Startup Series: Reclaimed Lumber with Urban Machine
Eric Law is the CEO and co-founder of Urban Machine.
Urban Machine develops robotics and AI to reclaim lumber from construction and demolition for re-use. They claim that 37 million tons of wood goes into landfills annually, and much of that wood could be reused. Their robotic machines specialize in the necessary steps to prep wood for reconditioning.
In 2022, Urban Machine successfully secured a seed funding round, spearheaded by Lower Carbon Capital and supported by GV (Google Ventures).
With a career rooted in the construction and contracting industry, Eric has extensive experience in large construction projects and has been involved in creating and selling software targeted at this sector. We start our conversation with an overview of the construction industry, highlighting the main players, their challenges, including considerations around emissions and sustainability.
The discussion touches on challenges Urban Machine aims to address, the innovative technology they employ, and their aspirations for the future.
Episode recorded on Jan 5, 2024 (Published on Feb 8, 2024)
In this episode, we cover:
[3:08] Overview of the construction industry and its challenges, including labor shortages and sustainability concerns
[5:52] Key stakeholders in construction
[13:41] Urban Machine's mission to reclaim lumber from construction and demolition for reuse
[17:91] The importance of deconstruction in reducing wood waste
[19:30] Urban Machine's tech and processes for preparing wood for reconditioning
[21:38] Benefits of using reclaimed lumber in construction projects
[23:58] Economic considerations of using reclaimed lumber and competing with virgin lumber prices
[26:19] Urban Machine's progress to-date, funding and future vision
[30:00] Eric Law's motivation for starting the company and its positive reception from the industry
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Cody Simms (00:00):
Today on My Climate Journey's Startup series, our guest is Eric Law, CEO and co-founder of Urban Machine. Urban Machine develops robotics and AI to reclaim lumber from construction and demolition for reuse. They claim that 37 million tons of wood goes into landfills annually, and much of that wood could be reused. Their robotic machines specialize in the necessary steps to prep wood for reconditioning, Eric has spent his career in the construction and contracting space. He's worked in large construction, and he's worked to create and sell software for the industry. We start out our chat today with an overview of the construction space, who the players are, and what issues they're grappling with, including how they think about emissions and sustainability. Urban machine raised a seed round in 2022, led by lower carbon capital with participation from GV, or Google Ventures. I enjoyed hearing from Eric about the problems they're solving, their technology and their vision for the future. But before we start, I'm Cody Simms.
Yin Lu (01:08):
I'm Yin Lu.
Jason Jacobs (01:09):
And I'm Jason Jacobs. And welcome to my Climate Journey.
Yin Lu (01:16):
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (01:21):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help. Eric, welcome to the show.
Eric Law (01:35):
Thank you, Cody. I'm glad to be on.
Cody Simms (01:37):
Okay. We are going deep in the world of construction. And I already love that in the background, as we're talking, there's beeping forklifts and stuff happening, so we are on-site in the thick of it, from what I can tell.
Eric Law (01:49):
Yeah, this is our shop. I've got a wood wall behind me made out of reclaimed lumber, which is even more appropriate. And then our engineering shop today is moving lumber in and out of the shop for test material. So you picked a good one for this podcast.
Cody Simms (02:01):
So Eric, you've been in the construction space in various forms with construction companies, with software companies, etc for it seems like most of your career. Is that correct?
Eric Law (02:11):
It is. I think I took about a two-year hiatus and went pure tech.
Cody Simms (02:16):
So what is the construction industry grappling with today?
Eric Law (02:21):
So the biggest challenge for the construction industry is really the trade and craft shortage, just people are not going into construction. We've got a massive demand for infrastructure. People want homes and apartments and bridges and all this good stuff, and we don't have the resources available to do it. And then when you tack on the climate challenges to go with it, it just makes it exponentially harder to build projects these days. So most of my career has been spent, software and hardware side, around finding solutions to that craft problem. I've partnered up with startups to bring robots on the job sites and help augment our craft, at a SaaS company where we focused on moving data across project teams. And then today, our Urban Machine, it's construction, it's robots, and its sustainability. As we essentially turn waste material back into a raw material, I can go back into the buildings to help with that sustainability side of construction.
Cody Simms (03:08):
Well, we're going to dive all into Urban Machine in a minute, but first you mentioned one of the issues that the construction industry is facing with is climate change and how they approach it. I definitely want to spend some time there establishing the broader context. What are the climate challenges that are front and center in construction?
Eric Law (03:27):
So construction's got two challenges. You've got the embodied carbon in buildings, and then you've got the operational carbon that actually takes the build, the buildings, all the trucks and tractors and stuff like that. And it's massive. If you look at concrete steel, the waste problem coming off the job sites. And one of the other bigger challenges that we have, more specifically here in the United States, is just we have, I call it ADD with buildings. We get bored of them. We want a new design. We want a fresh building. And we tear down the old one, we throw it away, and we build a new one.
Cody Simms (03:55):
I live in southern California. There is a lot of just building refresh for the sake of building refresh.
Eric Law (04:01):
It's brutal, but it drives a massive part of the economy, all the designers and the contractors and everybody involved with it. Whereas you look our counterparts over in Europe, buildings over there last for hundreds of years. So it's not a materials problem. It's purely just an attention problem with it. Everybody wants something shiny and new. So one of the big challenges for the design world today is how do we build a building that we can lightly update? How do we focus more on some paint and color changes versus wholesale, taking the whole thing down. And then when we take these materials out of buildings, instead of sending them to a landfill or downcycling them, how do we use them again? How do we get that material to go back into that building so we can reduce costs? Because if you look at the supply chain for construction materials, copper travels out of Australia, forest products travel out of Canada, Oregon and Washington. Everything travels long, long distances, which is a massive amount of carbon, and that shipping and the trains to get those materials to the urban centers where they're needed.
Cody Simms (04:52):
So when you talk about these different emissions problems, in particular, you said the embodied carbon being one, and then essentially the carbon from the operations being the other, I would think of these, from a carbon accounting perspective, as cement and steel, et cetera, or your scope three. If you're a construction company, they're critically important, but you don't actually make them. So you're pseudo responsible for them. But at the end of the day, it's the cement companies and the steel companies who need to fix that problem. But the emissions from your fleets, from fuel usage, the trucks moving stuff around, that's often your primary emissions footprint. Would that be the right way to think about it?
Eric Law (05:29):
For a contractor, yes. Because they don't control the design. They get handed a design and say, "Hey, go build it." So you're right, they really just have control over that supply chain where those materials are coming from. And the challenges at the end of the day, their client wants the lowest cost building. If a contractor says, "Hey, I can locally source all these materials, but they're all more expensive than the imported stuff, the client's going to say no. So that becomes a bigger challenge as well in the industry.
Cody Simms (05:52):
Can you map out the players in the construction industry from who are the contractors, who are the developers? What does the landscape generally look like for us?
Eric Law (06:01):
So typically, you've got an owner of a project. They own the real estate, they're a developer, or they're maybe a large tech company that has a lot of real estate in their portfolio. And they have a need for more space. They could be an office building, could be housing, whatever they have would need. So they go out and they bring on design firms to help them scope out what that project is, how many people are going to be in that building. And then at some point, they go bring on a contractor to say, "Okay, we're getting ready to go build this building. Come in and help us build that project." And that prime contractor may bring on hundreds, or even thousands of subcontractors and suppliers.
(06:33):
Central you set up a small supply chain and a small Fortune-Five hundred company on some of these projects when you get into multi-billion dollar projects to go supply all this material to a location, and it's all a one-off. So you set up an instant supply chain to do this for a couple of years, and then it breaks down and they go to other projects. So you don't get a lot of repetition to that particular location. So there's just a lot of inefficiencies in doing that. They assemble offices at the job site for all the people that are suddenly commuting to that location. It is a massive undertaking to build a building.
Cody Simms (07:03):
So the prime contractor is essentially the project manager or the product manager, maybe, of the whole thing, they may or may not directly manage the individual types of specialty teams that are coming in. They're going to find subcontractors who are electricians or who are framers, or who are this, that and the other. They're more of an operationally focused orchestrator, if you will. Is that the right way to think about it?
Eric Law (07:31):
Absolutely. They're orchestrating a massive theatrical event, we'll call it. And when they're done with it, they leave behind a big building for the client. And they typically aren't the designers of it. They're building a product that was designed by someone else for someone else. So those are your three core players, and then you have this orchestration team, all the people and equipment that do the work below that contract.
Cody Simms (07:52):
And who's most responsible for cost of labor? And who's most responsible for cost of materials?
Eric Law (07:58):
Good question. It's going to depend on the owner and the designer can put some requirements in their contracts. For example, some owners say, "Hey, the project has to be union-level, so then the contractor has to go out and make sure they hire union trade contractors on the project. So sometimes that's dictated for them. Typically, the union agreements are based on regions and trades, so that's typically set. The cost of materials is typically split between the contractor and designer because the designer says, "Hey, I want gold-plated toilets," for example. Well, the contractor has to go out and source gold-plated toilets. They may get a couple of vendors to pick from that they may compete against each other. But in terms of total cost, that's the designer and the client that are specified.
Cody Simms (08:37):
And does that same responsibility hold true when it comes to thinking about the emissions or sustainability of a building or a project?
Eric Law (08:45):
Definitely on the embodied carbon. Because if the designer says, "I want a concrete building versus a timber building," for example, huge deltas on the embodied carbon, the contractor can't come back and say, "Well, I'd like to give you a timber building here." If the designer expects concrete, they're going to build concrete. So that embodied side is definitely heavily on the designer and the client.
(09:03):
So, that embodied side is definitely heavily on the designer and the client to make those decisions in terms of what their goals are. The good news is we're starting to see a shift. We're starting to see a lot more owners start to measure embodied carbon, operational carbon from the building. Because while embodied carbon is a large amount and the operational carbon can far exceed it over that 30 or 40 year lifespan.
PART 1 OF 4 ENDS [00:09:04]
Cody Simms (09:21):
So the contractor would be responsible for the operational carbon of building the building or not?
Eric Law (09:27):
Really, because again, it comes down to the designers. What are they specking for levels of insulation.
Cody Simms (09:32):
Oh, operational carbon would be energy usage of the project. Okay.
Eric Law (09:35):
Then there's, I call it more the logistics carbon or the actual construction carbon, which is where the contractor comes into play. Are they going to bring in a fleet of electric heavy civil equipment? Or are they going to run all diesel gen sets and diesel equipment for that job site? And when you look at those three categories, what the contractor brings to the table is actually quite small, compared to operational for the building and embodied for the [inaudible 00:09:56]. So that's where it becomes really critical from the designers and the owner to get on board upfront. And ironically, if there's an existing building, if they can find a way to reuse it, then that's a huge win for them, on the carbon side.
Cody Simms (10:07):
And you and I both live in California, there's new legislations such as now state law 253 for example, that's requiring companies to measure and report on all aspects of their emissions, scope one, two, and three. How is that starting to impact the construction industry, if at all?
Eric Law (10:24):
It just passed. That was January this year, I think it just went into effect. So I haven't seen it because I haven't worked for a contractor for a couple of years. I'm sure like most things, they'll probably be slow to adopt it. I see it as one of those nice tailwinds to help move the whole industry forward and to start measuring it.
(10:38):
When I was at the last contractor I worked at, we had a sustainability initiative, which is where I learned about the wood waste problem. And we put together a proposal to actually swap out our pickup trucks. The F-150 gas guzzlers, essentially, they're driving billboards for our whole company. And I said, "Hey, let's go with some Model 3's, you get the carpool stickers, cuts our costs. They pay for themselves in like a year because the number of miles people are putting on these pickups are ridiculous as [inaudible 00:11:04]." And it got shot down. And the executive team was like, "No, we like our billboards. We like that pickup truck image." And I'm like, "Okay, this is going to be rough." Even when you show them cost savings and reductions and spending operational money and it's sustainable. Here's a win-win. Let's cut some wasted money and let's do the better. And it got shot down. So, it's going to be a tough uphill battle with contractors.
Cody Simms (11:25):
One thing I didn't wholly appreciate, I learned recently, is that most of these fleets, these pickup trucks or whatever that are driving to the site, the people who drive them aren't driving into somewhere, swapping in their personal car, and taking the truck onto the site. This is their car or their truck. They drive the truck all the time, it just so happens to be the company Fleet truck. They don't own it, but it's their primary vehicle, in many cases.
Eric Law (11:47):
It's the construction perk because you're always moving around to different offices. If you work in the field, one day you could be at a job in San Jose and two weeks later, you're at a job in Sacramento. So, you could have anywhere from a 50 to 150 mile commute each direction.
Cody Simms (12:01):
And I would assume then things like range anxieties, you talk about flipping to an EV truck start to be very real considerations for these contractors, as they're thinking about the fleets that their team might drive.
Eric Law (12:14):
We did the data and the research on it, and that's pretty false. The range these days is 200 to 300 miles, and that's fine, single direction. Very few people are commuting two to 300 miles each direction. That's a long, brutal slog. What we found is most of the people commuting... Because what we did is we looked at our employees with pickup trucks, we grabbed their home addresses, we grabbed their job sites they were commuting to, we looked at the distances. We crunched the numbers to look at, how feasible is this? And we actually had our superintendents raise their hands and say, "Hey, we want to do this. We want to use electric vehicles because we could put chargers at home so they can charge at home. We can put chargers at the job site. That's not a problem." So really, they just got to go one direction. So it was totally feasible to do it, it just was a willpower.
Cody Simms (12:55):
That's an interesting business opportunity for anyone in the EV charger space. These fleets often have, as I assume they do, partnerships with local gas stations or whatever to be the place where the fleets would fill up. Maybe it's whatever the local chain of Shell or whatever it is in your area. But maybe there's an EV charger company that could come in and say, "Hey, we're going to target these fleets and help with home installations."
Eric Law (13:18):
Absolutely. Home installations, and then a lot of job sites need temp power, and those companies supplying batteries and solar power to job sites these days. So, add on a car charger.
Cody Simms (13:28):
All right. Well we've uncovered a small, but actually probably sizable opportunity for any entrepreneurs listening, which is, think about how you approach construction fleets as a customer segment.
Eric Law (13:38):
Absolutely. It's a massive number of vehicles out there.
Cody Simms (13:41):
All right, let's turn our attention to your company, Eric, Urban Machine. What is Urban Machine?
Eric Law (13:47):
So, we are a two and a half year old robotics startup that is taking lumber waste from construction, removing all the metal from it, and then turning it back into premium lumber products that you can use to build again with. The lumber is still the predominant building material, especially in the residential space, single family multifamily, compared to steel and concrete. It's incredibly strong, it's beautiful, we can track the story of it. But unfortunately right now, most of the industry uses it once and then they bury or burn it.
(14:13):
So in the U.S., it's about 37 million tons of dimensional lumber heads to our landfills or incinerator every day, masses amounts. That's about half of what we log from our soft wood forests. So we're on a mission to take that wood and instead of chipping it and then burning it or burying it, take all the metal out. Because once it's metal free, then we can sell it into the virgin supply chain.
Yin Lu (14:32):
Hey everyone, I'm Yin, a partner at MCJ Collective, here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have grown to thousands of members globally. Each week, we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to solutions to climate change.
(14:59):
Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made as well as ongoing events and programming, like monthly women and climate meetups, idea jam sessions for early stage founders, climate book club, art workshops, and more.
(15:18):
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Cody Simms (15:33):
And is that metal contamination, I guess for lack of a better term, which are nails and screws and stuff like that? Is that the biggest reason why wood is not reused today?
Eric Law (15:43):
It is, because in order to use wood, you typically saw it, plane it, sand it, and all those tools that they use are not designed to cut metal and wood. The most efficient wood planers are very good at finding wood. So when you put a nail in there, it absolutely destroys the blades on the plane.
Cody Simms (15:58):
And yet it can go through a chipper with the nails still in it?
Eric Law (16:01):
Keep in mind it's a million to $2 million chipper with a massive diesel engine and massive teeth. And it requires a lot of maintenance replacing those blades, but yeah.
Cody Simms (16:10):
Okay. And in order to reclaim the majority of wood from a, I assume a demolition site is what we're really talking about here, more so than a construction site, is there anything that needs to change in how buildings are demoed?
Eric Law (16:23):
So for demolition, we're huge fans of deconstruction, because what that does is it increases the quantity and quality of material we can recover. Typically, if you smash it up with an excavator, you end up with a bunch of small chewed up chunks. That's pretty hard to replane. If you cut all the fasteners and take it apart in studs, then you dramatically increase the volume of material.
(16:41):
And surprisingly, construction uses a lot of lumber just in temporary structures. Think about safety railings, holding up walls, form work. There's a lot of material that comes off of job sites just in building buildings.
Cody Simms (16:53):
The scaffolding and all that that you have to build.
Eric Law (16:56):
Right, exactly. So lumber is not just in the walls, but it's all over the place on job sites.
Cody Simms (17:01):
And on the demo side of things, roughly what's the best practice today? Is it deconstruction or is it just smashing stuff up with an excavator?
Eric Law (17:11):
So, best practice is deconstruction. Unfortunately, the majority are still smashing. We're actually seeing a unique tailwind where because municipalities are responsible for waste disposal, they're driving the deconstruction ordinances. So what they're doing is they're requiring source separation and deconstruction and all these ways to keep wood out of the landfill, because nobody wants to go build a new landfill. If you thought building a new building is long and arduous and expensive, can you imagine building a brand new landfill? It's about a 20 plus year journey and a lot of money. So, most of the government agencies want to keep wood out because it's one of the largest contributors to landfill space by volume.
Cody Simms (17:48):
So, there's regulatory tailwinds. I'm guessing most contractors don't necessarily love being forced to do something. But that's where you come in, which is you say, "Hey, these regulations are happening and we can help you solve your problem around this." Would that be the right...
(18:03):
We can help you solve your problem around this. Would that be the right way to think about it?
PART 2 OF 4 ENDS [00:18:04]
Eric Law (18:05):
Absolutely. That and then it's very expensive to get rid of material these days. To truck it off the job site, take it to a waste facility. They charge a tipping fee, $50 to $200 a ton. There's quite a broad range on what you're paying for it. It adds up. It becomes a lot of money very quickly.
Cody Simms (18:20):
How did you discover this particular need and decide this was the problem you wanted to focus on?
Eric Law (18:27):
So when I was at the last contractor, I had done startups before, I work with startups, bring them into job sites. Startups are where you can actually move the needle if you want to solve a problem. It's very hard to do it at large organizations. So while I was there when we were doing our sustainability research, and you come across a massive problem, you're like, "Ooh, this is interesting. Massive problem. What's going on here?" And you start doing a little more research and you find out it's the metal fasteners.
(18:50):
So I reached out to some robotics folks I knew and I had done some research with before on other projects and said, "Hey, couldn't we automate this?" Because the problem with metal fasteners, it's just too laborious for humans to do at scale. It's never going to happen. So it's a perfect problem for automation. So Andrew, my co-founder, now said, "Absolutely." And within about 30, 45 days, he built a bench-top prototype. He had a web camera and a pneumatic nail shooter kicking nails out of 2x4s. And it's like, "Ooh, this is promising." And then reached out to some investors and they're like, "Yeah, we'll write you checks for this." And we're like, "Oh, okay. We're off." Doing this again. My wife's like, "Oh, man. Not again."
Cody Simms (19:30):
Maybe describe in a bit more detail how the system works. You have, I think, three main technology components to your system, if I understand it correctly.
Eric Law (19:39):
So over the last two and a half years, our tech has evolved. We're on version five, that's out in field trials right now. And version six, we'll start testing here end of April.
(19:49):
So there's three core processes to it. The first one is what we call cutting. And that is where we cut all the metal fasteners to essentially normalize the dimensions of the wood. If you think about wood and it's got nails and screws sticking out two to three inches going all directions. We call it the porcupine state. It's very hard to handle in that state. So what we've done is we've developed a way to cut all those fasteners down so they're just little tiny nubs sticking off the wood.
(20:13):
And then what we do is the next step is we want to reduce the friction it's going to take to pull those fasteners out. So we cook all the fasteners. We use induction cooking, we heat up the fasteners, and the real win is on the screws because what it does is it breaks down the fiber and the threads so instead of requiring hundreds and hundreds of pounds of pull force to get that screw out, we can do it with 10 to 20.
(20:32):
And then what that does is it feeds the third step, which is literally plucking all these fasteners out of the wood. So we have what we affectionately call our birds, which are bird beaks on top of electromechanical cylinders and actuators that go in and pluck all those. And we use computer vision throughout the whole process to identify the fasteners, to orientate the cooker, orientate the picker, and get all those fasteners essentially cut, cooked, and then removed from the wood and then we run it through a metal detector to make sure we've got it all.
Cody Simms (20:58):
This is a much stronger version of me with my needle nose pliers essentially would be the bird beak.
Eric Law (21:03):
Exactly. You got it.
Cody Simms (21:07):
Who is your target customer? Who are you targeting with the product?
Eric Law (21:10):
So we're selling it back into construction. So we're selling it to wood manufacturers, we're selling it to lumber yards. We're selling it back to contractors to use for hand rail and temp structures and other general use products on their projects. Essentially, we're testing out lumber rental. We deliver it to a project, they use it for the duration of the project, and then we take it back at the end of the project, we clean it all up, and we sell it to another contractor or rent it to another contractor for their project. It's really a cool model that we're playing around with.
Cody Simms (21:38):
And you've described, obviously, what the machine is and what it does. You know what you're selling. You're selling here's wood, here's the ability to reuse the wood on your site. Do you have a sense from their end of what they think they're buying? What is motivating them as a buyer of this solution?
Eric Law (21:56):
So the contractors that are buying material from us, they're doing it for the sustainability because their architects and their clients are asking them for it. Saying, "Hey guys, we need to reduce the carbon footprint of our projects. Come to us with solutions or ideas for ways to do that." So this is one of those ways. Lumber is a great storage tool for carbon, and we believe it should be stored in building walls or in use instead of in a landfill or burned up and released. So this does that.
(22:20):
The other thing that's great about wood that you can't do with concrete and steel is you can actually tell the story of its past. So we can take wood from an old building, we can track it through our process, we can tag it with a QR code, and then the new owner of that building or that wood can say, "Hey, look, I'm using reclaimed material." In reclaimed lumber, the EPA did some great studies for us where they found it takes over 90% less energy to reclaim lumber than it does to harvest virgin. Virgin lumber is awesome, it's a nice, natural product, but it takes a lot of carbon to cut down trees, process trees, dry the wood, ship it. There's a lot of energy involved with that. So using something that already exists that's already close to the customer is a massive win on that logistics problem.
Cody Simms (22:59):
So I would assume that the eventual user of this reclaimed lumber is able to be very vocal about it. "We built our building with all reclaimed lumber. It's more sustainable. Here's the emissions impacts," et cetera. But for the project sites that you are coming to, you're coming to the sites that may or may not be using the reclaimed lumber. They are contributing lumber to go be reclaimed. How did they think about that benefit? That isn't a category I've heard yet a lot of people talking about. We may still be building the thing on this site using virgin wood and whatnot, but hey, all the lumber that we tore down to build the new thing, we contributed it back to reuse in the future. That's a harder message to communicate. How is that starting to play out?
Eric Law (23:42):
It is, but it's a good entry point. It's a pretty easy entry point for the project teams that we're working with. They're like, "Oh, instead of us paying somebody to haul it and chip it and burn it, we can give it to you guys." So we're saving money and we get a more sustainable story. Oh, that's got us interested.
Cody Simms (23:58):
Got it. So the money savings seems like a big part of it. You come in, you show up, and are they paying you to do this or your payment is the fact that you get all this wood to go sell to somebody?
Eric Law (24:07):
Some people are paying us for it, depending on the wood that we're collecting from them and what's required on the logistics side, but most of them are just giving it to us. So our raw material is no cost, which is a great starting point when you're in the materials business. And then we just have to clean it up and then sell it back into the market.
Cody Simms (24:22):
So you have to ultimately become the best and most efficient source of reclaimed lumber to the construction industry and as a result of that, the project sites that are inviting you onto the site start to do so because they can save money not having to pay someone else to take this wood and go landfill it or chip it and that allows you to build this reclaimed lumber business. And your business is built mostly selling the wood after you've treated it?
Eric Law (24:56):
Today. Yes, we're in the lumber business today. Eventually we want to pivot out of lumber and be in the robotics space where we're just selling the machines to operators, essentially the franchise model where the machines in the process are going all around the country. We view that as the fastest way to scale it, but today here in northern California, we are in the reclaimed lumber business.
Cody Simms (25:14):
And your machines are on site, on the construction site, or is the lumber getting shipped to you to be treated?
Eric Law (25:19):
Right now it's getting shipped to us. We could deploy at really large sites if they're taking down a, say, 100,000 square foot old wood building. But today, most of the contractors ship it to us because our machine is too big to sell it.
Cody Simms (25:31):
And is that how you envision it ongoing, you'll have hubs in key cities around the country?
Eric Law (25:36):
Every metropolitan area that has waste wood will have a system operating there, processing it is our goal.
Cody Simms (25:40):
It seems like there could be optimizations to help with that fleet emissions problem we talked about, but that may not be in the cards for you all just given the complexity of your setup.
Eric Law (25:50):
Well, here's a really good one that we're pulling off. So because we're partnered with a lumber yard, they send the truck out with a delivery to the customer and then they pick up our waste material on the way back. So we're cutting the number of trucks in half. We're using empty trucks to bring our material back to our yard where we operate, which is a huge win if you can cut the number of truck trips going to a construction site in half. Not only is that a win on the carbon footprint and the air emissions, but it's also a huge win on the traffic and impact to the neighborhood and those in the building area.
Cody Simms (26:19):
What's your deployment footprint look like today and what are you hopeful for over the next one to two years?
Eric Law (26:24):
So robotics is always much harder and longer than software. My last company was SAS. Within six months, we had a minimum viable product. We had people testing it, clicking on it, using it. We will be delivering our first machine to our client up in the Seattle area in fourth quarter this year. That'll be our first paid customer deployment. And then our goal is to get 11 more out next year. So that'll be to 11 more metropolitan areas here in North America. And then we've actually already got our first LOI signed from a client in Europe that wants a machine in 2026. So we're actually getting inbound interest from Europeans, Australians, New Zealand, everybody who's got lumber buildings for delivery starting in 2026.
Cody Simms (27:03):
What are your big un
PART 3 OF 4 ENDS [00:27:04]
Eric Law (27:03):
... holdings for delivery starting in 2026.
Cody Simms (27:03):
What are your big unknowns right now? What are the things you need to crack in your company at the moment?
Eric Law (27:08):
So I've got to close a Series A. So we got to pick up another bucket of money. Really for us, the tech risk is just about done. We're finishing that up here in the next two months. And then we get to start to move into, okay, we've spent two-and-a-half years doing R&D, now we've got to go deliver these to customers. We have to train customers, we have to have manuals, we have to productize it. We got to make sure the machine operates safely and hits all its metrics. So that's going to be a big shift for the company. How do you take the research hat off, put on that deployment production hat? And then the next one is how do we scale this? So we go get a dozen customers, but how do we go build thousands of these systems? Because it'll take somewhere between 12 and 18,000 systems to saturate the market around the globe.
Cody Simms (27:48):
For these first dozen, it sounds like you're planning to operate and staff them. But as you said, the future vision is that the contractors actually run these systems?
Eric Law (27:57):
Not necessarily the construction contractors, but we'll have waste facility partners. And people that process waste wood, deconstruction demolition contractors. Actually, these first 12 are going to be operated by our partners. So only the one that we have right now is operated by us.
(28:10):
The one in Seattle will be operated, probably a demolition deconstruction contractor up there. So what we've done is we've found a lot of folks want to run these machines. It just takes general labor skills, so there's nothing real specialized to operate them. And there's a lot of people that are like, "We need this in our area. We have a wood problem. We have too much wood. We're tired of burning it and burying it. Our landfills are filling up. You guys have a solution."
(28:32):
So we have people reaching out to us, and coming to our facilities and see the machine, and plan building facilities. By the end of Q3, we should have all 12 systems reserved for next year, which is awesome to have a backlog of customers ready to go.
Cody Simms (28:44):
And you mentioned, at some point, a Series A on the horizon for you. You last raised a seed round in 2022, led by lower carbon capital with participation from GV, or Google Ventures. What more do you want to share about the history of the company from a capital perspective?
Eric Law (29:02):
So we started with a pre-seed back in November of '21. That was led by Union Labs and Catapult, who have been awesome investors. They invested in the people.
(29:11):
There's me, Andrew, and Alex. It was three guys with this crazy idea and a benched out prototype. And they wrote the checks for us then. We spent about a year proving the tech out that said, "Yeah, the computer vision and electromechanical [inaudible 00:29:22].
(29:23):
And then Lower Carbon and GV joined in in '22. And we've been focused very heavily on proving the economics. Because the construction industry, while a lot of them want to do better, nobody goes out and says, "We want to destroy that environment," but it's all about the economics. So we've been very clear that we have to compete with virgin lumber mill prices. We got to bring down the price on reclaimed lumber for it to scale.
(29:44):
So the last year and a half has been purely on driving the economic productivity of our machine, and our labor force, and making sure that we can move material competing with virgin lumber. So as we hit that milestone here with this next iteration, that's why we're kicking off this Series A raise.
Cody Simms (29:59):
Eric, what more should I have asked? What more should we have covered?
Eric Law (30:03):
So we covered the technology, we covered the machine, the market, the labor, the lumber. Most people ask why I do this?
Cody Simms (30:10):
Eric, why do you do this?
Eric Law (30:12):
Why do I do this? It's fun. As crazy as it sounds, the ups and downs of startup life, I've worked for large companies, worked for small companies, and if you want to change something, there's nothing like a startup doing it.
(30:22):
And this one's awesome, because nobody has said this is a bad idea this time. Whenever you start something new, there's always naysayers. We've had zero of those. Everybody, from contractors to trades, to the conferences we go to, they're like, "This is awesome. It's badly needed." So really, the ball is in our court to solve the technology problem and get it to market, which is a nice place to be in, to have people reaching out to you from all over the world and saying, "Hey, how do we get one of these systems for our metropolitan area?" It's a good place to be.
Cody Simms (30:51):
Well, I appreciate you joining us today and sharing more about what you're building at Urban Machine, and also just helping all of us understand more about the broader construction industry in general.
(31:02):
And certainly wish you all the best as you continue to build this. And reclaimed lumber is beautiful. So I think the more of it we can get into construction, get into buildings, obviously the better overall, not just from an aesthetics perspective, but from a sustainability perspective.
Eric Law (31:20):
Awesome. Thank you very much, Cody. It was a pleasure to be on your show. Great conversation.
Jason Jacobs (31:24):
Thanks again for joining us on My Climate Journey podcast.
Cody Simms (31:28):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem-solving capacity.
Jason Jacobs (31:38):
If you'd like to learn more about MCJ Collective, visit us at MCJCollective.com. And if you have a guest suggestion, let us know that via Twitter at MCJPod
Yin Lu (31:51):
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Cody Simms (32:00):
Thanks and see you next episode.
