Robots and Tax Breaks: How Plus One Robotics Started in San Antonio

San Antonio—Toyota opened a large-scale manufacturing plant in San Antonio, TX, in 2006, where both humans and computer-controlled Yaskawa robots began to build Tundra and Tacoma trucks.

Erik Nieves moved to San Antonio because someone had to install, program, and maintain those robots. Nieves was the man for the job: Not only was he originally from San Antonio and looking to return, he had worked for Yaskawa Motoman, the U.S. subsidiary of the Japanese robotics company, since he graduated from college in 1990.

Toyota’s decision to come to San Antonio was fortunate, for both Nieves and the city itself. While working for Yaskawa in San Antonio, Nieves wound up meeting the co-founders of the tech startup they would create in 2016, Plus One Robotics, which brought its vision-guided, machine learning software for robots out of stealth mode last year. Earlier this month, the company announced it raised an $8.3 million Series A round of funding, which it plans to use for making new hires in areas such as engineering and sales, Nieves says. Chicago-based Pritzker Group Venture Capital led the funding round (more info on the investors below).

For San Antonio, the Toyota facility was encouragement for city leaders and their economic development policies. Toyota chose San Antonio for the manufacturing plant in part because of a tax abatement agreement the city offered—the company received $14.4 million in tax breaks in the ensuing four years, according to a local news report—and San Antonio has continued pursuing similar agreements with big businesses and startups since, hoping to draw more entrepreneurs to town.

In this case, the idea of taking a short-term loss in tax breaks has paid off by bringing more technology-minded people to San Antonio, Nieves says.

“San Antonio landing Toyota, and not losing it to Alabama or Kentucky, was a really big thing,” Nieves says. “Plus One being here in 2018 is a fallout of that.”

The topic of economic incentives is particularly timely given all the bustle and news coverage over Amazon’s announcement, and subsequent selection, of a second (and third) headquarters in New York and near Washington, DC. Not all “big-play” deals are worth what a city might have to give up in tax breaks and other incentives, Nieves says.

But in his view, the repercussions of the Toyota deal have been positive for San Antonio, and particularly for Plus One—a company that he says is successfully hiring developers and other tech-oriented workers in the city. (Plus One hasn’t taken incentives from San Antonio, Nieves says.)

Plus One’s software was developed at the Southwest Research Institute by Paul Hvass and Shaun Edwards. Nieves met them while he was working at Yaskawa (he left after 25 years in 2015), and the three co-founded Plus One. They acquired the algorithm from the research institute, which has separate ongoing machine learning research, including for autonomous vehicles.

The software is focused on the logistics industry and supply chain management, particularly for companies that process tons of items—from parcels to packaged goods—in large warehouses. The company’s goal is to enable robotic arms, like those built by Yaskawa, to do the grunt work in those warehouses, such as sorting packages as they flood down conveyor belts, or moving packages from one delivery truck to another.

Plus One’s software connects directly to the robots, and the type of robot varies, from ones with grasper handles to others with vacuums on the end. Cameras throughout the warehouse take images of the robots and the objects that must be sorted, and Plus One’s machine learning algorithm processes those images to instruct the robots what to do. The software is similar to what is used in autonomous vehicles, Nieves says.

“I have to answer the same three questions they do: Where am I, where do I need to go, how do I get there without crashing?” Nieves says.

One barrier facing Plus One and other developers of similar software (there are plenty, from Amazon to FedEx to various startups) is that many warehouses don’t have expensive robots or other equipment already outfitted in them. Nieves says he believes companies will be willing to adopt such technology, however, because there is a lack of workers for these supply chain jobs, which can be monotonous and painfully repetitive. The potential of extra efficiency would be a side benefit, he says.

Meanwhile, robots scurry around Amazon’s fulfillment centers in various capacities, much of which came from its 2012 acquisition of Kiva Systems for $775 million. (MIT Technology Review took a tour of an Amazon facility in 2015 that had plenty of emerging tech.) Companies like Fetch Robotics in the Bay Area and 6 River Systems in Boston, among others, are working on their own robotic warehouse assistants.

Even with lots of competition, Nieves believes the experience and knowledge he and his executive team have, the company’s technology, and the relationships it has built with venture firms, customers, and others, will be key differentiators. The company’s lead investor at Pritzker has roots at General Electric, and other investors in the Series A funding round include Zebra Technologies, Schematic Ventures, Lerer Hippeau, TCL Ventures, ff Venture Capital, Dynamo, and First Star Ventures.

Plus One has already sold some licenses of its software—Nieves wouldn’t disclose how many or other financial details—and has people in the field in cities like Detroit and Seattle. Nieves’s meeting with Xconomy earlier this month quickly rolled into another meeting with an executive at a large supply chain technology business. Nieves says the demand is very high for software like this; it’s a large-scale problem.

“It’s meaty enough that if you get the attraction of the players in the space, you really wouldn’t have to do anything outside of that,” he says. “You wouldn’t have to raise a B [round of funding] either.”

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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