CMU Incubates the Science Fiction Future

Donald Bonk interviews David Mawhinney, executive director of the Swartz Center for Entrepreneurship at Carnegie Mellon University, as part of the Pittsburgh Tomorrow podcast series. This is the second part of a two-part interview, conducted before COVID-19. The transcript is abridged and edited for clarity.

“We have over 60 robotics companies in Pittsburgh employing over 5000 people… we can be that kind of a dominant player. AI is one of the significant components of robotics.” —David Mawhinney

Donald Bonk: We’re here at the birth of creation is what you’re saying. We’re just watching this take shape.

David Mawhinney: It’s a moonshot that took off 50 years ago, but it’s just gaining the acceleration in the time period that we’re in right now.

Bonk: And Pittsburgh’s a major center.

Mawhinney: We are the major center. I believe that we are the number one AI and robotics hub in the world. We have over 60 robotics companies in Pittsburgh employing over 5,000 people. It’s not yet the size that the steel industry was, but we’re on a trajectory that you’re normalizing for the type of industry that it is, that we can be that kind of a dominant player. AI is one of the significant components of robotics. But, there is a dark side that we all have to be careful of.

Bonk: What’s that?

Mawhinney: Well, our science fiction writers and movie makers have made us quite aware of the Skynets and the VIKIs from the “I, Robot” movie. “I, Robot” was the VIKI: (Virtual Interactive Kinetic Intelligence). At some point, we have to have an ethical view.

Bonk: So, morality and ethics are in robotics.

Mawhinney: Carnegie Mellon is at the forefront of that. David Dank from the Dietrich College at CMU, a philosopher, is working with some of our computer science professors in the School of Computer Science on the ethics of AI. They’ve had several conferences and are trying to build a good, meaningful pedagogy for us, an instruction set for us, to make sure that we are enhancing human life, not detracting.

Bonk: For example, Isaac Asimov’s 3 Rules for Robots, like “don’t harm a human.”

Mawhinney: Which was in “I, Robot” as well.

Bonk: And that was maybe 60 plus years ago (actually 80 years ago!).

Mawhinney: Obviously there were brilliant people 60 years ago and 600 years ago. A lot of them have thought of these things. We have to learn from those who came before us and adapt it to the current time.

So “AI for All” is the moonshot. It’s going to change our lives. It is changing our lives. Lots of people have Siri on their phones, or Alexa or Google Home in their houses already. That’s just another form of artificial intelligence.

Bonk: And Nest, the control for the temperature in your home.

Mawhinney: Nest was built by one of the Swartz Center Advisory Board members, Matt Rogers. Matt is a phenomenal engineer. He built Nest, sold it to Google, and it’s now the platform for Google Home. But many people don’t know that Matt also built the first four iPhones and the first iPad.

Bonk: What did he do at Carnegie Mellon?

Mawhinney: He was an electrical and computer engineering undergrad and masters student. One of his first hires when he went to Nest, was his former CMU computer science professor, Yoky Matsuoka.

Bonk: We both have iPhones sitting here on the table. Part of the DNA of the iPhone is Matt Rogers from Carnegie Mellon.

Mawhinney: Absolutely. He’s very involved with us now being a mentor and an investor in CMU companies.

Bonk: That’s something for listeners out there to Google and understand some of this history and the connections that are taking place here in our backyard in Pittsburgh.

We want to get to our last question. I saw a meme on Facebook that 1990 and 2050 are equidistant. I remember 1990 very well. I was in Pittsburgh and went to a playoff game with the Cincinnati Reds and the Pirates with my parents. It’s very real to me. But 2050 is that far away.

When you’re looking at the next three decades—the 2020s 30s, 40s, and up to 2050—what are three practical ideas that you might share with us?

Mawhinney: These are three that I’ve been talking about for quite some time. By the way, I started my first company in 1990, so it has great meaning to me as well. I had then an ongoing argument with one of my best friends about who is the team of the 1970s: the Cincinnati Reds or the Pittsburgh Pirates. So very close competitors.

Bonk: The Big Red Machine and the Lumber Company… Lumber and Lightning.

Mawhinney: So, three ideas to improve… Our number one biggest problem is the lack of risk capital.

Bonk: Can you explain for some of our listeners who might not understand?

Mawhinney: Risk capital is capital that is invested into riskier ventures. When you’re comparing a startup to an S&P or NASDAQ listed stock or bond, those are relatively safe investments. But on a relative basis to investing in a startup, the startup is much riskier. Venture capitalists, angel investors, friends and family are all pools of capital that support startups in the early stage. Pittsburgh is not good at any of those.

Bonk: Today… but maybe in three decades or maybe in less than a decade, we might be better at it.

Mawhinney: For sure! And kudos to Innovation Works, Alpha Lab, and Alpha Lab Gear, which is the Ben Franklin program from the state of Pennsylvania, has been supporting startups in this region for almost 40 years now. Without them, we wouldn’t be where we are today.

Bonk: So there was a foundational investment by state government.

Mawhinney: Right. We right now have no venture capital firm in Pittsburgh with dry powder, meaning fresh money to invest in new companies. They have money to continue to invest in the companies they’ve already invested in. There is no fresh dry powder in Pittsburgh right now.

Bonk: Yet there are all these opportunities we just described in robotics and artificial intelligence.

Mawhinney: All that money is coming from outside the region. We work very, very hard to continue to get that money to come from outside the region, into the region, but we’re not going to be sustainable unless we have some of that capital based here. Now, we’ve had some great partners like Drive Capital from Columbus, Ohio, that have been active investing in Pittsburgh and Carnegie Mellon companies. They invested in NoWait—Rob Meyer, one of our entrepreneurs in residence here. They’ve invested in Duolingo (first billion dollar plus valuation of a tech start-up in Pittsburgh). They’ve invested in Fifth Season, the indoor vertical farming company.

Bonk: The former Robotny.

Mawhinney: They’ve invested in READY Robotics, which was a CMU alum that’s now based in Columbus. So they’ve been very active, and they’re doing well. But we need more. We’re working very hard to build a risk capital base here. That’s a step one.

Step two is that our airport needs to improve. We don’t have enough affordable, nonstop flights to the Bay Area.

Bonk: And by affordable, what’s the metric?

Mawhinney: Depending on when you book your flight, you can be spending $1,500–$2,000 on a ticket to get to San Francisco that has one or two hops in it. Entrepreneurs here will pay that price because they have to.

Bonk: Because they need access to San Francisco.

Mawhinney: A venture capitalist in San Francisco is not going to do the reverse, to come here. So, we need nonstop flights at multiple times of the day, back and forth to the Bay Area, at a reasonable cost. And the same to New York, where the other hub for venture capital is located. Sometimes you go to book a flight to New York and it’s a $1,000 and you’re like, “Holy crap. That’s a lot of money.”

Bonk: You get in a car and be there in 6.5 hours.

Mawhinney: But again, a venture capitalist is not going to drive in a car for 6.5 hours. It’s a real barrier and inhibitor for us. I know that Christina Cassotis has been doing a great job at the airport in trying to transform it, but we’re nowhere near where we need to be. There’s a lot of community leadership effort that has to get behind that portal.

Bonk: That’s a portal to the outside world. We need to accelerate it and make it more cost effective.

Mawhinney: If we’re going to get number one, more risk capital, we have to improve number two, the access to the physical connectivity.

The third is that our startups in Pittsburgh have a really hard time getting local first customers.

Bonk: What does that mean?

Mawhinney: Let’s talk about the Bay Area first. There’s this pay-it-forward virtuous cycle in the Bay Area where a startup is formed. It’s bought by a bigger company. Those people are there, and they understand that for the next generations of startups to be successful, they need to get early customers to test their products and give feedback.

Bonk: You mean start-up companies grow and become successful, then they can start buying things from the next generation of entrepreneurs?

Mawhinney: Exactly. That doesn’t happen here. The PPGs, the Alcoas, the US Steels The Kraft-Heinzes… these companies, which are massive companies, are risk averse and are not buying new technologies from the startups that are here. So, our startups are having to go to New York, Boston, Atlanta or the West Coast with the first customers. The cost of customer acquisition and the time invested is way higher than it should be.

Bonk: The two solutions, if I understand what you’re saying, is that some of our local companies might want to consider—for those out there that are listening to this—consider checking in with and connecting with the great startups that CMU picks down the street, as first customers. And then maybe if we get a grand slam, or a multiple home runs, that a stream of supply chain, first customers, can come to fruition.

Mawhinney: Absolutely. We know that could be Columbus, Ohio. It could be Washington, D.C. It could be Cleveland. There are other cities that are closer, but those cities are always are suffering that same problem as well.

So if 1) we get more risk capital based here, 2) we improve access to the city via our airport, and 3) we get more participation of the mid-to-large corporations here in the innovation ecosystem, being first customers, we can sustain the Pittsburgh story as we’ve seen it evolve.

I think the real tipping point was 2005, when Google established a remote engineering office here. We’ve just seen almost every large tech company—Amazon, Apple, Facebook, Facebook Occulus—all establishing a technology and product development base here, which has created an environment where technical entrepreneurs can take risks. If they leave their job today to try something innovative and it fails, they can get a job… We’re in a great place right now because we have the critical mass of technology.

Bonk: A Thicker Labor Market.

Mawhinney: We need that capital. We’re also going to need more talent from the sales and marketing side to come to Pittsburgh to round out those companies. Of course, with things being virtual now, it’s much easier, right? We have immediate video conferencing which we didn’t have 15 years ago. You remember, I think it was in 1968 when they tested the first Westinghouse video conferencing. It was with a five-inch screen on a phone.

Bonk: Or you could watch it on Star Trek (TV) from 1966 to 1969. I am a Trekkie, self-described. That tiny (and large) screen that you could have that dialog back and forth with you and your colleague …

Mawhinney: These are three steps that we can take to improve our long-term viability as a technical innovation city.

Bonk: This is a really deep, thoughtful, and all-encompassing conversation. How I like to tie things up is to give you an open forum, which is that if you have anything to say, to share on your thoughts on Pittsburgh in general.

We’ve talked about the future, talked about the Swartz Center, entrepreneurship, capital… is there anything in particular that you want to bring to the fore for those folks that are listening about your experiences in Pittsburgh?

Bonk: Well, I’m long on Pittsburgh, meaning that I’m investing in the long term in Pittsburgh. I believe that this is an amazing city with the base of the two very successful Tier 1 research universities, Pitt and Carnegie Mellon.

As I mentioned before, we have a steady stream of great talent from around the world coming here: 3,000 a year to CMU alone.

Hopefully we’ll be able to entice some of them to stay here and help build the companies that are growing now and to create that next generation of companies that are going to change the world. So I’m very excited about that. But I just don’t want people to think that is not without risk.

Bonk: It’s a managed risk, maybe is the way to put it.

Mawhinney: Yes. We need risk capital to come here. We need better access in the airport. And the things that we said before: It’s going to take everybody pulling to make that happen. It’s not one individual in this city, or one entity in the city, that can make those things happen. It’s going to be like what the Allegheny Conference was back in the 1950s.

Bonk: A co-convener of thought leaders and action takers.

Mawhinney: I’ll just leave you with one thought: Perhaps the most unexpected benefit of the growth of the technology industry in Pittsburgh has been our rise from a greasy spoon restaurant town to a five star restaurant town.

Bonk: That’s an interesting way of looking at the town.

Mawhinney: We’ve become one of the best restaurant towns in America. It’s because we’ve brought all these high paying jobs for people who need convenience because they’re working hard and can’t necessarily take time to prepare the food for themselves. And so, there are these beautiful side effects of technology economy growth here.