How This Engineer Built a Successful Robotics Company
It’s often the most unglamorous problems that lead to the most lucrative opportunities.
Jake Loosararian is the founder and CEO of Gecko Robotics, a company that makes robots for industrial inspections.
The industrial sector may not have a reputation for being the sexiest industry for startups, but it’s often the most unglamorous problems that lead to the most lucrative opportunities.
The $1-Million-Per-Day Problem
Loosararian majored in electrical engineering, but he wasn’t sure of his career path when he started college.
During his last year in school, Loosararian led a senior design team working on a project for a nearby power plant. The plant manager told them the inspections at his plant were very costly, time intensive, and unsafe, but highly important because if the plant shut down for one day it could cost them up to $1 million.
Any improvements the design team could make to the plant’s process would be “a dream come true.”
Loosararian and the team began building a wall-climbing robot and in the process, became acquainted with the power industry. He was fascinated by what appeared to be a “wild west” of an established industry, and what was required to keep it going.
“At first it seemed like a very niche problem we were solving,” he said. “But it quickly grew into so much more than that.”
The robot they built inspected boilers, tanks, and scrubbers 10 times faster than human inspectors and gathered over 1,000 times more data, identifying areas of weakness and preventing costly shutdowns. Plus, it was safer. Between 20–40 people die every year performing manual inspections. With Gecko Robotics, there is no threat to human life.
Their project won a few technical awards, but Loosararian was already starting to think bigger.
Career vs. Entrepreneurship
After graduating in 2013, Loosararian accepted a job as a systems automation engineer in Ohio but quickly realized he wasn’t cut out to work for a company. However, he needed the security, especially if he was going to bootstrap Gecko on the side. He set a goal to stick it out for a year.
For the next twelve months, he worked sixty-hour weeks for his employer, while moonlighting for Gecko alongside a member of the college design team.
Loosararian struggled with the idea of working to achieve someone else’s vision, but looking back he’s glad he kept a job during the early stages of a startup.
“If you have the opportunity to gain experience before jumping in and have the willpower to restrain yourself, do it,” he said. “Startups are horribly difficult, very painful, and don’t usually work out.”
The Difficult Choice Every Founder Has to Make
The year was up and Loosarian looked for a way to leave, right as his co-founder burned out and quit.
But things became complicated when his company offered him a promotion to lead a team in Puerto Rico with more responsibility and a bigger paycheck.
It seemed like the right choice. He had a fledgling startup with a quitting co-founder and no prospects of making money for the foreseeable future.
Loosararian agonized over his options. The phone rang.
“Jake, it’s Mom.”
They talked and he told his mother about his dilemma. She asked him a question.
“What kind of man do you want to be?”
She told him his character is defined by the choices you make, especially during the times of hard decisions.
The more difficult path was with Gecko but he knew it was where he wanted to be. He knew he would grow much more as a person.
“So, I made the decision and the pain began.”
There Is No Playbook for Entrepreneurship
In May 2013, Loosararian devoted himself to working on the robot. He practically lived at customer power plant sites as much as possible to find out exactly what they needed.
He admits he didn’t really know what else to do.
“There’s a desire for a playbook for success that every entrepreneur wants, but no one gets,” he said. “The only advice you should be following is the feedback from your customers. The better your feedback loop is, the quicker you can iterate yourself, your company, and the approach of your company toward making something that people will actually pay for.”
Loosararian kept working to get his robot on sites and complete beta tests with real customers, forming a feedback loop that was immeasurably helpful. The most important feedback came from pushing to get them to pay for the tests.
“Here’s how you can tell if you’re making something people actually want: if they pay for a crappy version of your product because the pain point you’re solving for them is so great.”
Loosararian learned firsthand the signature lesson from Reid Hoffman, founder of LinkedIn: Get your product out there before you’re proud of it.
You may have heard me say: If you’re not embarrassed by the first version of your product, you’ve launched too late https://t.co/r4JyKzzyWO
“So many entrepreneurs wait and wait and wait before they launch,” said Loosararian. “And that ends up resulting in building towards the wrong thing and not proving to yourself or to others working with you or watching you that people actually want what you’re making.”
Watching you, indeed. A very large company was studying the progress of Gecko Robotics.
Soon, Loosararian found himself with a tempting acquisition offer.
Turning Down an Acquisition Offer from a Multi-Billion Dollar Company
A massive company put an offer on the table. They wanted to bring Gecko Robotics in-house. A move that was dramatically different than the founder’s vision for the company.
“I didn’t start the company for marginal impact, I started it for great impact and accepted failure as a probable outcome.”
But it was tempting, nonetheless.
Cashing out would have validated his decision to quit a great job and pursue a startup. Financially, it would have allowed him to stop worrying about a rapidly decreasing bank account funneling cash into his company. The interested buyer seemed to know what it was doing and would be able to provide him with knowledge, resources, and connections he didn’t have access to.
But selling would have sidelined Loosararian’s greater vision for disrupting the power industry. Their visions differed and their business purposes clashed. He remembered the phone call with his mother. “This felt like a shortcut.”
He said no.
“Do You Know Kevin Hale?”
After turning down the offer, Loosararian moved to Pittsburgh and discovered an unlikely source of insight and motivation to get him through the “messy middle” of building a startup.
“I didn’t have any founders of massive companies in my network or access to professors at prestigious universities,” he said. “The most valuable contributions for me were from my friends.”
One friend even became his CTO. Loosararian met with an old college hallmate, Troy Demmer, who was working at UPMC at the time while studying for his MBA at Carnegie Mellon University.
After classes one evening, during one of their brainstorming sessions, Demmer asked Loosararian, “Do you know Kevin Hale?”
Loosararian shook his head.
“Kevin Hale is the cofounder of Wufoo and a current partner at Y Combinator,”
said Demmer. He raised an eyebrow. “You do know Y Combinator, right?”
Loosararian shook his head.
“YC is a startup accelerator that invests in startups in two batches every year,” explained Demmer. “The program has helped companies like Airbnb, Stripe, and Twitch get off the ground.”
“Anyways, Kevin Hale is coming to CMU tomorrow to host office hours. You should talk to him.”
The next day they shared with Hale the vision and opportunity for Gecko. Suddenly, Hale started adding to it with his own ideas of how to grow the company and the potential he saw in it. In other words, Hale was helping them create their pitch for Y Combinator.
At the same time, Loosararian was down to a couple hundred dollars in his bank account. He had been sleeping on the floor in a friend’s apartment for the better part of a year — living the starving entrepreneur trope.
He asked Demmer, and another engineering friend from college, Ian Miller, if they wanted to come on as official partners and try to get into YC.
His co-founders came on board and a month later they were accepted into the winter 2016 batch at YC.
All of a sudden, Gecko had a $2 million valuation.
Outperforming Peers at Y Combinator
Loosararian and the team received a $120,000 seed investment in return for a 7% stake in the company. The founders gave themselves almost no money, hired four engineers, and moved the company across the country to Silicon Valley for the three-month accelerator program.
At YC, each team has a set of partners and mentors to work with. Among the people Loosararian worked most closely with were Paul Buchheit, employee number 23 at Google, lead developer of Gmail and COO at YC, and Jared Friedman, cofounder and former CTO at Scribd.
This team was instrumental in helping Loosararian answer foundational questions about his company and setting ambitious growth goals. Despite being one of the few non-software based startups in the batch, Gecko did their best to hit the target of 10% growth every week.
In the three months at YC, the Gecko team was able to secure around $500,000 in purchase orders or letters of intent. Their explosive growth became very attractive to potential investors.
The second area of focus for YC is helping founders deal with investors and acquirers, bringing the top investors in the world to an event called Demo Day where every company in the batch has two minutes to pitch.
Only a third of the companies secure funding on Demo Day, but it’s a huge opportunity.
Demo Day: Picking the Right Strategic Investors
Coming out of Demo Day, Gecko had significant interest, including from a very well-known top tier investor. But Loosararian and his partners decided to go in a different direction.
In the two weeks after Demo Day, they raised $2.1 million from 15–20 investors on an extremely high valuation instead of going with one highly recognizable investor.
That might not be the best strategy for every founder, but going this route allowed Loosararian to maintain flexibility and control of the company.
“If this were a classic software company, maybe having more insight from people who built and sold those types of companies would have been helpful, but for us, it was more likely that [controlling] investors would just get in our way.”
The move paid off. Gecko logged $1.7 million in sales in 2017 and was profitable in 2018.
In August 2018, Gecko went through another round of fundraising led by Founders Fund, the venture capital firm founded by Peter Thiel. The $7 million dollars they raised included notable investors like The Westly Group, Mark Cuban, Justin Kahn, and Gokul Rajaram.
In 2018, Gecko grew its revenues by 500 percent. The team expanded from 10 to 70 employees. Feeling confident with their product-market fit, Gecko eased on raising capital and is now focused on building scale and capabilities.
5 Takeaways for Entrepreneurs
Whether you’re trying to get into Y Combinator, pitch investors, or build a profitable company, here are the key ideas that powered Loosararian’s success with Gecko Robotics:
- Make sure you’re building something people want. Find a big problem first, then build the product and company around it.
- Don’t be afraid to launch a crappy product. Get it out there early and voraciously collect feedback from your first customers to iterate. Don’t be afraid to push them to buy — it’s the best way to glean honest feedback.
- The only advice you should be following is the feedback from your customers.
- Your friends may be an unlikely source of talent and insights for your company.
- The first acquisition offer — the one that feels like a shortcut — is rarely the one you should take.
Enjoyed this story? Stick around. Entrepreneur’s Handbook is Medium’s top source for startup deep dives with practical takeaways to inspire your own entrepreneurial journey.
Gotta startup story to share? Email the editor at firstname.lastname@example.org.
Thanks for reading.
How This Engineer Built a Successful Robotics Company was originally published in Entrepreneur's Handbook on Medium, where people are continuing the conversation by highlighting and responding to this story.
Source: Enrepreneurs Handbook
Author: Dave Schools