Why We Invested in Nikola Labs
In manufacturing today, machinery is infrequently maintained. This is a hugely inefficient practice — a study from the DOE estimates that proactive maintenance can save up to 20% in energy use, while also reducing downtime by 40% and increasing production by 25%.¹
Although proactive maintenance techniques have become more widely practiced over the last 20 years, manufacturers are still constrained by budget and a lack of resourcing. Due to this, in a 2021 survey from Plant Engineering, the majority of manufacturers report that they still run some of their equipment “to failure” as a maintenance strategy.²
The state of sensor-based maintenance today
Using real-time sensors to supplement human experts in the maintenance of key machines was an early focus in Industrial IoT. The DOE wrote about the potential of “predictive maintenance” back in 2010, and articles proclaiming predictive maintenance as the “killer app” of industrial IoT abound over the following years. And, it is intuitive that this would be the case! Constant monitoring of machines should drive superior performance versus zero or infrequent checks.
However, despite the promise of “connected service”, the majority of manufacturing companies do not utilize digital tools for machine monitoring today. We even still see articles written in 2022 proclaiming the “bright future” of predictive maintenance. This is consistent with what we have heard as we speak with manufacturers. Despite the prevalence of companies offering digital maintenance solutions, even manufacturers doing proactive maintenance today rely on route-based maintenance services, with experts coming on a regular schedule to inspect machines.
So, what has held this market back? There is not one clear answer, but rather a confluence of factors.
High Upfront Expense
Deployment of sensors is often very expensive, not just in the cost of the sensors, but in the cost of the IT infrastructure to support their connectivity. Combine that with the fact that these installations can also cause costly downtime, and there is a major barrier for adopting monitoring technology.
Inconsistent Performance
Applying advanced analytics to these problems is difficult. These machines produce loads of data, but 99.999% of that data is the machine operating well. Each machine breaks down relatively infrequently, so operators may not have a lot of data on what a breakdown looks like. This is known as a “low incidence” problem in ML/AI, and can make it very difficult to build analytics that truly can “predict” maintenance issues.
Difficult to Quantify ROI
Again, machines break relatively infrequently, and traditionally predictive maintenance sensors have only been deployed to a couple of the most critical machines. So it can be tough to prove that your new technology is actually driving value. For example, if your plant had 3 breakdowns last year, and 2 this year, did the predictive maintenance technology work? Or, was that just luck?
How does Nikola solve these problems?
When we first met Nikola Labs, we thought that their performance was, frankly, too good to be true. Nikola was growing quickly and efficiently in a market which has been very difficult for technology start-ups to penetrate.
However, as we dug in, we realized that Nikola has built a technology and a business model that uniquely addresses each of the issues we reference above.
Low cost, easy install sensor
Nikola’s sensor, Vero, is thoughtfully designed with the right performance/cost trade-offs that enables it to hit a compelling price point while not sacrificing performance.
Furthermore, it is low-power and wireless, meaning that customers do not have to involve IT to deploy the sensor. Nikola’s sensors can be deployed in minutes and start generating value in just a few days.
Closed loop automation
Nikola’s proprietary software, AssetWatch, improves the productivity of condition monitoring engineers by directing their attention to the right issues at the right time. Then, Nikola’s support team works to help customers resolve any issues in an optimal manner. Nikola’s product works well enough that customers make it their primary maintenance solution, making the budget for Nikola easy to find.
The compelling nature of Nikola’s solution was reflected over and over again as we spoke with Nikola customers. These customers raved about the value Nikola drove for them, how easy it was to use, and how they felt that Nikola experts “were an extension of their own team”.
The path forward for Nikola?
Will Zell (founder), Brian Graham (CEO) and Nikola’s core executive team have partnered to build a strong foundational platform and a compelling business. However, this market is still primarily white space and there is a lot of work to do to accomplish Nikola’s goal of eliminating unplanned downtime. We are thrilled to partner with the company on this mission.
If you want to help build the future of industrial maintenance — reach out! Nikola is hiring across most roles.
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