It's actually one of the better stories I've heard. The founder basically found various phds that were researching in related fields and convinced them to work for equity.
According to reports, Kiva raised around $33 Million in VC funding [1]. Like I wrote before [2]:
I've been tracking venture capital (VC) funding of robotics companies for the better part of two years. Based on my (limited) data, VC funding in robotics exceeded $160 Million for 2011. This is just a rounding error compared to VC funding of Internet (web-based) companies, which hit a decade-long high of $6.9 Billion in 2011. My hope is that robotics will get more love in the next year(s), but getting VC funding for robotics is a decidedly tough nut to crack. Robotics companies have large capital requirements for robot hardware, few potential acquirers, and almost no "Google-scale" breakout success stories (ie. IPOs). I mean, c'mon... one of the best known robotics companies, iRobot, has a market cap of just $700 Million. This makes robotics a difficult sell to your typical VC firm. My hope is that this list can give others courage to pursue "swing for the fences" type projects along with a source for robotics-friendly VC firms.
So this acquisition is good news for robotics, and _exceeded_ the entire market cap of iRobot. Like I mentioned in a previous comment, I hope Amazon doesn't hoard Kiva to itself and rob the world of efficient, robotic warehouses.
I don't know the exact situation of Google's server warehouse design. But I presume that was developed in-house. Kiva already has other big customers that rely on it for their order fulfillment. Like said in this thread, making your competitors into customers is a smart move.
I'm trying to remember more, he spoke at a class I was in.
His office was his small apartment with a whiteboard. In the morning he would go out for a cup of coffee, and when he came back it was his office. If he didn't do that, it wouldn't feel like an office.
Previously he had worked with Webvan, and one of their costs that was unexpectedly high was product fulfillment. Kiva was built partly as a solution to that problem (though it was after Webvan went bankrupt).
Their initial prototypes (we saw pictures of them) we're extremely scrappy, and I believe too big to realistically be used. I think they raised money with the prototype and computer simulations?
The robots are talked to wirelessly, and apparently wireless represented a major technical challenge (it was before wifi took off I believe).
The co-founder with robo-soccer experience was targeted. He said something along the lines of "If you can make a robot play soccer, you can definitely make a robot follow a grid and pick up shelving."
I got the impression that he gave up a lot of equity to get co-founders at seemingly late points in the game, but didn't regret it. I think people normally put a ton of effort into maintaining equity, sometimes at the risk of losing a great team member. It looks things worked out.
The great thing about this company is that it's indisputably the best solution available, although high costs mitigate some customers. He told the story of a stress test they did with one major brand name. To simulate high buying season, they held up regular orders for three days, then pushed them through at once without an issue.
Other cool benefits: despite having to power these robots, the power bills with Kiva end up being less expensive because of savings in lighting, heating and AC. Most fulfillment solutions require the entire warehouse to be lit up and heated so a person can comfortably work, while Kiva keeps the main warehouse dark and temperature doesn't matter much.
At the time, they were the fulfillment solution of some companies that Amazon had acquired, but not Amazon itself. I suspect that's going to change.
I may be able to provide some limited insight as well (source: used to work there, still keep in touch with a few people).
IIRC, Kiva raised ~$18M in funding, most of it from Bain. I read an article recently which broke it down to ~$1.5M in angel, with the remainder coming from Bain, but I can't track it down right now. Not a huge amount, but definitely not "no money". Great place to work, but most of that money was going right to the robots. :)
The robots do use Wi-Fi, but there are challenges with a multi-robot system of that scale which are somewhat novel, especially when they had to invent a lot of the backend IT infrastructure to get them to work.
The co-founders definitely came in right at the beginning, and it was Raff's robo-soccer team which actually inspired the concept of shelves which can "walk and talk." They found a great market - the Kiva approach isn't the best for all approaches, but it does happen to be particularly well suited for online retailers.
Also, a Kiva system is probably the closest you can come to real-life Frogger, but playing in the dark is not recommended.
yeah, there's more to it.
The founder Mick Mountz was an HBS guy, he went around for awhile networking with alums to try to get the initial cash investment. Eventually connected with Ajay Agarwal of Bain and landed some seed money.
It's actually one of the better stories I've heard. The founder basically found various phds that were researching in related fields and convinced them to work for equity.