This week we’re joined by William Santana Li, CEO of Knightscope. Headquartered in Mountain View, California, the company builds autonomous crime fighting security robots and offers them on a Machine-as-a-Service (MaaS) business model. They’re on a mission to disrupt the $500 billion security industry, and have so far raised over $40 million USD from more than 9,000 investors through previous capital raising campaigns. They recently launched their their campaign on FrontFundr too!
As the company’s founder, William’s been there, done it all, and got the credentials to prove it. He’s a former corporate executive at Ford Motor Company, was recruited by Softbank to establish the Model E Corporation as its President and CEO, and is also the Founder and former COO of GreenLeaf (which he grew to become the world’s second largest automotive recycler).
We were lucky enough to sit down with William to find out a bit more about who he is, what makes him tick, and also learn about his future plans for Knightscope.
First up, please tell us who you are and what Knighscope does.
Hello! My name is William Santana Li and I’m the CEO of Knightscope. We build fully autonomous crime fighting security robots that are a unique combination of self-driving technology, robotics and artificial intelligence. We provide unprecedented situational awareness to law enforcement officers and security guards so they can do their jobs much more effectively.
What was the inspiration behind founding the company?
For me personally, it is two fold. First, after 9/11, I decided to dedicate the rest of my life to better securing our country. Second, as a former automotive executive, I believe self-driving technology is going to turn the world upside-down but I’m just not in agreement with the rest of the world on how to commercialize it. The technology is so complex it needs to be built in a ‘crawl, walk, run’ approach - not a dump of a massive amount of reckless capital shooting for Pluto on the first launch. You can learn more in this post I wrote on our blog, Why did you build Knightscope?.
What’s the technology behind your robots? How do they work?
We design, engineer, and physically build the machines ourselves (you can take a 120 second tour of Knightscope headquarters here). Very similar to a self-driving car we utilize LiDAR, sonar, inertial measurement unit, wheel encoders and a bunch of crazy software to simultaneously map an environment then find itself in that same map. That’s the basic navigation principle and we’ve now operated over 1 million hours in the real world with real clients - and learned a great deal! And we survived our 3rd winter which is good.
Second, similar to seeing a police car on the side of the road and your foot automatically hitting the brakes, our machines provide a physical deterrence and help stop negative behavior from occurring in the first place.
Lastly, our Autonomous Security Robots (ASRs), generate over 90 terabytes of data a year that no human will ever be able to digest and utilize. We process that data and put it into a usable format for a human to utilize through our browser-based user interface called the KSOC (Knightscope Security Operations Center).
Can you give us some real life examples and use cases for the bots?
Sure. Pretty much anywhere outdoors or indoors that you might see a security guard is an opportunity for Knightscope. Some are used to monitor ingress/egress points for a great deal of vehicles or people. Others are on a parking lot or parking structure patrol (one of them at a nine story parking structure!). Some are in very quiet environments like a vacant massive building and some are in very dynamic environments like indoors at a mall or outdoors at a 24/7 hospital. Or even monitoring a neighborhood outdoor park for a law enforcement agency.
Who are Knightscope’s main clients?
10 of the Fortune 1000 are clients of ours. A couple of law enforcement agencies, local city government, malls like Westfield, logistics providers like XPO, or major corporate campuses like Citizens Bank, Samsung, or commercial property. Schools, as well as a movies studio warehouse in Hollywood. The long-term opportunity is immense. To help triangulate, there are over 1 million law enforcement professionals who drive about ½ million law enforcement vehicles plus there are over 1 million security guards in the U.S.
You’ve held senior management positions at Ford and built advisory boards that were working with Cabinet officials for three U.S. Presidents! You’re clearly a seasoned entrepreneur, with a wealth of experience, but what was the most surprising thing about founding Knightscope?
What you worried about the most becomes a non-issue. And things that you never would have worried about become major issues!
We were very worried during 2013/2014 if ‘society would allow us to do this’ - would people freak out or what would happen? Then on May 4, 2015 (yes, May The Fourth Be With You) we put the first machines out in the field with a real live client in a real world situation. And what happened was people hugging the robot, tons of robot selfies, and even lipstick on the machines from girls kissing them. Non-issue!
But then again, who would have thought that a major telecom provider would drop service for 3 hours in a major city and we would be blind. Or that we would end up building our own custom wheel/tire system to handle a bunch of unforeseen issues. Or that you can’t trust some suppliers to do a proper technical audit that ensures nothing was changed in the firmware - that has stopped production? A never ending pile of issues.
And the most challenging?
Financing the company. I’ve now unfortunately done more financial engineering than actual engineering in my life - not healthy but important. Capital formation for real innovation is broken. Over $100 billion gets dumped into startups every year - name me the fund that is fluent in law enforcement, physical security, robotics and hardware - with a track record. Doesn’t exist. What exists is a broken system of venture capital funds whose business model is to be wrong 9 times out of 10 but who walk around like they are right 9 times out of 10 - all with misaligned incentives, unprofessional behavior, poor track records, and horrendous returns for their limited partners.
Thankfully things are finally changing - I dislike the term “equity crowdfunding” a great deal but we now have over 9,000 investors backing Knightscope, and I would never dare trade out our investors for 4 guys (mostly guys) that have no clue about what we are doing, worried about all the wrong things, asking all the wrong questions, etc. You can read about this on our blog, Who Are Knightscope’s Investors?.
Why do you dislike the term “equity crowdfunding”?
Oh dear. I stuck my foot in it now. Well. When Goldman Sachs or Morgan Stanley does an S-1 IPO over a 2 week roadshow - what is that? That is one massive “equity crowdfunding” exercise where they are trying to get every Tom, Dick and Harry to buy the stock.
But somehow if a young company does something like that with a broker-dealer - it is frowned upon - like they couldn’t get VC money. Sorry - but VC money is ‘dumb money’ in a lot of cases (not all, but in a majority) - and only a tiny of percentage of companies should pursue that route. But the media and the financial elite think that is the best source of capital - and it is not.
Ok, what is even funnier is that VCs raise massive funds to disrupt every possible part of the economy. Education, financial markets, insurance, logistics, everything. But wait! You want to change the fundraising process? Oh, no, no, no. Can’t have that happen!
You can learn more about equity crowdfunding from a Founder’s perspective in our blog post What the heck is a Reg A+?.
To add insult to injury, institutional investors say “physical security is not an investment thesis” – they would rather put money into a photo sharing app instead of investing serious capital in serious issues requiring serious people with serious commitment. I even had a major, well respected top firm say to me “It is too complicated. It is hardware and software. You should pick one.” Yes, now is your cue to roll your eyes. Since when in our country do we choose what is easy to do rather than what is right and what is hard?
Jessica Herring says that when it comes to entrepreneurship, "You have to see failure as the beginning and the middle, but never entertain it as an end." Do you agree?
I don’t see failure. Not. In. The. Picture.
We are relentless in our pursuit of what needs to be done and I won’t allow anyone to tell us ‘no’. We will force it, if we need to - and if something doesn’t go exactly right then pick yourself up, dust yourself off, and back into the ring you go with even more fight in you. This is what it takes to deliver. And you need to be able to do that over several decades.
Who do you look up to when it comes to business? Who inspires you?
Founders. Anyone who has built a business from scratch despite everyone telling them that they are crazy. Honestly, you’ve got to have something wrong with you to want to be doing this - two cubes short of a tray, one tool short of a toolbox, and certainly a screw loose. You can read more about this on our blog, Don’t Ever Give Up.
Being an entrepreneur you also have to wear many hats, and it can sometimes be a struggle to fit it all in. What’s your method for being productive and effective?
100% of your time needs to be building the business. The other 100% of your time needs to be fundraising. And the other 100% probably should sleep some, eat, and do some exercise.
One thing I definitely try to do is ‘zero inbox’. If I have more than a handful of emails, text messages, voice mails, requests, etc. then I start the panic mode. Kinda view it like customer service - if my teammate asks me for something, then I need to be on top of it immediately. If an investor asks a question, ok clock is ticking, need to reply in less than a few minutes, max a few hours. Certainly never more than 24 hours. And if you are running behind - then need to work harder, faster and smarter.
One funny thing that has happened to me is that investors often will visit our pages on StartEngine or FrontFundr - but then wander over to our corporate site and get to the Invest page at www.knightscope.com/invest. The little button at the bottom right for the instant messaging goes to me directly - so I’m answering questions 7am to 7pm PDT, 7 days a week. And some people think it is a bot - and sometimes shocked that is the CEO answering! Or sometimes, folks don’t skip a beat, and get complaints for not answering a question that is nearing 10 minutes (while “I run the company on the side”). Can’t win! You can read our blog post on How To Make Things Look Up! for more on this.
What do you do to relax when you’re not at work?
Don’t agree with the premise of that question! I’m always at work. My wife and I always like to watch movies - and while I’m sitting there, I’m looking for an angle, an interesting approach to architecture, a cinema treatment of a scene, a good line - or just an inspiration. Again, if you want to be an entrepreneur, there is something wrong with you.
I’ve shared this before. My wife says I’m ‘possessed’. Probably because when she wanted to have a serious conversation about one day winning the lottery and what would I want to do – I didn’t skip a beat and said we needed a new headquarters, a lot more engineers, a design studio, and there are lots of new products I want developed at Knightscope. THAT didn’t go over very well I must say!
Studies show that 86% of companies across all industries are planning to use robots over the next three years. Where do you see the biggest opportunities within this space?
The robots are coming to take everyone’s job and kill everybody.
Sorry, just kidding! For us, obviously, physical security is on a growth trajectory. And even more so now with the global pandemic in full effect. There has effectively been zero innovation in the space except for maybe a camera, phone, and a sharper #2 pencil with a notepad.
All kidding aside, the perspective from society and the media on robots - doesn’t match the reality of capital formation in the space. Why do Google, Facebook, and Amazon even exist? Well, billions and billions of dollars and multiple attempts in search, social media and e-commerce were attempted over a considerable sustained period of time. I think Google was like the 13th search engine attempt.
So out of the $100 billion a year that gets dumped into startups a year - how much goes into generally speaking ‘robotics’. Try less than 1%! The capital is not there to innovate at scale in the space, fund dozens of attempts, etc. If you ever want to figure something out - best place to start is ‘follow the money’. So if it was 30% or 50% going into the sector, then yes, time to worry about implications.
Some people are concerned about the rise of robotics and automation, fearing these will replace a lot of existing jobs. To what extent do you agree with these concerns?
Well, to build on the previous question but focused on our space. There are 2 million people charged with securing the U.S. within its own borders - that’s law enforcement and security guards. The military operates outside of our borders.
These 2 million people need to operate 24/7 and you can’t triple shift a human - so at any given point accounting for downtime, weekends, holidays, sleep, etc. - there are only about 500,000 humans who are supposed to secure 328 million people across 6 time zones and 50 states. This is absolutely ridiculous - I love my country but this is structurally flawed.
So what we need to do to fix the ongoing problems - we need to make sure those 2 million brave women and men in uniform have the tools to do the job of 10 million humans. And that’s where Knightscope comes in.
What’s the best way to address these types of concerns people might have?
Our planet is going to go from 7 billion people to 9 billion people and I can assure you the security apparatus will not scale. So you need low-cost physical deterrence, predictive analytics and new game-changing tools to fix the problem. And the best way to alleviate any concerns is ……. RESULTS. You can read about all our crime fighting wins but the most fascinating of it all - is it works!
Read about What Happened in Huntington Park with actual crime statistics issued by the Huntington Park Police Department.
Social distancing and life in lockdown have created a new reality we’re all having to adapt to, one that requires a different mindset to help keep us all safe. How can Knightscope’s robots help out with this new reality and keeping us safe during the pandemic?
Our clients are ‘essential services’ (law enforcement agencies, hospitals, security teams) - so we were just congratulating our team for ‘not missing a beat’ while we continue to operate 24/7/365 across the country during a pandemic. We believe remote monitoring will become the norm.
We have also been proactive with our clients who are now utilizing our COVID-19 Public Address Announcements which have been a big hit (see video here). We are also working on some other initiatives to try to help. Remember, robots are immune!
Knightscope will also soon be featured in a crime tech TV series run by an Emmy award winning production company. How did that come about?
Well, one of our 9,000 investors brought the opportunity to us! A lot of institutional investors ask me how “you do you deal with all these people” in not the nicest of tones implying that our massive number of investors are a nuisance. Well, our investors are awesome - they help us find great recruits, bring us PR opportunities, find other investors, introduce us to prospective clients, and continue to write 2nd, 3rd, and 4th checks into the business - and get us on TV!
What is even funnier is when you publicly list a traditionally funded company - with perhaps only a dozen or two large investors - the lead investment banker will frantically try to find a broker-dealer who still has a large retail investor base - so that they can help diversify the float and ensure some normal level of volume trading and overall support for the stock. But I thought those were the same folks you didn’t want on the cap table in the first place? 🤦♂️
Your current crowdfunding campaign - a joint listing on StartEngine in the US and on FrontFundr in Canada - covers all of North America. You’ve done previous rounds on other platforms too. What makes crowdfunding a good fit for your business?
A lot of Founders are told to focus on product-market fit, product-market fit, product-market fit. But no one tells them to think carefully about company-investor fit. Do you have the right backers for what you are trying to do? If for example, you are doing a new social media app, and there is a VC with a bunch of General Partners in that space with a solid track record - likely they could be profoundly helpful and you should just do the deal with them - inclusive of selling them a board seat. But in a majority of the cases - this is not the case.
What we are doing is going to be a massive change in society and building that basic support across the country from almost every facet life - will be in the long-term interests of the Company.
And for the Founders reading this, you are an officer of the company and you have a fiduciary responsibility to all of your shareholders to find the lowest cost of capital with the most benefit for your startup. And if there is an opportunity to set the price, set the terms, set the timing, do a rolling close, while finding new customers and recruits at the same time, without selling a board seat to the highest bidder - you at least must take a look at it and vet the opportunity. Otherwise, it is entrepreneurship malpractice.
What folks like StartEngine and FrontFundr are doing is setting the foundation for a massive change - and now, with Kevin O’Leary (aka Mr Wonderful) joining in as a strategic advisor to StartEngine - things are going to get interesting (watch Canadian-born Kevin O’Leary’s interview with Knightscope’s CEO here).
And what do you hope to achieve with this current round?
Over $80 billion has been invested in self-driving technology with 200+ companies working on it. Yet Knightscope is the only company in the world we know of that is operating 24/7/365 fully autonomous, both indoors and outdoors, across an entire country with real renewing clients, generating real revenue in the real world. What we are doing is extremely difficult and technically challenging - but now that we have it working - we need to put the capital in place to scale the company up to profitability.
We are targeting that to be 300 machines-in-network. I kid our sales team with - “Hey, how many states in the U.S. Fifty, right? So do ya think you can sell 6 robots in each state? Great! So 300 is right around the corner!”
We talked earlier about the rise of robotics in the workplace, and how much things are set to change over the next few years. Where do you see Knightscope as a company in 5 years time? And what about 10? What should investors be thinking about?
Here are 3 questions I usually have investors consider plus can share my long-term personal ambitions:
- Do you believe that self-driving technology, robotics and artificial intelligence will dramatically change the world in the coming years?
- Do you believe that the 'market for crime' will ever collapse? That is, if a company came up with a recurring revenue business model for a recurring societal problem, might there be a significant opportunity?
- Do you trust the management team to execute the plan and do they have a track record of delivering - and should anything go wrong, which it normally does, do they have the experience to fix it?
Long-term I would like to build a $30 billion equivalent to a defense contractor (e.g., Lockheed Martin, Boeing, General Dynamics, etc.) except focused on the U.S. Dept of Homeland Security, the U.S. Dept of Justice, targeted to better securing the United States of America. I think more will change in the next 10 years than the last 100 years combined.
Knightscope’s mission is to make America “the safest country in the world”. What does a safer America look like to you, once you fulfill that mission?
Ok, let’s suspend reality for a moment and let the crazy Founder dream a little. Let’s say Knightscope delivered the mission.
Talk to me about the impact on municipal budgets, insurance rates, and the volatility of financial markets. Talk to me about the value of your home, infrastructure budgets, the safety of your family. Talk to me about trade imbalances. We could literally change everything for everyone.
But as we posted recently for Peace Officers Memorial Day: “The greatest honor to befall Knightscope would be to contribute to just one officer returning to her/his family at the end of their shift - because we continued to put in 20+ hour days for years to try to help. You are our heroes.”
Knightscope’s campaign is now live on FrontFundr. Head on over to their campaign page to find out more!