IndustrialNext is a company that is building an autonomous manufacturing ecosystem. The system’s foundations are smart cameras that allow more precise vision-based tasks, which opens the door to a more modular and flexible approach to manufacturing automation. These smart cameras don’t need extensive programming to set up and can handle both classical and deep learning-based computer vision work. Pulse 2.0 interviewed IndustrialNext co-founder and CEO Lukas Pankau to learn more.
Lukas Pankau’s Background
Pankau studied aerospace and industrial engineering at the University of Michigan and worked at Yazaki, Ford, Tesla, and Waymo afterward. And Pankau said:
“I was doing a lot of design around wire harnesses (all the cabling that connects the various systems of the cars together), and that kind of naturally led to working on self-driving systems – cameras, sensors, and similar things.”
Formation Of IndustrialNext
How did the idea for IndustrialNext come together? Pankau shared:
“When you study engineering, they show you an idealized model of the world. As soon as you start having to make actual products in the real world, you realize how different things can sometimes be. What struck me the most was that we had all these very sophisticated sensors and systems that were able to create and react to detailed models of the world, but the processes we were using to actually put the vehicles together were from a completely different era. You’d go down to the line and see people banging on parts with hammers.”
Challenges Faced
What are some of the challenges Pankau faced in building the company and has the current macroeconomic climate affected the company? Pankau acknowledged:
“So we have similar challenges to any startup: finding the right people with the right types of skills, making sure we’ve got enough money, and finding our first customers and revenue. There have been some issues with the macroeconomic climate. Due to the fact that we are actually making a physical product, we have a team located in China, close to suppliers of things like camera lenses, image sensors, etc., and that has had its own set of challenges, especially around the zero COVID policies. We were also affected by the collapse of Silicon Valley Bank, though thankfully, we were able to recover our funds without any issues after a very tense weekend of ambiguity.”
Core Products
What are IndustrialNext’s core products and features? Pankau explained:
“Our core products are a smart camera, a modular workstation, and an AI system that ties these things together. The camera feeds data to our system, and the AI analyzes that data so that leaders can make decisions about what to do, and the workstation offers a platform for both, making those decisions easier (by reducing variances in the “scene” the camera sees, like lighting) and implementing those decisions on production lines by giving a smart, flexible, and truly modular unit by which to ramp capacity up, down, or change how steps are performed.”
Evolution Of IndustrialNext’s Technology
How has IndustrialNext’s technology evolved since launching? Pankau noted:
“Well, each of our products has obviously become more sophisticated as we do additional research, development, and implementation from customer feedback. I think the biggest evolution has been about our system-wide thinking to solving these problems and using the AI-enabled workstation as a platform to get real modularity into production processes.
“With most solutions, they are just big blocks of functionality – if you buy a workstation with a robot arm or a crane, you’re stuck with it even when your needs change. With our stations, you can quickly reconfigure them to be fully manual, fully autonomous, or a mix. You just can’t do that with the other solutions on the market. The focus has shifted from the smart vision, which is still a key component, to a more holistic, process-oriented offering, which focuses on data collection and analysis via AI.”
Significant Milestones
What have been some of IndustrialNext’s most significant milestones? Pankau cited:
“We closed our seed round with an order of magnitude more funding than we’d originally envisioned, with $12.25 million in the bank, giving us a $60 million post-cash initial valuation. So that was really significant, and as far as we know from what’s been made public, it was one of the top results in all of Silicon Valley for 2021. On top of that, it was exceptional because we are making hardware, an area which is not often funded well by VCs.”
Funding
Revenue Model
How does the company generate revenues and what are future funding plans? Pankau revealed:
“While we’re still going to need funding from investors, we are trying to move away from that to a subscription model. People will purchase or lease equipment from us and then subscribe to over-the-air software updates to keep things working and evolving as their needs change over time. This model also feeds data continuously into our AI, which will help us generate recommendations to the customers on how their processes can be further optimized or adjusted over time. So in a way, it’s a bit like paying for manufacturing-as-a-service.”
Differentiation From The Competition
What differentiates IndustrialNext from its competition? Pankau affirmed:
“In many industries, being the new kid in town is a detriment, but we think this is a benefit to us, for a couple of reasons. There is a lot of ‘silo’ mentality in the manufacturing industry – a lot of existing relationships and older ways of doing business have not kept up with the pace of innovation in other areas, like consumer electronics. For example, through my entire career, I’ve yet to get a single definition of what ‘industrial grade’ actually is, but I can tell you that the image sensor in the camera on your phone has better image quality and is better equipped to deal with the low light environment in most factories than the leading-edge ‘industrial’ grade cameras. So we just are able to use off-the-shelf parts for a lot of what we’re doing without compromising quality.”
“Ironically, the processes used to make these high-tech phones are often not highly advanced or automated, but no one’s really thought to take the products they are churning out and turn those back around to make the line more efficient. So we see these types of disconnects, and because we have really smart software guys, we’re able to make these products work and do things in ways that no one else out there seems to be doing. And as I mentioned, our solutions are designed to evolve over time, not end up collecting dust in some back room somewhere.”
Future Company Goals
What are some of IndustrialNext’s future company goals? Pankau concluded:
“Our next short-term goal is two-fold: we want to sign some initial customer contracts to demonstrate that we have real traction with established manufacturers, and then we want to use that momentum to do another round of fundraising to help ensure the company can execute on those commitments. Once we have that momentum, we’ll hopefully move away from additional funding to a self-sustaining business model.”
