By Fritz Nelson, editor-in-chief
Rufus Labs CEO and Founder Gabe Grifoni has a 360-degree view of the impact of the coronavirus on the manufacturing industry, both as a player and a supplier. His company makes wearable technology for manufacturers and warehouse workers, and like many companies in its industry, Rufus Labs is navigating coronavirus-induced ripples and waves — and anticipating those still to come.
When it became clear that the coronavirus would impact its business, Rufus Labs created an outbreak response plan that included internal and external changes. Internally, it froze hiring but didn’t reduce its labor force, and it cut unnecessary spending. Externally, for customers such as airline food suppliers that face stiff headwinds, Rufus Labs deferred their payments if possible. Other customers, like those in biomed, picked up steam.
Most of the technology used to build Rufus Labs products is made in the U.S., and the company had a lot of inventory on hand, the result of its reliance on parts that require a long lead time when ordering.
“We always look way out,” Grifoni said, adding that he sees the previously stalled supply chain in China starting to move.
The company continues to meet weekly to discuss its outbreak response plan. It continues to institute and follow safety protocols, especially around packaging and shipping its equipment. A recent round of venture capital funding gives it runway to continue focusing on a long-term plan.
Check out our video interview with Grifoni, in which he talks about all of the above and more, including his experiences applying for a PPP loan and his thoughts on some of the changes coming for the warehouse workforce.
Watch our conversation with Rufus Labs’ Grifoni in the video above.
Here’s the full transcript of our conversation:
Fritz Nelson: Joining us today is Gabe Grifoni. He's the CEO and founder of Rufus Labs. Hey, Gabe, thanks for joining us.
Gabe Grifoni: Hey, Fritz, thanks for having me. I appreciate the time today.
Fritz Nelson: Let's start off at the top. For those who don't know who Rufus Labs is, maybe you can give the ... Do they still call it an elevator pitch?
Gabe Grifoni: Oh yeah, they still call it an elevator pitch, for sure. Logline, elevator pitch, yeah.
Fritz Nelson: Yeah, let's start there.
Gabe Grifoni: Okay. Yeah, so at Rufus, we build wearable technology for enterprise workers. Think warehouse workers, manufacturing people that can benefit from having their hands free. And we can learn a lot of things about how they do their jobs to provide some data to make it better and safer for them on the job.
Fritz Nelson: So this is B2B, you're selling into warehouses, into manufacturers.
Gabe Grifoni: Yep.
Fritz Nelson: That's your main audience?
Gabe Grifoni: Yeah, yeah. E-commerce and then manufacturers. Logistics is pretty much an underpinning of almost every business. If you're a manufacturer and you don't sell direct-to-consumer, you still have goods to move from one distribution center to another to distribute everywhere. So a lot of our customers are manufacturing or e-commerce, but they're moving a lot of goods and barcodes throughout globally.
Fritz Nelson: And I took a little bit of a cheat tour of your website. I mean, some pretty cool stuff. And I'm not as familiar with all the technology that people in warehouses use. But the fact that I could just, it looks like I could just wave my hand over a barcode and read it. I mean that's got to ... The productivity there has to be huge.
Gabe Grifoni: Yeah, there's definitely ... It's a little more than a hand wave, but it —
Fritz Nelson: That's one of the things.
Gabe Grifoni: It's very easy. Yeah. We have a barcode, a hand ... Which actually, the hand glove scanner increases productivity even fractionally more efficiently than a ring scanner. So we've kind of done a lot of that homework, and it makes the worker's lives a lot easier with what they have to do. And that's the main goal here. And that on the other side drives a lot of ROI for operations. They see a lot of improvement.
Fritz Nelson: And they look cool when they're walking out on the street with all that gear.
Gabe Grifoni: Yeah. Yeah. Well we're all about empowering, like, a superhuman workforce. So how do we make workers more powerful and superhuman at their jobs? It's kind of why our brand and our tools and everything is kind of focused around that.
Fritz Nelson: So this is kind of an interesting time with the impact of COVID-19 hitting all kinds of business. How's it affected your business?
Gabe Grifoni: Yeah, so, I think we're still figuring out, I think everyone is figuring out how it's really affecting their business. I think we've already seen some things happen. We had a customer that was going into trial, and they're one of the largest suppliers of food to the airline industry. So that project obviously was now pushed out 11 months. It's basically indefinite at this point because no one's flying, no one's delivering food to airlines. So we have seen it impact customers that are in areas that are heavily impacted.
And then on the other side, you look at an Amazon or an Instacart, hiring 120,000 new workers. There's a big uptick in demand on grocer and home goods. People don't want to go there even more than they didn't before. So that's going to uptick. So we've seen some customers, obviously that are going to face challenges and we'll do what we can to support them. And other customers will have a need to improve that productivity much quicker.
Rufus Labs makes wearable technology for manufacturers and warehouse workers.
Fritz Nelson: And so then how have you and your business reacted to this? And how have you looked at this unpredictability and how things are going to go and rejiggered how you're looking at your operations, cash flow, et cetera to be prepared for whatever may come?
Gabe Grifoni: Yeah, the first thing we did, we started working remotely about a week or so before I think it was a state mandate here in California, somewhere in the first half of March, just because everyone could start it to see the things coming and the priority was safety of the team, safety of the community, everyone around us. We formed an outbreak response plan. So we basically got everyone together on the team and said, "How do we respond to an outbreak?" This is something we hadn't developed before. No one thinks a once in a century outbreak is going to happen. You don't plan for that. But that was the first thing we did and it was, across the gamut, internal and external, how does this change things at Rufus?
And internally it was we're not going to hire anyone. We're going to do a hire freeze. We're not going to cut anyone. We're not going to lower any salaries. We're going to keep the team on mission and not expend any more than we currently have right now. And I think that also on a customer side, we've maintained certain marketing levels because we still have a good amount of inbound. I mentioned there are customers in the space that are now going to have a boom in demand. And those we'll continue to service.
And another thing we did was look at customers that might face challenges. I had one customer that delivered food to schools. So obviously they're affected too. But we thought how can we help customers that in the future may still have to do these things, but it may be a while before they get paid, which means it may be a while before we get paid. So we started looking at how do we defer payments and let people either who are on the platform now or join on if they're affected by this essentially work for free now with our tools so they can get those goods out faster. We work with a biomed company. If we can get supplies that are actively involved in helping fight COVID-19 out the door faster, we'll do whatever we can to help. So it's a lot of things went on in that discussion and continues to go on.
Fritz Nelson: Sure. Yeah. That's what we're finding that it's almost a weekly conversation. What can we do now? How can we extend the runway and so forth? I'm wondering, you're obviously manufacturing a lot of this technology as well. How has your supply chain been affected?
Gabe Grifoni: I'd say most of our tech is built here in the States, and we have inventory here right now of a quantity that at least will hold us over for a bit. So it hasn't really, we haven't seen the impact of that yet. We have always kept a pulse on parts. In the supply chain space for us with electronic parts, there's a lot of end of life. There's a lot of, “Some parts might take 12 weeks to get.” So we're always kind of thinking four months out in an advance on supply chain. So we've always kind of had that longer ... If we have to have things ready in four months, we need to know it today. So we've always been thinking a little bit further on the supply chain.
The stuff here in the States, again, we have inventory here. Stuff out of China, because we do OEM some solutions out of China. Those items have actually come back online now as China has ... I know Wuhan after 76 days opened up their lock down. So parts of China have come back online and are now moving supply chain there.
Fritz Nelson: Got it. And so you're, as you see the business fluctuate, some people doing good, some people doing bad, or just not doing it as well, I guess is maybe a better way to put it, do you feel positive about your prospects for the next few months?
Gabe Grifoni: Yeah, I mean I think right now everyone, no matter where you are, just because the fallout is still unknown, everything that will happen and everyone's affected by this. It's the most terrible thing that's happened in our lifetime in terms of a tragedy, but it is the most united everyone has been on one front to help each other out, by social distancing or whatever we're doing. So I think that you need to have a long-term plan. For us, it's not a few months. I think you need to be prepared and ready to do things for the rest of the year, at least. I think there's always the risk of coming back too soon and having another kind of outbreak.
So I think that we've prepared for a long runway to kind of ride out the storm. And I think everyone has to prepare for it, whether you're doing okay right now or not. I talked to someone this morning who's in a business totally unrelated to things you may even think are affected, and their business is fine, but they're now concerned with their customer's ability to pay them. So it will have ripples everywhere.
CEO Gabe Grifoni says the company has a "long runway" allowing it to continue business despite COVID-19.
Fritz Nelson: Yeah. And speaking of runways, you're still a relatively new startup, been around for a few years, but still in those startup days. And we've heard some people talk about having a long runway if they're startups. So since you said you have a runway, how have you built that especially from a funding standpoint?
Gabe Grifoni: I think we do have a long runway right now. We've revamped the budget. Everything, part of that planning was where do we trim any fat, where do we not make any hires, whatever that can be. And we did that in combination with looking at SBA, the PPP, production payment plan loan and stuff like that. So we've got over a year of runway now, and I think that was really critical to be able to close some funding earlier on to give us that runway. It was not intended to be that long of a runway. We were looking at closing more so that we could ramp up. We've shifted that. I think after the summer, there may be some funds that are still going to be active and moving. I think right now everyone's in a weird kind of freeze, rightfully so I think with not knowing what's going to happen.
And I talked to another startup last night that had just closed a round at the end of last year that would have given them two years of runway and they're looking to get a loan and looking to raise a bridge because they're concerned at the length on that. So I would say you need at least a year runway to ride out whatever's happening.
Fritz Nelson: So you have applied for PPP?
Gabe Grifoni: Well as much as everyone else has. I mean, I don't know if you're... The PPP application process is quite a nightmare right now.
Fritz Nelson: No, I actually wanted to talk about that. We're starting to talk to companies now who have gone through it. I know I talked to somebody this weekend who was on their third time trying to fill out the application and they're not a stupid person. So what was you or your company's experience in doing that? What are your expectations around it? Where are you at in the process?
Gabe Grifoni: Yeah. So I think a lot of banks are as confused as the people applying for the loans, right? We have two banks that we work with, and one of them had a pre-application email over the weekend that we're still waiting ... That was supposed to be Monday, then now Wednesday, potentially today a response. Another bank took all of the application, which we did do, and then guidance was revised last night about how to calculate things, not using FICA numbers, which our CFO is on a conference call five times a day to hear different news about how this is changing. So I think we have all of the information we need, until we get new guidance from the SBA and the federal government, which is happening daily.
So as far as we know, we have two banks working on this right now. Obviously we would only go with one, but we're hedging bets at this point because we've had pre-established relationships with both and that was one of the prerequisites, before February 15 I think was the day you had to have an account with them. And we have everything in and we're just waiting and I think the banks are waiting. So it's a big waiting game. I talked to someone else today at a nonprofit. He's in the same boat in Colorado, playing that waiting game with his bank. No one really knows kind of what's going on in terms of the government getting the money to the banks and what banks are processing loans. I don't know of anyone who's gotten one successfully processed yet. Do you?
Fritz Nelson: I don't. I don't.
Gabe Grifoni: Okay.
Fritz Nelson: I'm waiting. Waiting for that first one.
Gabe Grifoni: Yeah, I'll let you know when that happens.
Fritz Nelson: Okay. We talked a little bit about the workforce side of this, and I'm wondering both from the workforce side and the customer side, especially because you guys send equipment out, right? And I imagine occasionally I have to service it. How are you dealing with safety issues for your own employees, but also for customers receiving your equipment?
Gabe Grifoni: So well right now the lab, I'm in an empty office right now so it hasn't, no one's been in here for a few weeks. I come down here every once in a while to grab mail and do any kind of work I need to do in here. But so one thing we keep the office locked down and sterile. No one comes in or out. So everything in here is clean.
When we have to ship out devices, which I'm here to do actually today, I've got to prep something. Our VP of engineering is going to guide me through it on the phone. I'll do the engineering work here remotely, wipe it down, package it up. We actually ship now three-day shipping, which is counterintuitive. We used to ship overnight to our customers. We want time for anything that could be on a surface for 72 hours to potentially decontaminate. The packaging on the outside obviously could be touched by someone, but everything inside should be clean. So there's a lot of steps we've taken along the way from keeping the building completely locked and clear of any contaminants or people, wiping down what we ship out and shipping it longer time, unless there's a critical need and we let the customer know, "Hey, we've done this on our end, but make sure you do that on your end if you want to be doubly safe." Definitely has changed. It's slowed down some things for safety.
The Rufus Labs team is taking extra precautions in shipping its wearable tech to warehouse workers.
Fritz Nelson: I'm sure. And I'm sure people appreciate that. I'm wondering too, especially with your company being still such a young company, about whether you had plans in place, crisis management, business continuity plans? I mean obviously, as you've mentioned before, nobody can plan for such a convergent of events like this, but do you have those in place and is this causing you to rethink some of the aspects of those plans?
Gabe Grifoni: We didn't have them developed before and that was part of what we started planning with these more than weekly meetings on kind of the outbreak response as things shift around us. So we've started to develop these protocols about, I mentioned to you about how we ship out devices. That was part of our plans here.
In terms of how we run operations. We're lucky in the sense that we're not a service industry where you need to be in a particular place to do something except for when we have to ship out equipment. Our engineers can work remotely on code, push everything to servers. We are 100% operational offsite. And it was very quick that we had to make these decisions. So I think we have them in place now and they change on the regular. Hopefully we never have to use them again.
But it may change things in the future too, right? I think a lot of people are going to understand that remote work may work and maybe it's a few days in, a few days at home, maybe you have half the workforce in sometimes, half another depending on social distancing or what you want to do. I think it may change the way people work going forward for a while.
Fritz Nelson: What about that same kind of outlook on warehouse operations? I mean people are having to rethink how they... Working in shifts and keeping people apart. But does it change the future of the warehouse? Not just because there might be another outbreak, but maybe we're learning some things along the way.
Gabe Grifoni: Yeah, I think, I would ... I don't know everything that will change, but I would imagine things will change. I don't think any area will be untouched by what happens here. And people will rethink their business and they'll be doing it for at least the next 12, 18 months or so until we've got a vaccine and kind of a clear path from here. And that's a long time to get used to doing something in a new way that may work out operationally better for you. So I think that the warehouse, the way I look at it, some things is customers that used to have one shift, right, now maybe have two or three with less workers per shift. But if they're busy and in demand, they're going to have more workers, but they're going to need to spread them across more shifts so they're not packed in one warehouse for a small time.
We have customers with small warehouses and they've told us, "We've got 20 people in this X-square-foot place." And I can't imagine that today. So I think things will change in that regard. I think automation is still pretty expensive, and a lot of our customers, it was cost prohibitive before, it'll still be cost prohibitive. But I think people will think about it more, "What things can I do with these humans and these robots together to minimize the number of humans that have to be doing stuff together?" And we may learn this over the next year and a half, like you said, And it may change things going forward that the new practices will be put in place from this. I think the warehouse will change, but I think it'll hopefully make it safer.
Fritz Nelson: Yeah. And again, kind of going back to your company as still relatively a startup, having just gotten some funding. What do you ... We've read or heard that there's still all that capital sitting out there waiting to be invested once we kind of come out of this. What do you think about the current climate for startups and where some of that capital might be spent?
Gabe Grifoni: I think right is a really tough time to be raising capital, but I don't think it's the rest of this year. I think the social changes and the world changes will last a little longer, but people will start putting money in places. And I think what industries emerge out of this crisis and what new businesses find better ways to be more profitable I think will affect where that money goes.
For us, I look at logistics as an area that was already growing rapidly, right? More and more home deliveries, last-mile deliveries, warehouses everywhere, no one goes to a store. This just round that to a halt, going to a store, and boosted this. So for us I think that that will be a big area that we'll need to focus on our customers and stuff going forward. And as a startup, I think that people will be looking for a startup ... I'm sorry, as a startup looking for funds, when we're raising again, I think it will be industries like that where people see these shifts even more that will get money into them.
It may be more biomed may have a boost for a while because people will start thinking what other things could hit us that people might solve now. So I think money will still flow out of those places. But I think right now everyone is waiting to see where the chips land.
Fritz Nelson: You talked about some of the things that you hope never to have to do again, but I'm just... We're talking to a lot of companies that, they're doing things maybe out of necessity and going, "Oh wow, it's working. Maybe we're going to keep doing this." Is there anything so far that you guys have changed and are doing that you think, "Wow, this could become part of our future strategy?"
Gabe Grifoni: Yeah, I think that totally will happen here and everywhere else. And what I meant earlier, I hope we never have to do it again in the sense that there's a reason like this to have to do it. But obviously there are good things that will come out of every terrible thing. And I think in this regard, like I've always been okay with work from home. I know some people aren't. Maybe it's enough stuff doesn't get done. If people are on mission, they're going to get stuff done. So I think for us, maybe going forward, having more days where people don't have to commute in, right?
I see that, there was an article yesterday I think I saw about the pollution levels in Los Angeles, how drastically they've changed since this. And I saw one about India where certain levels of pollutants dropped 70-75% since the lockdown. So I think as a society, if we say, "Hey, we can work three days in, two days off. People don't have to drive in. They don't have to spend an hour in the car where they can't do anything. They don't pollute as much." Those are good things that come out of this and that I'd be okay implementing and I think the team would probably love too. So I think we will have some of those. That I can see as one coming out of it where we're not here five days a week.
Fritz Nelson: Great. Well Gabe, thank you. Stay safe there in your lonely environment, and best of luck during these times.
Gabe Grifoni: Awesome. Thank you. And you too. I hope that your family and everyone around you is safe, and thanks for the opportunity again today to talk.