it's just really hard to scale it. You can't scale it literally.

16:18Alex Blumberg:Like I was in the, like not only did SHIP, arguably that was a 3PL, we actually did our own labor and all that but it's like i saw this airhouse all the time we worked with dozens of different 3pls and they'd all have the same problem it's like the management of people it just breaks every single one of these warehouses break and it comes down to the human element and that's because they just don't have enough leverage it's like you still have to get more and more people and it's usually a lot of temp labor and also you're typically have to locate these like to get the your cost down you gotta get your labor cost down which means you're in a location that it's probably in the middle of nowhere.

16:54Alex Blumberg:Like, so, and you probably are competing with other warehousing jobs. It's just really tough. So it's like, it takes a bad supervisor, bad GM. It takes a misalignment and management. And then all of a sudden, everything comes crumbling down. And that's why, like, fulfillment is like one of the only things that as you scale, it actually gets more expensive on a per unit cost.

17:15Kevin Gibbon:That's crazy. But I, and I'm glad you told me that because I never would have guessed that. So it really makes the idea of having your smaller facilities with automation make a lot of sense because you don't have the same problem. And also you can be closer to customers for faster ship time. So it's kind of like it feels kind of win-win-win in that case. Win-win-win. Except for if you are an existing 3PL who are going to get the rug ripped out from underneath them. But short of that. Right.

17:44Alex Blumberg:Yeah. Well, look, we're in a competitive marketplace. And I think ultimately, like, who are the people that are going to benefit? It's going to be consumers and brands, right? Like, we're all competing. We all want our stuff faster and cheaper. And, like, I'd love for more of my favorite brands to be, like, have same-day delivery and everything. And they can't afford it. Yes.

18:03Kevin Gibbon:Which brings me to a question. So we talked, you know, getting the cost of picking storage and, you know, getting something ready to go out of a warehouse. Super key. Get that down. Lovely. Yes. Now, on the shipping side of this, I presume that you plug into existing delivery services?

18:19Alex Blumberg:Yes. Yeah. So we will use today's standard carriers. So the UPSs, whoever, international carriers, DHL, whoever, they'll come to our warehouses today. It's very simple. We're not trying to invent everything. But yeah, that's what it is today.

18:36Kevin Gibbon:I was just curious if there's going to be any possibility to work with some of the drone delivery companies. We've got a zipline here on the show. I feel like they've kind of proven early scale. There's also a company called Mana from Ireland that we had on the show. They're moving into the US. And so it seems that when we think about low cost, local, quick deliveries, drones are becoming less of a pipe dream and more of a possibility.

19:00Alex Blumberg:I think so. And absolutely. For us, we will use whatever is cheapest and fastest and not high quality. So we're into partnering. Potentially, we'll look at maybe even doing some of it for our actual delivery. The fulfillment is really our wedge into the broader ecosystem. And wherever we can trim costs and pass those savings to our customers, we're going to. The highest cost of an actual e-commerce transaction outside of the marketing and the product, it is shipping and fulfillment. Chicken is actually more expensive than fulfillment. So we're taking off the fulfillment piece, which really is just like an extra tax.

19:39Alex Blumberg:Why wouldn't you as a brand just want an extra 2 % to 5 % gross margins? It's like a no-brainer.

19:45Kevin Gibbon:Extra 5 % gross margins could revolutionize someone's business

19:48Alex Blumberg:from breakeven to consistently profitable. People don't really even believe what we're selling. It's like, no, it's real.

19:55Kevin Gibbon:I've known you for a minute. Yes. I know you're a real legitimate entrepreneur. and I still kind of want to go see one of your facilities and be like, really? 80 %? Well, actually, that's a great segue because according to some news I read about your funding announcement, you have facilities in the San Francisco Bay Area, you're building one in Dallas, and you have a third, where's the other one?

20:15Alex Blumberg:Chicago. Chicago, right.

20:17Kevin Gibbon:So why those two locations? How did the setup go? And how much volume are you currently handling as your company kind of leaves stealth and goes to market?

20:25Alex Blumberg:Regular listeners already know

20:26Kevin Gibbon:that if you've got a great idea for a new business,

20:29Alex Blumberg:our friends at Northwest Registered Agent want to help you bring it to life. They're going to be the most amazing partner you've ever had. Even if you're not ready to form an LLC, you still need to take care of some basics. So Northwest Registered Agent is now offering free identity services. That means a free domain name, open source website hosting, a business email, and a phone number and everything else that's going to make your new startup look and feel like a professional company, all with no purchase required. And you know you can rely on Northwest because they've been helping people like you start businesses for nearly 30 years.

21:03Alex Blumberg:If you have an idea you can't get out of your head, or even if you're already building something amazing, you already got started, Northwest Registered Agent is the best way to establish your new company. Learn more at northwestregisteredagent.com slash twist domain. So we started off in the Bay and really because that's where myself and my co-founder and the team live and also a great place to start a venture-backed company. And our first facility was our R &D facility. And that's where we just tried to make, like I knew this company is going to be a really important one if we get the cost out.

21:43Alex Blumberg:Yeah, I was as skeptical as you were. But I needed to see it and I needed to prove it. And so we did that at a very small scale. So the actual facility is, it's about a tenth of the size of the ones that we're now expanding out. So it's about 2 ,000. Yeah, 2 ,000, 3 ,000. Yeah, yeah, yeah. With the exact same technology that we are using for our rollout. We proved it. And just with us, we actually had our own brand that we just were selling a bunch of stuff on. And it worked great. And we were doing all the fulfillment. bit like we were managing the robots and we were debugging stuff and all that and then we got to the point where I was like okay we're ready to start thinking about taking on more capital and then going to expand this and then offer it to the broader market and that's when it's like okay if you're if you are in e-commerce logistics like there's a few things you need to have a central operations because you need to your first location needs to be central so Chicago, Dallas, somewhere in the middle of the country.

22:44Alex Blumberg:So you're able to reach the coast in a relatively short amount of time. So that's why we launched Chicago first. And then it's going to be about the coast. So we're getting ready to launch LA. New Jersey is going to be at the end of the year. And then it'll be about kind of just expanding this to every other major market, getting closer to your customers and then spreading a brand's inventory across our different locations.

23:09Kevin Gibbon:These facilities that we're talking about that you're going to bring on this year, Are those the, I think you said like, you know, 30 ,000 square feet, you know, up to 10 to 30 ,000 packages a day. Okay. So they're the full zoot. The full zoot. Okay. Okay. Awesome. So how are you getting brands to sign up with you? Because the 3PL market is quite large. You're competing with some degree to Amazon and their fulfillment network. I presume it's not that easy to get a lot of folks to show up. At the same time, you do have a lot of history here. You probably know a lot of people. So how goes the getting brands to pick you side of things?

23:38Alex Blumberg:So I think that what gets everybody's attention is the robotics. obviously and that's kind of like uh hey we're automating this and everybody's like yeah that makes sense it's like of course okay we'll take a call or whatever and where we get people to actually sign on is the cost it really is it's it is such a no-brainer after you trust us that's the biggest hurdle we had to overcome early days uh when we were um nothing and just like uh we didn't hire our new facility but now we have real customers and and all that but it really like I've been in this industry for a long time. Airhouse was arguably solving the same problem.

24:15Alex Blumberg:Our close rates are unbelievable. And also the other important thing, I know we talked a lot about small business, but our ability to go up market is unlike anything I've ever seen before. So the exact product is the same for like a 50 to a hundred million dollar brand.

24:31Kevin Gibbon:I was thinking about this when you said you built your test facility with a couple thousand square feet and the same system. To me, that implies a lot of modularity that you can scale it up and down. so that i don't see a reason why i mean correct me if i'm wrong you couldn't go from 3 000 to 30 000 to 300 000 square feet and just have more of the machines in there like they're robots they

24:48Alex Blumberg:don't smell bad you don't get mad about being packed in right well well actually the so the benefit of having a more module smaller footprint is that um you can be located in city center so one of the things we actually didn't talk about is like the real estate how do you like where do you get these facilities um and like i like we don't need to be in the middle of nowhere like we don't need to be from a cost standpoint. We don't have the per unit costs that a labor heavy 3PL would be. So it makes sense for us to be closer to the city. So and that lends itself to being in smaller facilities. You're not going to get 300 ,000 square feet in the middle of San Francisco or something as you could.

25:28Alex Blumberg:But it. But then you've had no money. Exactly. Yeah, totally. And so the smaller nature, it derests a lot of things. So you prove out one, and then you replicate them and then you're able to have this like containerized unit that it is more on the small side sure but you don't get a lot of the economies of scale by just expanding it you actually get more benefit to go in more places because then then you're not only like changing the the fulfillment um uh uh curve on the cost but you're you're now moving the shipping needle so and that's how we're able to go upmarket it's like a brand that is a hundred million dollar brand they should probably be in i don't know four or five different locations across the u.s and they'll see substantial savings on the shipping side and so for us being able to be in so many different markets is actually better than having fewer larger facilities which is the

26:21Kevin Gibbon:inverse of how things have been going which was enormous distribution facilities that serve many many markets i mean if you've been on the highway and you've driven past an enormous building with like right 50 18 wheelers out there that's what we're talking about okay so you guys only raised I think it's$13.5 million. And I say only, that's a very large seed round and well done and applause.

26:41Alex Blumberg:Thank you.

26:42Kevin Gibbon:10 points, sorry. I didn't mean, that came out so dismissive. Don't delete what I said before, but here's another take at that. You just raised$13.5 million. Congratulations, Kevin. Thank you. No, but I mean, clearly very large aspirations here. And I think there's actually some pretty cool things you could do. I was just trying to Google and try to remember the name of the company, Serve Robotics. They have the little delivery bots that go on your sidewalk, they're public, and they're only worth$450 million, which is like, for the public markets, like a plugged nickel and a piece of gum. And think about how cool it would be if your facilities in these urban areas had their own dedicated fleet.

27:18Kevin Gibbon:So you can tell people, look, not only will we cut all your fulfillment costs, but we also have, if your delivery is nearby, we can just do it for you too. There's so much you can add here. There's even assets in market that are relatively cheap. So are you guys going to be, I know this is kind of a silly question, but super aggressive? in trying to like capture market share quickly because I don't want anyone else to like come behind you. So my question is, how aggressive are you guys going to be? Because I can see a lot of inorganic growth opportunities ahead for Satronic.

27:45Alex Blumberg:So for us and how we've even gotten here is focus. Like we're not getting, like we turn down customers all the time when they want to do a lot of B2B stuff. They want to do some custom like packaging or inserts or anything like that. We just say no. We're like, when you're ready to really want, you want cheap and fast fulfillment operations, you come see us. And so the answer is we have to stay focused. And I think that is the only way that that that's going to be the start of like where you see robotics companies actually chip off at the incumbents. Are these very focused use cases? But one other thing is that I think that the broader like you bring out the different point solutions, which we use them.

28:23Alex Blumberg:We love them. It's amazing. It's amazing. The venture kind of is backing this industry. But as an actual business, and even maybe as an investment, these point solutions are really tough because there's a lot of competition. There's not really a lot of defensibility. So my broader thesis on the market is that there is going to be a service layer on top of a lot of these different point solutions, whether that's in logistics or something like that. And the people that are able to roll up a lot of these technologies and continue to use the cheapest, fastest, whatever it is, whether they manufacture it themselves or they go and partner, that is where all the value is going to increase to.

29:00Alex Blumberg:It's those service levels versus the actual point solutions, the individual robotic arm piece, whatever. I just believe that it's going to mostly get commoditized, which I think for a lot of industries is going to be a great thing because it's going to enable a lot of stuff. Yeah.

29:16Kevin Gibbon:But fundamentally, what you're doing is making e-commerce even better, which I think means that if you own a mall, this is the last chopper out. Drop that asset because we're not going back. Kevin, an absolute treat. The website is cytronic.ai, C-Y-T-R-O-N-I-C.ai. And is there a job you're hiring for you'd love to shout out to our audience?

29:35Alex Blumberg:Everything. Yeah. You want to be in tech and you want to be part of something really awesome. And yeah, hit me up. I'm Kevin Gibbon also on Twitter.

29:45Kevin Gibbon:All right. Thank you very much. We'll see you soon. As you may have noticed, if you've ever seen this show in video format, I'm a glasses wearer. I've worn glasses since third grade. I've had glasses of all types, fancy sunglasses, very basic regular glasses. You name it, I've worn them. I even had sports goggles back in my high school wrestling days. A little out of fashion now, but they were a real thing. Now, I learned about a company called iBot, and what they are doing is putting kiosks into places around the world where you can go walk up and get a new glasses prescription in 90 seconds.

30:12Kevin Gibbon:I love this idea. I love the idea of bringing healthcare care to the people, getting people what they need at a lower price point, applying technology to longstanding issues to make them just easier to solve. So please join me in welcoming Matthias Hoffman, CEO and co-founder of iBot to the show to tell us all about how he's going to make everyone see that much better. Matthias, welcome to the show.

30:30Alex Blumberg:Thank you for having me. Our show is filled with helpful and practical advice for founders, but there's another reason to become a regular twist listener. Amazing deals on essential products to help you run your company more effectively. So I'm super excited to announce our new deal with Agree.com, the all-in-one contract to cash flow workflow. Go right now to Agree.com, sign up, and tell them you're a JCal listener, and they'll give you 50 % off for life. Agree is the number one fastest way to go from contract to cash. That means gathering e-signatures, invoicing, billing, payments, and revenue recovery.

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31:29Kevin Gibbon:I'm very glad to have you here because I do feel like around the world, getting the correct prescription for your eyes is much harder than it should be. And I kind of think of iBot as a company that could help a lot more folks have more accurate and regular prescriptions. But let's talk about the technology first. Most people listen to this, I think when they get their eyes checked, they go in to see probably an ophthalmologist and they have a big workup, like I was describing in the intro. You guys are offering something a little bit simpler and a little bit more targeted. So why don't you explain to us how it works?

31:57Alex Blumberg:Yeah. So iBot is a vision testing technology. It's really in the format of a kiosk that anyone can walk up to. And you go through a battery of tests. The whole thing only takes about 90 seconds. And then within that time, you know, you punch in your after you do the test, you punch in your name, information, email, and then it goes all that information that gets packaged goes to the cloud and gets paired with one of our teledoctors, who then review that session and then write a script to to your eyes. So you can essentially get an eyeglass prescription within minutes. So no planning, no scheduling, you just walk up.

32:33Kevin Gibbon:Well, one, that's fantastic. A lot of people just need to get their eyes checked once every couple of years. They're not like myself and maybe you need a little bit more. But I think we're kind of talking about the difference between an eye exam and a vision test. And I think that for most people, those are quite literally the same thing. So can you break down what you're offering and how it might be different from people who are accustomed to getting their eyes dilated once a year?

32:54Alex Blumberg:Right, exactly. So the comprehensive eye exam is really a battery of tests. So it's quite a big a bundle of tests actually if you want to call it that sure um and the first portion of a comprehensive eye exam when you go to an eye doctor or an optometrist uh is the vision testing portion so like you you sort of uh put your head into a machine maybe i look at a balloon um maybe it's like a flippy lens machine uh that you know you look at and look at some letters um and uh there's a couple more things but really that's all to test uh the clarity of your vision and from there, the doctor can then tailor a prescription to you so that when you wear a pair of glasses or contact lenses, you see better, right?

33:37Alex Blumberg:That's the whole point. And we've, as a human species, we figured that out. Like this is a really solved problem. Now there's a second portion actually of the comprehensive eye exam and that is checking your eye health. So that's when you kind of do the puff test and maybe sometimes you dilate your eyes. Nowadays, actually it's kind of falling out of favor, but, you know, kind of dilating your eyes and you actually see the back of the eye. So you see the retina. And there's many more tests that you do to check the health of the eye. And so, like I said, the comprehensive eye exam, which I bought, you know, encourages anyone to do that on a very frequent basis, is important.

34:21Alex Blumberg:It's really essential to maintaining our health. So the eye is essentially the window to our health. It's actually one of the few spots or only spots where you can directly see your blood vessels without actually having to cut yourself. And so you can diagnose diabetes actually through a comprehensive eye exam, believe it or not. So there's many things that can be diagnosed through that.

34:45Kevin Gibbon:So eyes are not the window to the soul. They're the window to watching our blood pump around.

34:49Alex Blumberg:Yeah, exactly. There's a tremendous amount of opportunity beyond just being able to get to a prescription. There's many more things that can be diagnosed, including cancers, certain kinds of cancers, or neurological issues. And that's essentially what you get out of a comprehensive eye exam. You get a full battery of things. Now, what we identified, and I think that resonates in general when I talk to people about this, is that getting an eyeglass prescription just to get a new pair of glasses is unbelievably hard and frustrating. for people. Like it's a multi-week, multi-month process sometimes for people.

35:26Alex Blumberg:Now, in many cases, people should get that comprehensive eye exam. But if you've broken your glasses or you have scratched lenses or you're just unhappy with your current glasses, you know, you may actually not need to go through that whole suite or bundle of tests. Actually, all you need is a pair of new glasses or contact lenses, which for that, you only need an eyeglass prescription. And that's really where iBot today comes in. So our technology is very mature and very accurate. And it allows people to get to that iGlass prescription very quickly. And to the point where it's a matter of minutes where you don't need to do any scheduling or planning.

36:09Alex Blumberg:You just essentially our iBot technologies and our units are in iGlass stores. And some of the biggest, most prominent retailers like walmart and sam's club and so it allows you to just walk in take a test get an eyeglass prescription and buy a pair of glasses you should be able to buy a pair of glasses uh like you buy anything it should be that easy right and that's what we're doing so but we're not doing the health portion yet and that's right okay well we'll talk about that in a second

36:34Kevin Gibbon:but this makes a lot of sense to me because whenever i now go from a yearly exam they send and then like makes a perfect image for my eyes and then they just kind of check it and then i think well are we done and the answer is no because i need some other stuff but like i'm amazed at how good that's become when i feel like when i was a child they really had to start with all the flippy lenses you know it took a while to actually kind of dial it in whereas now they jumped to like nine the 99th percentile of it so yeah this makes a lot of sense to me what does a person pay to to use your kiosk? And then also, where do the teledoctors come into the loop?

37:15Alex Blumberg:Yeah, great question. So the first question is the cost. So it's anywhere between zero to$25. Right. So we want to not only make it unbelievably easy for people to get to their eyes checked and to get an eyeglass prescription, but also we want to lower the costs so much that you really have no reason to not do this. And really unblocking and removing all the hurdles and barriers that people have to getting an essential service, like getting a new pair of eyeglasses is like getting a new pair of shoes. It's a fundamental thing that we need. And so that's why we're really focused on this low cost approach.

37:57Alex Blumberg:The way we actually solve this is that we have business relationships with the retailer, with the enterprise, so that they have some agency on how much to charge for that prescription. In most cases, our partners actually charge$0 to the customer because it is obviously a benefit that drives people in.

38:21Kevin Gibbon:Absolutely.

38:22Alex Blumberg:And so it's sort of this win-win solution that we have great business relationships with the retailers, The retailers get more traffic to get incremental customers and revenue. And the consumer and the patient gets a free prescription. That's amazing. And we know that drives people in because, I mean, there's many statistics out there, but the lower third of income level in the United States is half as likely to go see an eye doctor. Yeah, yeah. And it's a money problem, right? Like they don't have vision insurance. Half of Americans have vision insurance. And the other half just doesn't.

38:58Kevin Gibbon:that was me growing up. So I'm intimately aware of this. And also I read a study that showed the impact of going to a lower income school and giving all the kids eye exams and glasses and what happened to their reading scores. It turns out they couldn't not read, they just couldn't see. And that was one of the most heartbreaking things that I've ever read because think about these kids who don't know better and are kind of walking through the world effectively. And I say this as someone who's really not blind, but like, you know, pretty poorly visioned, walking through the world in a daze. And so I'm an enormous fan of the idea of getting the cost down here and baking this into essentially other services to make it more available.

39:37Kevin Gibbon:Exactly.

39:37Alex Blumberg:iBot is here to really level the playing field. Like it's the, if you have vision insurance or not, it doesn't really matter, right? Your co-pay is more than$25. So it's basically even for everybody in terms of cost, in terms of access. And especially we do really well in rural communities where there's frankly just no doctors around.

39:57Kevin Gibbon:where there's frankly no doctors around i mean we talk about food deserts quite a lot and kind of you know modern culture but i think we don't talk enough about specialist droughts or deserts as well and like ophthalmology is well you can make a lot of money doing it in big city but i don't think you're gonna set up shop in the sticks probably yeah so exactly on the business part though my understanding and i i'm not mad about this so don't don't take this the wrong way but is that when we buy a pair of frames we're paying uh quite a lot of margin to the company in question And is that margin what allows partner frames companies to essentially subsidize the cost of having the kiosk and the telehealth doctor?

40:35Kevin Gibbon:Because I can see how that math could work out. I just want to make sure that I'm understanding kind of the model.

40:39Alex Blumberg:Oh, yeah. I guess I didn't answer your previous question on the teledoctor. So, yeah. So it's our own teledoctor network, right? So we have our ophthalmologists and we have our optometrists. And, yeah, they get cued in depending on which state it is. And obviously, they're all licensed in the state that they work in and prescribe in. The data that we collect goes to doctors and they look at the data and even present the data the same way in a chart, the same way that we're in their own clinic. So that's sort of the ramp up speed and time for doctors to work with iBot is very quick because they, you know, it looks like it's the same kind of layout.

41:19Alex Blumberg:and they use their clinical judgment and training and schooling to write and craft eyeglass prescription the same way they would with patients in their own clinic. Yeah. So that's the answer to the previous question.

41:32Kevin Gibbon:What's the doctor vibe on this? Because on one hand, I can see if I'm an ophthalmologist, I don't maybe want to see my patients less frequently, but also I don't want to be the person who's just helping people adjust their eye prescription. That seems like a misuse of my time. And also people could also moonlight with you guys, I presume, and add to their overall clinical load. So where do doctors land in terms of viewing you as like a helper versus politely a competitor?

41:59Alex Blumberg:Yeah, I mean, that's obviously the big question here. And that's something we're, you know, even in terms of making the industry understand about what we're doing. We're here to fill a gap, right? We're not here to displace doctors. We're not here to take people's jobs or anything like that. In fact, what's happening right now is that the gap of doctors right now in terms of patients that need care is actually growing. So 10 years ago when I joined this industry, I think it was one optometrist would have to care for about 3 ,000 to 4 ,000 patients a year. Today, it's one in 5 ,000 per year. It's almost impossible.

42:46Alex Blumberg:And in 10 years, it's going to be about 8 ,000, one in 8 ,000. So it's just the amount of doctors actually is decreasing in the United States.

42:58Kevin Gibbon:Is that because ophthalmology is a less attractive specialty for doctors leaving medical school and they choose residency?

43:04Alex Blumberg:Or is that just because people are like, why is it going up so fast? Yeah, there's a very rapidly decreasing pipeline into residency programs for ophthalmology. And optometry is relatively flat right now. And you could argue on the decline in terms of how many students are actually getting board certified per year. It's actually on the decline. So our population is growing. our need for eyeglasses is actually increasing because our kids are 80 % more myopic than they were 20 years ago screen reading, exactly not enough outdoor time and so those kids are going to be adults soon and they're going to wear glasses 100 % so yeah, if you're in the glasses contact lens business the revenue is going up the demand is going up but the amount of available doctors is actually decreasing and that's the surprising thing so iBudis here is is simply here to fill the gap.

44:02Alex Blumberg:And I think once the community understands that, and we talked to many doctors, they totally understand the need. They see it themselves. Optometrists are oftentimes, with their own independent clinic, booked out for weeks and months, right? And the same is true for ophthalmologists.

44:22Alex Blumberg:The ophthalmology is projected to have 20 to 30 % fewer ophthalmologists in 10 years. And this is coming from the community. This is not like an independent study.

44:34Kevin Gibbon:Yeah.

44:34Alex Blumberg:It's like a red alert from, uh, some of the big trade associations in ophthalmology.

44:40Kevin Gibbon:It's kind of incredible how I feel like every medical specialty is just under, uh, my spouse is in medicine. So I have some insight into different specialties and everyone has the same kind of story that you're telling me now, which is like patient loads going up, number of available providers is flat or heading down. Everyone wants to get into something that's super specialized because it's higher value, blah, blah, blah. No one wants to be, it's,

44:59Alex Blumberg:Yeah, yeah.

45:00Kevin Gibbon:American health care, man. Yeah, exactly. Got some holes in it.

45:03Alex Blumberg:What we're seeing here is that the only way to meet the demand of today and even into the future is that we need to automate health care. And by extent, and what we're doing is automating eye care. And there's no other way. The four wall clinic with a room full of equipment does not scale to the demand today and the demand to the future. It's impossible.

45:23Kevin Gibbon:Especially if you found a place where it is mechanically done even by the doctors, as we talked about earlier, like Like similar technology. Okay, so what's the kiosk cost to build? I think we're all familiar with kiosks. Mostly they give us candies or whatever. Yours is a bit more technical. I presume it has a higher kind of bomb. So what does it cost to kind of put one of these into a location?

45:44Alex Blumberg:Yeah, I can't speak to like how our manufacturing costs, but it is by far the most high-tech kiosk out in the world. That I can say. and it has gone through eight generations of R &D over multiple years. It is the state-of-the-art on multiple kinds of technologies, actually, that you use in the optometry clinic. So we have a very advanced autorefraction technology. We have a very advanced visual acuity system that compresses the letters. When you look inside, everything is 20 feet away visually, and your eyes have to focus at 20 feet. But obviously the kiosk is not 20 feet long.

46:27Kevin Gibbon:No, it looks like it's about 12, 14, 15 inches deep, I think. Yeah, yeah, yeah.

46:32Alex Blumberg:And so the distance actually even shifts when you get to the balloon part. We also have a balloon part that's familiar to people. And you look inside and look at the balloon and it's actually scanning your eyes while you're just standing there casually. So it's, you know, everything is built from the ground up and develop from the ground up. And we also have a lensometry technology built in that also scans your existing glasses and extracts all those settings. And so we can transfer those settings to a new pair of glasses with, of course, adjustments that update your current settings that need to be done so that you have the absolute best settings that you need today.

47:12Kevin Gibbon:I ask about the cost of building this because you are not an asset-light business. Like you're not making enterprise software, right? This is a thing you have to go out and put it into the world. So with your, I think it was a, it was a$20 million series, a Ramatis.

47:28Alex Blumberg:Yes, that's correct.

47:28Kevin Gibbon:Yeah. So how far does that get you in terms of being able to put kiosks out in, into the market? I don't know if you're sharing costs with partners or not, but what I don't know is, is this a hundred kiosks or is this 10 ,000 kiosks? I don't even know the zeros, you know?

47:42Alex Blumberg:Well, one, one unit makes us a good amount of money. So, uh, but hundreds, uh, hundreds of kiosks. Yes.

47:47Kevin Gibbon:And how long will it take to build those and get them out into the market? I know that supply chains have had a rough couple of years. I'm not sure if that impacts your production process.

47:56Alex Blumberg:A little bit, but it's actually, in terms of the tariffs, it's not really been too impactful to us. It's not something that keeps me up at night. It's not a top 20 problem.

48:07Kevin Gibbon:Oh, wow. So it's quite down there.

48:09Alex Blumberg:Yeah. And so we can really efficiently make these units now. and we have big orders coming in on containers on ships right now. So we're patiently awaiting, you know, we just got a new place. We've got a new staging and research and manufacturing facility in Boston. And we're filling that up with inventory because we have a lot of units to put out there.

48:35Kevin Gibbon:Which brings us to partnerships. Now, I know you guys have talked about partnering this January with the Framery and the company behind 1-800-CONTACTS. who else is in your partner portfolio? And can you work with everybody in the eyeglasses space? Because I don't see a reason why you need to pick one partner over another or have exclusivity.

48:55Alex Blumberg:Yeah. I mean, we want to work with everyone, right? The selling glasses is not our business. We're in here to help do vision testing and getting people to the solution they need. Typically, that's the prescription or contact lenses. And so we're not a retailer. And so we work with retailers and provide our services. That's as simple as I can explain that. Now, different retailers have different products they sell. I broadly characterize that between the traditional eyeglass retailers where they sell glasses. And you actually asked the question about margin. I'm happy to talk about that too. and the AI glasses, which is a sort of a new nascent industry that's growing now.

49:41Alex Blumberg:And we're working with all of them. That's what I can share at this point. So from the traditional big logos that sell glasses or chains and all the way to mid-market independent stores. And then in the AI glasses, which you've seen the Meta Ray-Bans And Google, of course, also came up with new versions and some other logos that I can't name are bringing out their own versions. And so all that is happening. And it's the new, exciting, fast-growing market as well. And iBot is here to help unlock that bottleneck is the prescription, right? Because if you want to get a new pair of Meta Ray-Bans or you want to get a new pair of AI glasses, you also need to have a prescription.

50:27Alex Blumberg:and people don't walk around with that in their pocket.

50:30Kevin Gibbon:No, and also you're talking about products that retail for a higher unit cost than your average set of frames. Admittedly, the pair that I just bought, this is my backup pair. My kids broke my main pair twice. Shout out toddlers, just lovely people. I want to go get like an Apple Vision Pro, but what I don't want to do is go through the ridiculous annoyance of dealing with my prescription, its intensity. But if like I was a normal person and I wanted to get a pair of those and I wore a normal prescription, I would just go to the Apple store, stand in front of the iBot kiosk for 90 seconds, have that inputted into my order.

51:03Kevin Gibbon:Like it just, it feels like this is a thing that should be brought into the physical location of a lot of places. So I really like the approach of this.

51:10Alex Blumberg:So you're going to see exactly that kind of business model in the coming months. I hope so because I don't know, man,

51:18Kevin Gibbon:I'm still staring at monitors like I did when I was 10. It feels a little archaic. I would like to trust something else. How has consumer reaction to this been? because you and I clearly know, well, you know a lot, I know a little, but we understand the space a little bit and how the technology works to some degree. The average person doesn't. Are they comfortable with this?

51:35Alex Blumberg:Yeah, actually what's been surprising to us is the kind of uptake that we're seeing in terms of demographics, right? So this is the stuff that gives me goosebumps is like, and this is why I'm, the entire iBot team is, if you ask anyone on our team, like, why are you working on this? it typically revolves around the fact that we have a solution that works for so many different kinds of people. And what I'm saying here is all ethnic backgrounds, all cultural backgrounds, all skin colors, all rich or poor, educated, not educated, it doesn't matter. We see everybody. We see doctors, we see bikers, we see grandmas, we see Amish people.

52:20Alex Blumberg:We have Amish people getting eyeglass prescriptions. from iBot. Like, how is that possible, right? But because there is a real, like, strong demand for this kind of service, and the alternative is, of course, waiting weeks. And so that's really what gets us super excited, is just the humanity of who's using this. That's one thing. That's one clear sign of something that's working for us. Now, the other thing, of course, that we always track is how happy are people with the glasses that they're using iBot prescriptions and what we're happy to report and we have a ton of data on this now is that not only do we have really high mps score or customer satisfaction scores and you know 80 plus scores we also have extremely low remake rates remake rate is you know how often do people go back and say hey i want this prescription changed.

53:18Alex Blumberg:I don't like it.

53:19Kevin Gibbon:Yeah.

53:20Alex Blumberg:Um, we beat the industry average by a considerable amount. So, uh, if you were to compare that to like how good our doctors are, uh, we're in the top 10 % of, of doctors nationwide.

53:33Kevin Gibbon:That's fantastic. Uh, I want to go back to the, this works for everyone thing. And I was going to bring this up dead last, but I'll just bring it up. I'm, I'm legitimately curious what you're thinking is, um, on the point of American healthcare being a little bit uneven based on who it reaches and how and the quality of care that they get and what they have access to, frames can still be relatively expensive. And I feel like what you guys have done as a company in a for-profit sense is great technology, good distribution, and I think it's a great, great product. But for a lot of folks who don't have money or insurance or access to it, getting those prescription isn't going to be the entire process.

54:07Kevin Gibbon:And you guys can't take that on because that's not your job. But are there any major charitable groups or programs that you could maybe supply a handful of iBot kiosks to, to allow them to bring them on the back of a truck or whatever, to places where they're needed to give you guys the ability to help more people faster than you might be able to with a more traditional commercial only rollout.

54:32Alex Blumberg:Yeah, exactly. So we are actually in discussions with multiple organizations, including the WHO. And I mean, there's so much opportunity overseas, right? Like in the Philippines or in certain nations in Africa, like there's just, there's a lot of folks that need access to care. The statistic that I saw recently is like 1.5 billion humans on this planet right now are not seeing well. And all they need is a pair of glasses. It's crazy.

55:03Kevin Gibbon:Man, for people who don't have vision problems, they don't understand how bad that can be. Now, not everyone has really bad vision, but like you can't read signs when you're driving. You can't see the fork you dropped. You can't see your kids smile when they look at you. Like this is a real loss. This is in 1.5 billion people is what? 22 % of the population, whatever.

55:23Alex Blumberg:Yeah, exactly. And the funny thing is that as a human race, as species, you know, intelligent species, we figured out how to solve this problem. It's a curved piece of plastic. that makes you then see well. Yeah. And making them nowadays, and this actually goes back to your original question about margin. This pair of glasses that I have here right now costs$5 to make.

55:53Kevin Gibbon:$5? Yes.

55:55Alex Blumberg:Okay. Not the highest end pair, but they work great for me. Now, of course, there are more specialty lenses, and if you're going to go progressives, it costs more. but in general most pairs of eyeglasses cost less than 20 bucks to make all in right like sort of the general purpose ones then you can get into like specialty coatings and specialty lenses of course but really the coatings don't cost that much money to add i won't say what what margin

56:21Kevin Gibbon:that is don't don't tell me how much money i just wasted on my pair that i have coming in soon because

56:25Alex Blumberg:yeah yeah so so making the product making this solution including contact lenses is actually very economical for the manufacturer to do. But then why is it still so hard to get them? This should be unbelievably commoditized, and it's not. And the big bottom leg, that's where we're stuck as a humanity, as a species, is getting to the numbers to getting those glasses. And that is the next piece that is getting automated. You can't stop it. It's the next piece that's getting automated. It's the next piece that's getting commoditized.

57:07Kevin Gibbon:Okay.

57:08Alex Blumberg:And that's where it's heading.

57:12Kevin Gibbon:Let's be rude. Let's be rude here. Let's just go for it. So I personally, me, with the current state of AI technology, I think that right now it makes good sense to have doctors in the loop reviewing prescriptions in a format that they understand, making sure that it's correct, making tweaks as they need to. Viva. Fast forward three years, right? In just another couple trillion data points, will we still need doctors in the loop? Because that will be a rate limiting step to bring this to 100 million people in the Philippines, Africa, parts of Asia, et cetera, right?

57:45Alex Blumberg:Yes, 100%. So doctors need to be in the loop. And as it turns out that in our case, writing great eyeglass prescriptions is not many people know this, but it is science and also art. Like, you need a tremendous amount of experience to craft well-tolerated settings. And that's really one of our big benefits is sort of this hybrid solution where we collect all the data electronically, but we still have that experience in the back end from licensed, very experienced teledoctors. but as also as far as you know treating goes and and and finding solutions i think that will be human driven for a long time the decision making the agency uh all of that will be doctor driven like who takes the responsibility right like do we really want a computer program to just make decisions on our care and our treatment?

58:55Alex Blumberg:And this is actually a broader question in healthcare, right? It is. Ultimately, I think that's kind of where the buck stops in terms of AI is like, well, who makes that decision on your treatment and care? And I think it will take a long time for humans to give up that kind of agency. And so, yeah, as far as IBOT goes, we're going to have doctors. We have doctors who review every session and deal with every session the same way it happens in a clinic. I think there's a common misunderstanding out there about how IBOT does it. But, yeah, we're effectively just kind of reorganizing reorganizing the care model.

59:39Alex Blumberg:Collection happens digitally. Yeah.

59:43Kevin Gibbon:I just think that for the 1.5 billion people who need them, I think they would rather have a 95 % solution than a 0 % because there's a chance of an issue. So I'm thinking about that versus like in Utah or whatever. But it seems like all we need is you guys to have a huge commercial success so you can donate a couple of units, get someone to make the, what's that Mark Cuban prescription drug company? Cost plus. cost plus for frames and lenses, and then, you know, get some doctors to donate a block of their time every month to review scripts for poor kids around the world. And we can really change the world, but it'll come down to how big iBot can get.

1:00:17Kevin Gibbon:So tell me about what's coming up for the company. Um, new partnerships, kiosk upgrades, what's next?

1:00:23Alex Blumberg:Yeah, we have numerous partnerships. Um, probably more than I can, I can put on my fingers, uh, today, uh, that we're going to be announcing. And yeah, so there's just a tremendous amount of pull in the market because, you know, there's just simply no doctors available. And we are a very practical drop-in to solve that problem. And that goes for the AI glasses companies and also traditional optical.

1:00:50Kevin Gibbon:And just before I let you go, you are building in the Boston area. I'm here in Providence, Rhode Island. It is rare that I get to speak to someone who I can drive to in, you know, less than three days. So tell me about building in the Northeast and how the ecosystem is for founders, for venture capital, for just networks of people that are also interested in the same things that you are.

1:01:11Alex Blumberg:I mean, I'm going to maybe do some hot takes here. So overall, Boston is a fantastic place for robotics, for hardware engineers. There's been no shortage of talents in the Boston area. And we have a fantastic team. And it's sort of like, once you're in that community, once you're in the hardware community, and I used to work at a company called Formlabs. It's a 3D printer company. That whole network has been, that Boston kind of network has been super valuable for us in finding great talent and knowing people that know people, right? That's kind of how it goes. But as far as venture capital goes, Boston does have some good VC firms.

1:01:52Alex Blumberg:But what I would say, and this is my hot take, is that the mentality and the sort of the vision of East Coast versus West Coast venture capital is very different. So while what I mean is more that West Coast venture capital is very much dream big, you know, be disruptive, try something radically new. and east coast is more traditional kind of capital where you need more proof and you need to have a clear business case already sorted out and so that's kind of the differences and depending on where you are what kind of business you're building one of the other is better but for something extremely ambitious as i bought west coast type vc just is better suited well

1:02:39Kevin Gibbon:i'm an oregon boy living on the east coast so i like it either way i'm just glad to see companies building outside of like, you know, eight square blocks in Soma in San Francisco, a neighborhood that I love, a neighborhood where I used to work, but it's not the entire world. And I think as we think about all the problems that we need to fix, I think we're going to need to have more centers. So I'm glad you're making your footprint in Boston. Maybe you can teach those VCs how to be a little bit more freewheeling with their checks. But in the meantime, Matthias, what's the website? And is there a role you're looking to hire for?

1:03:06Kevin Gibbon:You'd love to shout out to the audience.

1:03:07Alex Blumberg:Yeah. So we're looking for more salespeople. We're looking for more marketing people. We're looking for more R &D engineers. We're looking for more scientists. We're looking for more across the board, right? Certainly. I would say in that order. And our website, yeah, it's ibot.co. So E-Y-E-B-O-T dot C-O. All right.

1:03:36Kevin Gibbon:Well, announce those partnerships and then come back and tell us all about them. But in the meantime, Matthias, thank you so much and go out there and save the world, please.

1:03:42Alex Blumberg:Thank you. Awesome. Thank you.