Meet the Innovators: Mr. Wonderful Chats with the CEO of Knightscope
As StartEngine’s newest strategic advisor, world-famous entrepreneur Mr. Wonderful is launching a new Q&A series called Meet the Innovators, where he sits down with the founders of some of StartEngine’s campaigns. The first installment of this series features his chat with Knightscope CEO, William Santana Li. Watch the interview and read the recap below:
Computerizing Security with AI-Powered Robots
When it comes to disrupting industries with AI, the first question is often “Why is a robot better than a human being?” Indeed, that’s what Mr. Wonderful wanted to know. In addition to the robots being a physical deterrent, William explains that Knightscope’s robots patrol on their own and even recharge themselves. Knightscope claims that their robots generate over 90 terabytes of data a year, which no human could generate on patrol on their own. This creates insights for guards and officers to utilize, so they’re not meant to be a one-for-one replacement.
However, Knightscope believes they can also be more cost-effective. Knightscope estimates that an armed, off-duty officer costs around $85 an hour, while an unarmed guard ranges between $15 to $30 an hour. Knightscope’s robots operate on a machine-as-service model at an effective price range of $6 to $12 an hour. “That really gets clients excited,” William said.
Knightscope estimates each individual device nets about $250,000 in income over a five-year lifetime. William put it in real-world terms: “You might want to think of this as luxury automotive per-unit-economics with SaaS margins. … But we’re not selling $0.99 subscriptions, so these are meaningful transactions.”
The Market for Security Robots
Who’s buying these robots, you might wonder? Knightscope boasts over 10 Fortune 1000 clients, like Samsung and Citizens Bank, as well as the NBA’s Sacramento Kings, four major hospitals, law enforcement agencies and many others. “Basically anywhere indoors or outdoors you might see a security guard is fair game for us,” William said.
Though it may be difficult at first to penetrate a certain sector, Knightscope has seen that having an initial reference point makes closing the next deal in that sector substantially easier. “Just because you patrol the parking lot at a hospital doesn’t mean a casino is going to buy. But having that first hospital helped us close others.”
Raising From the Crowd
“You’re doing a $50M raise via crowdfunding” Mr. Wonderful said. “That’s a serious chunk of change.” In fact, it’s the most that’s allowable under current regulations. But Knightscope is in familiar territory – their last Reg A in 2017 exceeded their $20M goal in an oversubscribed round.
As far as why they’re sticking with StartEngine over “traditional” methods of fundraising, it comes down to something William calls “company/capital fit”. “Some people won’t say it, but VCs are dumb money if it’s not their sector.” He went on to explain that the venture capital model hinges on a small percentage of hugely successful investments that make up for an overwhelming proportion of failures, which he feels is at odds with a general attitude of arrogance among VCs.
“Institutional investors look at us and go ‘Your 7,000 investors must be driving you mad,’ William said. However, he continued that equity crowdfunding has brought a wide variety of investor backgrounds to their company, from Chief Security Officers of major corporations, NYPD detectives, members of the FBI, CIA, and many more invaluable industry experts. “I would never trade out my 7,000 investors for three or four guys (it’s mostly guys) sitting around a table asking the wrong questions.”
In closing, William reiterated Knightscope’s mission to make the US the safest country in the world. “Listening to you I definitely understand your mission,” Mr. Wonderful said before signing off.
You can learn more about Knightscope or invest by visiting their campaign page.
Knightscope, Inc. is conducting a Regulation A offering made available through StartEngine Primary, LLC.
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