Humanoid robotics are having a moment. Prototypes have been twirling online for years. But lately, they’ve hiked the Great Wall of China and learned the difference between a mug and a water bottle. Though the real breakthrough in robotic capabilities is taking place on factory floors and warehouse loading docks, and Agility Robotics is one of this revolution’s leading lights.
This spring, Agility deployed a fleet of Digits to MODEX in Atlanta. These humanoid robots were set up to work in a mock warehouse environment, lifting containers, restocking shelves, and replenishing totes. But what enthralled observers most was the fact they did not stop. These 5’9”, 140-pound robots toiled and charged for 26-hours continuously over almost four days. As America’s labor shortage drags on, robots can be purpose-built to deliver value doing dull and dangerous jobs.
At Playground’s Annual General Meeting in May, Agility Robotic’s new CEO Peggy Johnson sat down with Bruce Leak to discuss Digit’s work, why she joined a startup, what sets Agility apart, and how she sees the robotics industry evolving.
This interview has been edited for clarity.
Bruce Leak: Peggy has already had a storied career in the industry. She started at Qualcomm when they were only around 100 employees. She had quite a career there, ending up as the Executive Vice President of Global Market Development. Peggy went on to do other incredible things, like become the EVP of Business Development at Microsoft and help them pivot into this thing called “the cloud” that you may have heard of. She then went on to be the CEO of another storied company called Magic Leap and helped them pivot into enterprise. We couldn’t be more excited about having Peggy join Agility. My favorite story about her hiring process is about her references. I’ve run a fair number of CEO searches — both as an entrepreneur and as an investor. But I’ve never had a CEO search where the reference list was four Fortune 500 CEOs, and that’s it. Do you want to talk to Satya Nadella or Larry Fink from BlackRock? How about Lachlan Murdoch or Paul Jacobs? Peggy, I know for a fact that you had multiple offers to be the CEO of public companies. Why spend your time on a startup doing hardware?
Peggy Johnson: I love hardware going all the way back to my roots at Qualcomm. For those of you who remember, Qualcomm made mobile phones, cell sites, and then chips. So I know hardware is hard, and I love it. I just like the challenge of it. And as far as why robotics, Paul Jacobs, my manager at Qualcomm, his dissertation at Berkeley was on robotics. He had his PhD, but ended up running Qualcomm after his dad stepped down as CEO. But he always talked about robotics and about the day when robots would be part of our lives. He saw that vision way back then. And all of a sudden, it has come together. Clearly, it has been going on for many years, so it feels a little bit like AI. We’ve heard about it for so long. And now it’s just zooming forward accelerated by AI. So it just felt really right. I saw robotics and compared to everything else, I thought, “This is the one I want. This is an exciting one.”
Bruce Leak: So an overnight event that was decades in the making.
Peggy Johnson: Correct.
Bruce Leak: So why Agility?
Peggy Johnson: Frankly, I didn’t know much about it. But from the outside looking in, I thought Agility seemed to be far ahead. I completely validated that before I came in, looking at all of the others in the space. Again, they’re making coffee and doing backflips. Agility was focused on work, and that seemed to me the right place to focus. Digit was capable of doing it, and customers would pay them for it. That’s a perfect recipe. And if anything, I thought I could help get that story out there more broadly so people understood that robots are not just doing backflips; they can actually provide ROI today. I wasn’t looking at other robotics companies, but when I did the comparison, Agility stood head and shoulders above the rest.
Bruce Leak: There’s a lot of fascination with humanoid robots. But is it practical? Why not use wheels or some special purpose automaton that solves the real problem that the customer wants to solve at 1,000 miles per hour?
Peggy Johnson: There are a couple of reasons. One is we are building a human-centric robot. Digit goes where humans go, and wheels cannot actually go everywhere that humans can go. We can traverse uneven surfaces. We can go up and down stairs. We can even go outside. If you think about how buildings are designed, if there’s a shelf, and humans are meant to tend the shelf of products, the shelf goes as high as humans can reach. And so, since the infrastructure that exists was built around humans, making a humanoid made a lot of sense. But then having the type of stability that two legs gives you allows many more use cases than just wheels. There is a place for wheeled robots. But the problem is when that humanoid goes to reach up high, the torque factor gets pretty high as well. And so then the base has to widen out and then you can’t fit down the aisles. Digit is a product that can go where humans go and complete the tasks that humans normally do not want to do — repetitive, dirty tasks that will give you a backache and a blown out knee.
Bruce Leak: Who are your customers? What tasks are you doing for them?
Peggy Johnson: First, I will say that the ramp has really gone up over the past few months. There are a lot of headlines out there about humanoid robotics that have caused people to turn to us. It’s been great exposure, great visibility. Amazon is not a bad customer to have in the logistics space. If you ever go into one of these Amazon warehouses, they’re just amazing. But you still see people running around in between certain things. There are still people who interconnect these big islands of automation. In fact, there are over a million unfulfilled jobs right now just in the logistics space. The robotics market is uncapped, but over a million in logistics alone is astonishing. And so, they want to be able to find ways to pull the humans out of those jobs and make those humans the managers of the robot fleet. That way there’s actually a career path for those folks that they wouldn’t have had without the introduction of the robot. We’re working with them on things like tote recycling. Totes are the plastic bins that are filled up, picked and placed, and sent over to another area of the warehouse. Oftentimes, humans are picking totes up from one shelf and putting them over on a conveyor belt. We can take the place of that job. I heard an interesting comment from one of the Amazon folks the other day — perhaps one you all know — who said, turns out it’s hard to manage 1.7 million people. And this can help take a lot of the issues around managing humans in these environments out of the picture and give humans the opportunity to move up.
Bruce Leak: Talk about your plans beyond Amazon.
Peggy Johnson: We are also working with a company called GXO — a big third-party logistics group out of Atlanta. If any of you bought Spanks for Christmas last year, Digit likely provided the movement of that product through their logistics facility in Atlanta. They brought Digit in to help them get through that rush. They are starting with us in a couple of weeks on our first Robot-as-a-Service contract, so they are going to be bringing Digit in and pay a monthly fee for Digit, which really is a new business model that will allow some of the companies who can’t bring on robots to their balance sheet outright to benefit.
Bruce Leak: Are there applications that you can tackle out of the box today?
Peggy Johnson: Retail, grocery, automotive. Automotive warehouses are a tote paradise. They’re everywhere, happen to be longer, and can carry more weight. And so, we’ve put different ways we can swap out the end effectors, or the hands, on Digit. And we have two fingers — like two thumbs, a kind of gripper — which lets them pick up the longer totes that are used in the automotive industry. I think we’re talking to five or six automotive companies right now. As the safety standards come up, you can start doing more integration into other fields like health care.
Bruce Leak: It seems like each of those customers are going to want tens if not hundreds of robots to start. How are you going to scale capacity?
Peggy Johnson: We saw the market signal and decided to launch a factory here in Salem, Oregon last year. The first product will come off the line this summer, and the factory will ramp to about 10,000 units a year. It’s a fairly CapEx light facility — workbenches, light automation. We’re going to grow one line responsibly and then bring it up to four lines. At some point, we’ll likely outsource some of it but right now, the only way we can keep up with the signal that we’re seeing in the market is to have it in our control. It wasn’t a heavy burden on our balance sheet to put this factory in place, and it made a lot of sense and still makes a lot.
Bruce Leak: What sets Digit apart from other humanoid robots?
Peggy Johnson: When I was looking at the company, I saw how far ahead of others in the business space they were. Largely because of the team that we have on board. We have Pras Velagapudi as our CTO. He came from Berkshire Gray and understands how to commercialize robots. We have Melanie Wise, who came from Fetch which was sold to Zebra. She knows how to build and run a commercially viable robotics company. And then we also have Jonathan Hurst, who is one of our founders who came out of Oregon State University in the Robotics Institute there and has two decades or more in this area. He understands how to not just make a cool demo, but to harden the device for enterprise use. What does that mean? It means meeting all the safety standards, the OSHA standards. When you go into a customer’s facility and slip into their workflow, you don’t want to make them change their IT infrastructure or their workforce at all. Here comes a robot to do a job here. It’s safe; it’s compliant. You don’t have to make a lot of changes to bring it in. And that is the thing that we’re probably furthest ahead on, besides the fact that our robot walks. You’ve seen it: it walks all day for hours. Our competitors are focused on a lot of things. But a lot of them are still tethered or teleoperated. They are just at the stage of getting the robots to start walking, and we’re well beyond that stage. We’re getting them to work.
Bruce Leak: No one has done high volume production of humanoid robots or any materially complex robots. What industries do you look at to get the team you need to make manufacturing happen at scale?
Peggy Johnson: So we have an awesome leader there, Aindrea Campbell, who was part of Apple’s iPad team. She built iPads for Apple and helped Ford build the F-150 truck. So real, hardened experience in manufacturing at a scale-level of an Apple and a Ford. She’s been amazing. She is the one who I thought your question was about who has gathered the team around her, the right head of facilities, the right assembly and test folks, and how we get the people under them that will work in the factory. She has done an amazing job and has really up-leveled our understanding of what it takes to build these units, and we’re grateful to have her.
Bruce Leak: How does AI fit into the Agility Robotics story?
Peggy Johnson: It’s certainly helping us accelerate the Digit skillset. We didn’t rely on AI to deploy Digit originally, but we have used reinforcement learning since about 2020. So we’ve been using the tools in the space and machine learning for physical intelligence — optimizing the legs and the arm movement. But around the ChatGPT moment a little over a year ago, we saw the opportunity to accelerate the skills building — more the semantic intelligence of Digit. We’re model agnostic, and we’re going to keep it that way. That has allowed us to take the data that we’ve gathered out on the factory and warehouse floors of our customers, and integrate it with other data. That’s helping us look at new markets, and how we have to change things to get into the back office of grocers and other new markets. We’re just at the start of foundation models for robotics, because nobody had data before. But guess who has a lot of data? We do. We’re gathering a larger data lake than anyone else in the industry, because this is actual operational data. We have three years of data, and a three year head start on everybody. All of the folks in the foundation model space have been talking to us about utilizing that data, training the robots, and it’s helping us internally already.
Bruce Leak: Can you tell us about the business model and how your customers engage with you?
Peggy Johnson: When we first came out, Agility had a CapEx business model: You buy the robot, and there’s an ongoing Software-as-a-Service program that keeps it upgraded and allows access to our Arc Cloud platform. That was a signal that we have an enterprise hardened product and platform that helps manage the robots and the metrics around the robots. For a new field, there are customers who can go that route like an Amazon. But our customers in the mid-range are looking at something different, and Robots-as-a-Service — RaaS — turns out to be the right way to go after them. So Robot-as-a-Service, it’s several $1,000 a month to have the robot come on to their facility, it’s maintained, we keep the software upgraded. For us, we can have a fleet of Digits that are used at different facilities. There is a working capital element to all of this, and we’ve got that secured in this case. We will continue to offer both, but RaaS likely will be the dominant model.
Bruce Leak: What are your top priorities and what are your top challenges?
Peggy Johnson: We’re fundraising. We also have several proofs of concept. Actually, we have more customers wanting proof of concepts than we have robots. So we have to filter customers and ensure they can deploy afterwards. We’re incentivizing customers to come on to the proof of concept, but only if they can give us a signal that they can actually deploy. We’re being careful about that. Showing ROI is something I have our team very focused on. I’d rather go deep with a few customers than go broad with a lot of customers. That lets us show ROI across these different industries, which will have a lighthouse effect. The last thing I’m tracking closely is keeping up on innovation. We’ve led in that area for years, and I’m not going to lose that lead. So we have to make sure we’re continuing to focus on innovation, like the end effectors changing out, integrating AI quickly, and so on.
Bruce Leak: How many hours per day can an Agility robot work?
Peggy Johnson: It can run a shift, and it has to be charged of course. Digit can back into a charger, charge itself, and then come back out. So it can take on a shift, we generally have two robots running at the same time, so that one can charge and go back and forth like that. When we were at MODEX, we were live streaming, two Digits, worked all day, and they just swapped in and out. There is no other humanoid company that can do that — that can just work day in and day out for a full shift like that. And so that’s what it takes to get into a customer facility and for customers to value it and pay you for it.
Bruce Leak: Anything else on your mind that you think we should know?
Peggy Johnson: There’s certainly been a willingness to spend in this space recently, but we’re just trying to keep our heads down and provide value for our shareholders, focus on the right metrics, the ones the public markets would value — revenue, profit — and delivering ROI to our customers. We are doing our best to not get caught up in any hype.
Bruce Leak: It’s been great having you on board.
Peggy Johnson: Thank you.
