This Serial Entrepreneur Raised $60 Million To Build A Robotics-As-A-Service Company, Delivering Robotic Automation At Low Hourly Rates

Saman Farid is no stranger to reinvention. From growing up as a cultural misfit in China to leading groundbreaking ventures in robotics and artificial intelligence (AI), Saman’s journey is a testament to resilience, curiosity, and a lifelong commitment to solving problems.

This blog delves into Saman’s experiences as a founder, investor, and founder again and how he’s redefining manufacturing with his latest venture, Formic. He talks in detail about being on both sides of the table and pattern recognition when it comes to investing in companies.

Saman also relates what it means to almost run out of runway with Formic and the strategies he used to turn it around.

Listen to the full podcast episode and review the transcript here.

Growing Up in a World of Transformation

Saman’s early years were shaped by his parents’ move from the U.S. to China when he was just six. As the only non-Chinese student in his public school, he developed a unique perspective on the world—a third-culture lens that allowed him to see opportunities others might overlook.

Saman grew up in a household where his parents are Iranian Americans, which added another cultural dimension to his future approaches. Since he had family back in the US, he constantly traveled back and forth, which gave him insights into how things evolved in parallel universes.

“I was in China during an extraordinary time,” Saman shares. “When we moved to Beijing, it was dirt roads and donkey carts. By the time I left at 18, it was a bustling metropolis with Starbucks on every corner.”

This dual perspective, bridging the East and the West, taught Saman to navigate and synthesize diverse environments—skills that would later prove invaluable in entrepreneurship.

Engineering Roots and the Entrepreneurial Bug

Saman’s fascination with engineering began early, inspired by his father. “I had a reputation for breaking and fixing everything electronic in the house,” he recalls. He had this inclination to figure out how things came together and worked.

Saman fondly looks back at an exciting game played in the family. The kids could point to any object, and Saman’s father would explain how it worked–an incredible education for him.

By 14, Saman had started his first business assembling computers and setting up local networks for small businesses. This early taste of entrepreneurship ignited a passion that would follow him through college and beyond.

After earning his degree in engineering, Saman entered the corporate world with roles like an internship at Verizon and, later, working at Honeywell Technology Solutions.

“I quickly realized I wasn’t cut out to be an employee,” Saman admits. While he gained valuable insights into corporate etiquette and processes, he found the rigid structures stifling. However, he learned to converse, write emails, send calendar invites, and do other tasks.

Working at Global Partners United (GPU)

Saman’s next move was a step closer to his entrepreneurial dream—joining GPU, a clean energy startup building manufacturing facilities across China. He wore many hats there, working in different roles and picking up diverse skills.

Saman learned how to dive into a problem and solve it efficiently using common sense instead of a corporate hierarchy to guide decision-making.

The Founder’s Journey: Lessons in Building and Letting Go

Saman’s first venture, a software infrastructure company for VoIP and internet television, was a baptism by fire. He recalls having relationships with people building software infrastructure and compiling the essential components to create a platform.

As he started to assemble the components, Saman identified a real opportunity to build a company. “It wasn’t a massive success, but it taught me critical lessons: how to manage people, prioritize, and, most importantly, say no to good ideas that don’t align with immediate priorities.”

Saman eventually sold the company to one of its customers, an emotional milestone that solidified his passion for building businesses. The experience was his introduction to the full cycle of entrepreneurship.

“The entrepreneurial journey is full of ups and downs,” Saman reflects. “One of the best pieces of advice I received was from Garry Tan: ‘The key to success is staying alive long enough.’” Garry Tan is currently one of Formic’s investors and YC’s president.

Saman also picked up lessons about why VCs like to back second-time founders. Repeat founders have learned from their mistakes and have a list of things they would have done differently. The second time around, they have more energy and a clearer direction for the best approaches.

Transitioning to Investor: A New Perspective

Following his first exit, Saman transitioned into venture capital in the early 2000s, initially as a temporary role suggested by one of his investors. But it quickly became a long-term endeavor. Saman was exposed to incredible entrepreneurs and exciting innovations.

Joining the early 2010s wave of AI innovation, Saman was captivated by the transformative potential of technologies like deep learning, AI, and computer vision. Voice recognition was evolving quickly.

Machine learning was being used to analyze data and make predictions, and sensor data was now a real possibility. As an investor, Saman was fascinated by the new capability set and could see how it was poised to change how the industry functions.

Google and Facebook were using deep learning for content recommendation, ads optimization, and search optimization, like in a pure software world. Saman could see many things happening in the physical world that could benefit from AI.

This thesis was the genesis of Saman’s own venture fund. At the time, he worked at Comet Labs, where he raised $50M to invest in AI and machine learning applications for physical industries, such as agriculture, construction, manufacturing, and health care.

Comet Labs funded around 40 different companies, many of which were working in the robotics space, which was Saman’s passion. A few years later, Baidu, one of the biggest limited partners and a Chinese search engine company, offered Saman the opportunity to run his own AI fund.

Baidu Venture – The Next Stop

Baidu pooled a $600M AI fund focused on Saman’s areas of interest and invited him to run their non-China investments. It was an incredible experience for him to go from a small fund backing early-stage startups to bigger multi-stage companies–but with the same thesis.

As Saman reveals, Baidu is one of the few companies in the world with huge amounts of GPU computing, large GPU clusters, and massive amounts of data annotation capabilities. He could see the potential of leveraging this world-class organization’s assets to benefit entrepreneurs.

Saman got unparalleled exposure to cutting-edge innovation. However, he noticed a recurring challenge: robotics startups struggled to scale in the real world. “There aren’t many robotics startups with more than 10 deployments,” Saman explains.

That realization planted the seed for Formic.

Founding Formic: Revolutionizing Manufacturing

While at Baidu, Saman attempted to incubate a company internally. However, he was unsuccessful at building a team that could combine the very disparate disciplines of asset financing, robotics, and software into one cohesive whole.

In October 2020, amid the COVID-19 pandemic, Saman took the plunge to launch Formic, a robotics-as-a-service company designed to address America’s massive labor shortage in manufacturing.

The problem–There are 622,000 unfilled manufacturing jobs in the U.S., with factories running at 30% vacancy rates.

Their solution–Formic offers factories an alternative to labor shortages by providing robots on a pay-per-use model. “Instead of paying $25 p/h for labor you can’t find, pay us $20 p/h, and we’ll do the job with a robot,” Saman explains. Thus, Formic has a direct value proposition for factories.

Within a couple of weeks, the robot solves several operational problems, increases worker safety, increases throughput, and reduces operational expenses. Formic is paid a monthly rate to do that for them. Essentially, Formic is a robot staffing agency, Saman explains.

Formic’s innovative approach eliminates the high upfront costs of robotic systems, making automation accessible to all manufacturers.

The company handles everything from installation to maintenance, allowing factories to scale without worrying about technical expertise or financing. “We want to make robots as easy to deploy as hiring a temp worker,” Saman says.

Formic’s mission aligns with his belief in using technology to solve real-world problems efficiently and sustainably.

Raising Capital and Funding Deployment at Formic

Saman reveals they’ve raised about $60M in equity capital and around $250M in asset financing for the company. The equity capital funds the business operations and is used to build software, the sales team and its salaries, and all R&D activities.

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The asset financing facilities are leveraged to fund hardware procurement. Formic purchases a variety of hardware components from a variety of vendors. The company overlays software to make the robots and their systems work and converts them into functional robots.

These robots are then deployed in the customers’ facilities. Customers pay the usage fees, which are used to pay back the asset financing facilities. The balance funds are diverted to the operating business.

Saman explains that robots are very high-yielding assets with an IRR of 60% to 70% per year if viewed as a financial asset. At Formic, they spend extensive time on R&D to improve the speed and quality of the robots they are deploying.

They are also working on improving the speed and quality of their maintenance, making it faster and cheaper to program them. They’re also drastically increasing the asset yields on the robots.

All that translates to better customer pricing, faster deployments, higher uptime, and an improved overall experience for the people who need robots.

Lessons Learned

In retrospect, Saman talks about the need for clarity around the product-market fit before stepping on the gas pedal. Formic quickly raised $26M and created the initial product offering. They also had a few initial pilot customers interested in the products.

At the time, they were automating a broad range of application types for many different types of manufacturers. However, due to the lack of focus, the conversion rates were low, systematizing the sales process was difficult, and the uptime on deployments was spotty.

Although the exact ICP or ideal customer profile was unclear, they sold to many different industries and catered to a broad customer base.

Saman conceded that the series A+ capital was spent on inefficient growth. They invested in a large sales team, offering them bigger incentives to bring in business regardless of product-market fit.

The solution was to focus the sales team on a single customer segment, CPG, and a smaller set of application types, where Formic had seen the most success.

They also improved the product and sales process, which boosted their conversion rates and, more importantly, increased their iteration and learning cycles.

Within a few months, the company started growing efficiently, with more predictable sales cycles, higher conversion rates, and happier customers interested in buying more products. Formic also attracted other investors who believed in its vision.

Vision for Manufacturing Innovation

Saman envisions a transformative future for manufacturing, where every factory in America—and eventually the world—has access to instant, on-demand, and virtually unlimited robotic resources.

As Saman sees it, today’s manufacturing sector faces dire challenges, particularly the human capital crisis. With a staggering 200% annual turnover in factory jobs, an operation employing 500 people must hire 1,000 workers yearly just to maintain its workforce.

These roles are often physically demanding, leading to high attrition rates as employees leave after only a few weeks. This labor shortage results in significant underutilization of manufacturing facilities.

According to Saman, most factories in the United States operate for less than eight hours daily, roughly 30% of the utilization of resources like forklifts, air conditioning, and facilities.

This inefficiency inflates production costs, reduces product quality, and perpetuates a vicious cycle of underperformance and low demand. However, the transformative potential of robotics is breaking this cycle.

By integrating robots, factories can dramatically increase productivity, lower production costs, and deliver higher-quality goods. This shift counteracts inflation and drives global benefits by fostering a world of abundance.

“We don’t want to live in a world of scarcity where people face shortages of essential products,” Farid explains. “Abundance comes from much higher capacity and efficiency in manufacturing, and achieving that could help eliminate shortages worldwide.”

Lessons in Leadership: Culture Over Strategy

Reflecting on his entrepreneurial journey, Saman emphasizes the critical importance of building a strong team and fostering a cohesive culture. “Every incremental person who joins a company has a huge cultural impact,” he notes, citing the adage, ‘Culture eats strategy for breakfast.’

Saman believes that even the most brilliant strategy will fail without a united and effective team to execute it. Conversely, an excellent team can quickly pivot from a flawed strategy to the right one through collaboration and iteration.

Saman advises entrepreneurs to approach their ventures humbly, acknowledging that the initial business idea will likely evolve. “95% of the time, the assumptions you start with are wrong,” he explains.

Success lies in creating mechanisms that enable continuous improvement and adaptation. This philosophy extends to his experience as a venture capitalist. Saman admits to initially focusing too much on funding specific ideas based on rigid theses.

Over time, he learned the value of prioritizing exceptional teams over predefined concepts. “It’s crucial to listen to entrepreneurs, understand their challenges, and back teams that can iterate and innovate,” he says.

Saman Farid’s journey—from a curious kid in Beijing to a serial entrepreneur and VC—is a masterclass in adaptability and vision. With Formic, he’s not just building a business; he’s shaping the future of manufacturing.

Listen to the full podcast episode to know more, including:

• A cohesive, adaptable team can iterate its way from a wrong strategy to the right one.
• Entrepreneurs should start with the mindset that their initial idea is likely incorrect and focus on building systems to iterate and improve.
• The original business idea is rarely what succeeds; flexibility and evolution are key.
• Venture capitalists should prioritize funding adaptable teams over rigidly backing specific ideas or theses.
• Writing an investment thesis is useful, but real success lies in listening to entrepreneurs and adapting to their challenges.
• Both startups and investors must embrace iteration as a core principle for finding the right solutions.
• Building mechanisms for continuous learning and adaptation is critical for long-term success.

 

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