00:24 Hey, welcome back to the show. And today I'm super excited to have the robotic master, Eric Law, with us today. Eric, will you please fill us in? Who are you? What problem are you solving with your business?

00:36  Yeah, my name is Eric Law. I'm CEO and co-founder of Urban Machine. We're building robots for reclaiming the 37 million tons of dimensional lumber that's thrown away every year here in the United States. 

00:47 Wow, that's a big problem to solve.

00:52 It's a big one.

00:54 So tell us about this. I mean, what's driven you to want to solve this problem?

00:59 Yeah, so a couple years ago, I was researching waste for a large contractor that I was working for, and we were looking at where concrete, steel, lumber, and glass and all the products go. And what I learned is concrete and steel both have recycle paths, but wood does not. Wood was going to incinerators, it was going to landfills, but none of it was going back into buildings. And wood is the predominant structural building material, especially when it comes to housing, apartment building, single-family, those are all wood structures, right? 

01:25 Yes it does.

01:26 And so why are we...

01:27 Anything below four stories or so, right?

01:29 You got, well now they're going to 18 with mass people. Yeah, it's, so it's got a lot of options. And what I learned was the big issue was the fasteners, right, all these nails and screws did such a good job. It was too expensive to pull them out. And so I reached out to a roboticist I'd done some other research with on some other projects. I said, hey, you know, can we automate this? And he's now my founder, Andrew Gillies. And he's like, absolutely. And so he started building the first prototype shop he started building, it's about the size of a desk, and he was able to prove that he could kick nails out of a 2x4 with a web camera and this home-built system that he built. Yeah, and he had this thing running on his desk, we showed it to some investors, we went out and raised around a capital in November 21, and we were off and running. Yeah, hired a couple engineers, proved that we could automate it in that first phase. I want to raise another round of capital on October 22 from some great investors on our team. And now we're creating the first product. So now what we're doing is we're iterating on the system to hit the unit economics. Can we reclaim lumber at the same unit economics that those massive mills in the Pacific Northwest produce virgin lumber actually? That's our goal. 

02:46 You think so?

02:47 That's absolutely.

02:50 That's amazing. I mean, if you can pull this off, that solves a lot of problems.

02:55 You got it. You got it. So we're on, we are currently building our fifth iteration of hardware. So one of the things that people don't realize about robotics is you build an iteration, you spend a lot of money on it, you learn a ton, and then you make a list of, here's how we're gonna make it faster, better, more accurate, more reliable, and you have to go build a whole nother one. All right. 

03:16 Well, we've kind of learned that through the Elon Musk model, right? We've all watched him blow things up and have to start over again from scratch. So this is amazing.

03:25 Yeah, Rockets is probably the most extreme case, right? I mean, that's the most extreme thing for a ways. Oh, well, we learned a lot, go start a new iteration. We don't blow our, ours go to the shelf, 

03:33 Isn't that crazy?

03:34 which is pretty cool. But so yeah, we're in our fifth iteration. Our version four is currently out in the field doing field trials where we've got a full-time crew on it, feeding it wood 40 hours a week, testing that, picking it and seeing how it's performing.

03:48 Amazing. So you're not actually trying to salvage two by fours, but you're taking the wood, pulling all the extra crap out of it, and then turning it into kind of microfiber type stuff? Or what is your end product coming out of these machines?

04:03 Yeah, so we're trying to keep the fiber intact. So it starts two by fours on up to four by 12, six by 18s is kind of our range of material. And really wood strength is in the fiber, right? That fiber is incredibly strong tensile strength for being a natural material when you compare it to the other building blocks out there. And so our goal is to just get all the metal out of it because once it's metal free, then I can plane it, I can cut it just like virgin wood. I can sell it back into the virgin wood ecosystem. And so we're working on projects with furniture manufacturers or working on projects with mass timber manufacturers To take essentially our test material now and they're testing it in their workflows to see okay if I take and reclaim wood. How does it compare to the virgin that I've been processing?

04:48 That's crazy. That's cool.

04:53 And if you look, yeah, and the sustainability of it is phenomenal, right?

04:56 Now, the question though is how are you gonna get, so let's say that I'm doing demo on a project and we're tearing this building down, I mean, obviously the easiest thing for that tractor to do is just dump scoop it into a dumpster and off it goes. I mean, this isn't like an easy ask for people to say, hey, can you put all your wood here and all the other stuff over here? You know, how does that work?

05:20 Yep. Yeah, so today, you don't get to really just smash up a house and go dump it in a landfill, right? Today, it's got to be separated out, or they charge you a lot more money. So if you co-mingle everything in the bin, it becomes very expensive to dispose, because then those facilities have to separate everything out. So they grind it up, and then they put people in it. Literally, people pulling chunks of wood and metal and plastics out of a conveyor belt to separate it. And so what's happened is the cost to deconstruct a building is almost the same cost to demolish it because you're not all those waste fees, right? You're reclaiming all the materials the metal gets recycled the concrete gets recycled the wood can get recycled And then all the plastics goes in the landfill, right? Because that's really the only thing we don't have a recycle solution for

06:06 Right, right. So you're literally, I mean it almost sounds like a service first and then a product afterwards. Is that kind of the model?

06:17 Yeah, so we are in the reclaimed lumber industry right now. So we have to prove not just the technology of the hardware works, but we got to prove the business, right? Cause nobody's done this before. Historically, the demolition contractors and the waste folks, they dealt with landfills and waste distributors and recycling companies. They've never sold their own into the wood industry, right? And so we have to create that link in the supply chain that says, okay, hey, here's a raw material over here coming from the waste industry. We cleaned it all up with our tech, and then we sell it over here into the wood industry. Once we get that movement of material and that supply chain link created, then we can step back and be more of a pure plate tech company supplying the hardware and software to solve the problem.

06:56 Wow, wow, interesting, very, very cool. That's a really cool problem to solve. So as you look at your client avatar, I guess we could say, you're talking, I mean, you're talking about solving a bigger problem than just a client, but as you're thinking of the clients, are you thinking the contractor's doing demo? Are you thinking the people buying the reclaimed wood? What is it that you look at as, okay, we gotta really serve these people better than those people?

07:29 Yeah, so we have two groups, right? We've got the client on the source side, right? Where are we getting all the material from? Who can buy and lease these machines? Who can turn dirty lumber into clean lumber? And so that's primarily demolition contractors and then the waste facilities, right? These are the folks that are currently processing all this contractor waste today. And so we're working with them to do pilot projects showing the value of the material, but then we have an end customer that we're selling the material to so that's wholesale lumber companies, that's lumber mills, lumber yards, furniture manufacturers, anybody who can consume virgin wood products becomes a customer for us in terms of purchasing reclaimed lumber.

09:28 Gotcha. Gotcha, gotcha, awesome, awesome. So as you, yeah, I mean, a lot of businesses are like this, and for those listening, pay really close attention here, because people like Eric are a lot like you, potentially, when you're serving two ends of the spectrum. You've got two specific clients that you're targeting, and sometimes it's hard to balance your focus on Which one do we want to solve the bigger problem for? Which one's gonna make us more money? Which one is gonna help us sustain our mission better? And what do you look at? As you evaluate where to put the focus, I mean obviously you gotta produce the product first, and so you're out there kind of working with the demo guys. How do you feel like it's gonna be received on the buy side? I mean is this product gonna be less expensive? Is it more expensive since you had to put more work into it? Like how do you see this translating into the consumer side?

10:27 Yeah, so the nice part today is there's a lot of sustainability initiatives. So there's clients that'll pay a green premium, right? They'll pay for a product having a much lower carbon footprint. And so we can take advantage of that to get the early product into the market while it's expensive and then we can continue to drive the price down. Because as we have all the tech, the price is going to come down for us to process the material because the machines are going to get faster, right. More is law. It's just going to happen. And so as we do that, we have early adopter customers that come on board and they're like, hey, this is a beautiful product. The great thing about wood is it's probably the only recycled product that's higher quality than the virgin product. If you think about trees that grew 100 years ago, they're clear, there's barely any knots in them, tight grains, really strong clear material. That's what we get to process. The stuff that you get at the lumber yard today is junk compared to what we're processing. And so we can actually bring a higher quality recycled product to market than what the virgin guys can which is phenomenal, right? That's a huge advantage on our side to be able to do that.

11:28 Interesting, interesting. Yeah, I could see a lot of areas of the country where those green initiatives are in place, and people really trying to get their home certified or their building certified to be some type of, there's a lot of requirements that they have to go through to qualify for those, I guess, programs. There's a lot of programs that help supplement your building costs when you're using green materials.

11:56 Yep, you've got state, you've got federal, you can go for lead credits on the marketing side, right? If you want to have a commercial building, wants to say, hey, we're greener than the one next door, they go get lead certified things. And then there's a lot of tax credits and incentives these days to help folks out with it, right? And try and change the economy, because we've been so focused on this, consume one, grow a model, which, you know, it doesn't work anymore. We're a little too big for that. There's just too many in the planet.

12:21 All right, I'm with ya, I'm with ya. Totally, I got a way better picture of what you do and how you help people right now. Now let's talk about the business, because when a lot of people talk about building and growing a business and hiring and having a team and engineering and all this stuff, they think you're making a lot of money already, right? So let's dissect your model, because this is not the typical business model. You've got a heavy flow of engineering, product testing, development. You know, you talked about two rounds of money raised already, and yet you're talking also about releasing your first product coming up here in the next few months. How does that work compared to the typical business? It's like, I got to make some money, then I'll raise some money and then I'll grow. You know what I mean? Tell us about the model.

13:16 Yeah, so in the hardware world, you really need the investor partners. You know, the capital costs, you know, if we built machine one and tried to take it to market, we'd all be losing. None of our customers would take that stuff on it, right? The downtime and the failures and stuff. And so in robotics, it's really a balancing act of I've got a salesperson and a marketing person, we're building brand, we're building pipeline. So when this machine gets to market, the audience is ready to go, right? We can't sit there and do all the engineering for two years and then say, okay, now let's go start sales and marketing. We call it a very delicate balancing act, right? Cause you got to be good with setting expectations on these long tail projects, getting people engaged that are like, Hey, as soon as it's ready, I want one in my yard. We've got pilot projects coming up this year. Um, and with hardware, you know, the last company I had was a SaaS platform, you know, a SaaS platform. You can bootstrap that, which is what we did. You know, that's no problem. You just don't have this capital cost that you have with hardware. You can take a product to market real quick with SaaS. So this one, you've really got to have a large team, right? Not just the employees, but the investors backing you and supporting you. Because we're going to go for another round of financing in Q1, Q2 next year. We'll make money probably until 25, 26. So we'll be four or five years old before we start to turn green. That's a phenomenal story. And obviously the investors have to trust us and know what we're doing. And it's about the people. The people we hire, everybody's got to be phenomenal and excel at their job and just hit the ground running. Because at 13 people, we don't have a whole lot of management time. 

14:55 Sure, sure, sure.

14:56 It is a lot of folks that know what they're doing to support the team, all working together in the same boat, which is cool. It's what I love about startups, right? No large corporation can reproduce what they do. They'll advertise it. Oh yeah, we're startup thing and you can't do it as a large company. You can only do this. Um, but it's, you know, it's that roadmap. It's that story and that path to success. You know, next year we're going to try and build 12 systems and go deploy them in six different metropolitan areas and start to volume.

15:26 I love it. What a fun, scary time. I mean, honestly, like I, for me, I've never done a project like this. So it kind of freaks me out just thinking about it. And you coming from a SaaS background, you know, obviously, I mean, you're generating customer and client acquisition before you're even done with your product, you know? It's a very different model.

15:47 Exactly. You can fix the bug overnight, right? If the customer is unhappy, you write the code that night, test it the next morning, and they're happy the next day. You can do things. In robotics, you just can't do that.

15:56 Eric, this is fascinating. What a cool story. So obviously, you know, I mean, you're five models in or so, and as you're working on this six, and you said 12 that you hope to deploy next year in six different geographic regions, like what are some of the big challenges you've had to face thus far that maybe you weren't anticipating? I mean, this is not the normal business that you were running before. What are some surprises that you hit in this model versus a SaaS model.

16:26 Probably the biggest surprise is the level of support. Everybody wants one. Everybody's like, this totally solves a problem. We have it. How do we get it? We have, you know, we targeted six markets. Right now we've got eight or nine of them competing to get machine in North America. And they're like, no, we want one of these in our metropolitan area and we've got sponsors and they're bringing all the players together, right? Who's the demo contractor, the waste folks in their Metro? Who's the wood man in the Metro? And so that's huge. For us as a startup to have sponsors on board doing that are like, no, we got to get one of these here in our area. How do we get this in here? How are we all successful? It's a huge win for us.

17:06 That's every business owner's dream right there.

17:09 Yeah, selling software and competing in the IT space is brutal.

17:17 Right, right, look, a lot more cutthroat. You don't have as many people cheering you on. Hey, hey, come on, bring it here first. We beg you, we'll pay for you to bring it here first. That's awesome.

17:24 Exactly. Yep. So that's cool. And right now we're the only ones doing it. You know, our competitor is a million dollar grinder that turns it into bark chips.

17:33 Hey, we need bark too.

17:36 Yes, we got lots of barges. The playground's named Barges. Don't worry about it. There's plenty of wood around there. It's OK.

17:44 My wife makes me do that every spring. So yes, I get the point here. But yeah, the fact that you're doing, taking on such a huge, huge mission like this, I mean, I understand the business proposition. Why is it so important for you to solve this?

18:00 Two things, you know, one, we don't have room in our landfills and we don't have room in the air, obviously, for all the CO2 that gets released burning it, right? We've got to look to it. The other one is we don't have enough raw material. You know, we have a housing crisis really globally. And with wood being the predominant building material, there's not enough trees growing in our forest. Obviously, the forest industry is not going to share this with you. They say, oh, it's infinite, but that's not true, right? To manage our forest healthy in a sustainable manner, you gotta let the trees keep growing before you cut them down. And if you look at that 37 million tons, that's almost half of what we logged from our softwood forest every year in the United States. That's how much gets thrown away, which is not sustainable economically as well as environmentally. And so it's a huge opportunity to do something different. And the other big benefit is we can keep the material local. So if you take like the Southeast, take LA for example, right? There's no trees down there and they're not doing any log harvesting at all. 

19:00 No, no, not a lot of logging down there.

19:02 Yeah, not a lot of logging, right? So it's all truck and train, you have a couple thousand miles out of the Northwest. Well, now we can take that reclaimed lumber, you have a local source of a raw material, you can create local jobs and local industry around it and put it back in local buildings. So you have a lot of trucking and a lot of inefficiencies in our current supply chain.

19:20 Very cool, interesting, interesting. I like it. I think this is a really fascinating thing you're doing here and I wish you all the success in the world. Now, in terms of inspiration, I mean, you had an exit before, you've been inspired, you know how to run a business, you know how to run this thing. Is there someone who inspired you to build what you're doing now? Or is there a peer group or something that kind of pushed you along the way here?

19:49 Just a little bit of craziness. And then my wife, you know, she thinks I'm nuts. She's like, hey, I keep the day job that pays the bills. You can go do these crazy things that are successful. 

20:01  Awesome. What a sweetheart.

20:03 You know, obviously years down the road, but you get the long-term high risk stuff. So she's awesome.

20:07  That's awesome. You know, your wife, my wife, all these blessed wives, bless their hearts. I mean, for dealing with people like us doing what we do, throwing everything on the line, it's really crazy of us most of the time.

20:24 Yeah, it is. Yeah, that and then obviously the team we've built, the employees, the co-founders, the investors, the whole team that we've put around this one is awesome.

20:35  Love it, love it. Well, Eric, I love what you're doing. I'll put links in the bio down below of everything that you, to connect and see the progress of what you're doing. And if you've got pages or YouTube channels or whatever you're doing to build awareness, I would love to share this out there. And for those of you listening, like honestly, this is a really fun interview because you're hearing someone who has been there in the SaaS, someone who has been there in now a completely different space, building something completely different than he's ever done before, you can do this and you can find demand in areas that you can feel passionate about. Eric, I love what you've done. Any parting thoughts you'd like to leave to our audience who are out there trying to build and grow their models?

21:19  Definitely look at the waste industry. There's a lot of opportunities, there's a lot of other materials out there that we can turn around and reuse and solve these problems that are both good for the planet and good for the economy, right? The key thing is finding a large problem where you can change it from a waste to a raw material. And that's like huge economic advantages when you're putting together business models.

21:43  I love it.

21:44 And so hopefully we can get more people going after that space, going after building materials, going after the recycling industry, because it's, when you start to look at the numbers of what we generate every year, it's massive

21:54 Love it.

21:55 Which checks a bottle, right? When you want to solve a problem, you got to find big ones.

21:56 Yeah, yeah, hey, the bigger the problem, the bigger the reward, usually. Well, Eric, I appreciate what you're doing, and while I do think landfills make the best golf courses, I understand the problem you're trying to solve, so I'm gonna let that go for now, but I love what you're doing, I love the passion, I love the problem you're solving, so thank you for coming on today. We hope we can drive some interest into the problem you're solving here. And for those of you listening, don't be afraid to chase after a big problem to solve. Thanks, Eric, so much for being here.

22:34 Awesome. Thank you very much Todd for having me.