From C-3PO to CEO: The Rise of Humanoids

From sci-fi fantasy to boardroom reality, humanoid robots are stepping into roles once reserved for humans. In this IBKR podcast, we explore how AI-driven humanoids are transforming industries, reshaping the workforce, and what this means for investors and the future of automation.

Summary – IBKR Podcasts Ep. 236

The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.

Andrew Wilkinson 

A long time ago in a galaxy far away… One of my favorite films as I was growing up in the 70s was indeed Star Wars. It was hard to believe then that C-3PO might be a real thing during my lifetime, but as I inch closer to retirement, and as I think about an inevitable need for healthcare, the reality of robots and humanoids is already here. 

My guest today is Alexander Gunz, fund manager for Heptagon Capital in London. Welcome back to the podcast series, Alex. How are you? 

Alex Gunz 

It’s always a pleasure to be here. Thank you so much for having me, Andrew. And similar to you, I have very fond memories of Star Wars too, and it is fascinating, as you suggested, to see this becoming reality. 

Andrew Wilkinson 

Alex, why don’t you start off by distinguishing between a robot and a humanoid? And if you can, what is the current size of that market? And what do you think it will look like in a decade? 

Alex Gunz 

I think context is really important, as ever, Andrew. The concept of a robot in any form—this is not, in any sense, novel. The idea of automation or an automaton was something the ancient Greeks talked about if you go back a couple of thousand years. 

But I guess, for the context of all of our listeners, the way we conventionally think of robots is actually very crude machines—not really like an R2-D2 or a C-3PO—but simply machines that are able to, say, spray-paint cars or help assemble iPhones in big factories in China and so on. 

Whereas I think the next step forward, as you highlighted, is this sort of step change. AI, as we’re seeing with so many other areas of the world, is driving this. I’m sure we’ll come back to talk about this a little bit later on. But you are effectively seeing robots attain capabilities that make them increasingly like humans. 

And it’s almost like a portmanteau to talk about a humanoid robot. So this is a robot that increasingly resembles a human. It may well be bipedal, it will have two legs, and it will have five fingers. Therefore, the number of use cases in which it can be deployed will be significantly greater. We’re right at the very beginning of this trend. 

It’s really taking off, just as AI is taking off. And yet, the industry is growing about three times the rate of the conventional, traditional robotics market. So if you project forward, certainly on the numbers that we’ve seen and we’ve read, we think that by 2040, this could be a $40 billion industry. 

Andrew Wilkinson 

What’s the current penetration of robots around the world in absolute terms and its effectiveness? 

Alex Gunz 

Robots really are nowhere near as developed, perhaps, as the doomsayers or the naysayers might predict or might suggest. 

Sorry, can we do that one again? Because “I predict” and “suggest” didn’t sound very clever. Yeah. 

Andrew Wilkinson 

What’s the current penetration of robots around the world in absolute terms and in effectiveness, Alex? 

Alex Gunz 

Robots are nowhere near as developed, Andrew, as many people might believe. Today, there are only about three and a half million robots in use globally. So typically, when you do the maths, it’s about one robot for every thousand workers. 

And even if you go into a country like South Korea, which I believe has the highest robot penetration, you’re at about one robot for every hundred workers. And typically, the geographies where we see most of them are South Korea, China, the States, and Germany. 

Andrew Wilkinson 

Now, one of the main drivers of progress is the role of AI in helping improve robotics. How is AI being used to advance humanoid technology? 

Alex Gunz 

AI, I think, Andrew, as all of our listeners know, is a massively revolutionary technology. And effectively, what we’re seeing is just the next stage of its evolution. So typically, the path that any technology takes is that you begin with this idea of infrastructure, then you go to platforms, then you go to applications. 

That’s really the software side of the story. Then, however, if you listen to anyone who knows anything about AI—particularly, say, some recent commentary from Jensen at NVIDIA—he would argue that the subsequent stage that we’re going to see with AI is really where it becomes physical or embodied AI. 

So AI will not just reside within software, but it will reside within physical objects as well. 

And let me give you a case study or an example that perhaps really brings this idea to life. If you or I, as a human, enter a room and we have to cross that room in order to go and get a drink from a table at a drinks party, then come back and talk to a guest, that would be something that would be second nature to anyone. 

However, if you’re a robot today, it’s actually incredibly hard because you need to respond to a whole range of visual and haptic clues and prompts along the way. And that’s quite complex. 

And the great beauty of AI is that you are actually reinforcing learning the whole way you go along through this journey. And that’s what I think will actually allow for this step change—that robots, or humanoid robots, will continue to get better at the job while they are doing the job. 

Andrew Wilkinson 

I just Googled quickly—there are 8 billion people on the planet. Elon Musk projects that within 15 years, by 2040, the number of… is it humanoids or robots… will—humanoids… 

Alex Gunz 

Yes, I know exactly what you’re going to say, yes. 

Andrew Wilkinson 

You agree the number of humanoids will outnumber robots? Sorry, let’s do that again. That’s a shame. 

Alex Gunz 

Sure. 

Andrew Wilkinson 

Alex, I just Googled the global population—8 billion people. Elon Musk projects that by 2040, so within 15 years, humans will be outnumbered by robots. Agree or disagree? 

Alex Gunz 

I think we all know, Andrew, that Elon Musk is hardly one who’s shy of making bold predictions. And I guess if you do the maths, it would obviously imply an absolutely huge uptake in humanoids, bearing in mind that there are fewer than 5 million, as we touched on earlier today. 

I think, really, there are a couple of factors to consider. 

Number one is cost. First of all, robots today—humanoid robots—are not cheap. The good news, of course, is that the cost is coming down, and we should expect that with any technology. And if you look at, say, how much the price of semiconductor chips has come down, how much the price of solar panels has come down, there’s every reason to believe that the cost of humanoids will continue to fall. 

Alex Gunz 

If my maths or my memory serves me correctly, we’ve seen something like a 30 percent reduction even in the past year. So that’s factor number one that would need to happen in order for Elon’s prediction to come true. 

Factor number two is also public acceptance, and this is really an intriguing idea in the sense that we have argued regularly in the work we’ve done at Heptagon that any new technology should be a complement, and there has never been any technology in the history of the world that has resulted in net job losses. 

I don’t worry personally about losing my job to AI, but where I might worry is someone who knows how to use AI better than I do. And I think if I were a factory owner, I might perhaps employ the same logic with regard to humanoids. But we need to get through that acceptance bump or hump as well. 

And then, I think, the third lesson or third observation—just to put some context or framework around that comment of Elon’s—is really this idea that it is typically important to manage expectations. So don’t have too high hopes for any novel technology. Why not underpromise and overdeliver? Don’t over-anthropomorphize what robots can or cannot do. 

Andrew Wilkinson 

Let’s talk about the need for humanoid robots. The boomer generation here in the United States—those born between 1946 and 1964—are soon set to retire. I think Goldman Sachs has projected a 2 percent shortfall in U.S. manufacturing labor. And as far as global elderly healthcare provision goes, they’re projecting a 4 percent deficiency. 

Explain to us, Alex, where humanoids will fill the gap. 

Alex Gunz 

I think, Andrew, to an extent, you’ve already answered your own question in the sense that if we have a shrinking working population and a growing elderly population, there is an obvious gap that needs to be filled. 

And in an environment where immigration is becoming an increasingly complex, contentious topic, and given the sort of structural advantages, if you will, of humanoid robots—i.e., that, all other things being equal, they’re not going to complain—there will be many other factors that also support the business case for humanoids that we can touch on. 

You can see a very logical scenario where robots will be replacing many of those boomers retiring. And equally, for elderly care provision—whether it is companionship or actually that scenario where you have a robot, say, lifting an elderly person who may struggle to move around physically—the humanoid could potentially undertake tasks like dispensing medications that someone needs. These are very plausible scenarios. 

Andrew Wilkinson 

Now, there are some very clear benefits to employing humanoids. They might do a better job, they work harder, and I’d imagine we don’t have to give them holidays. But give us a bigger-picture take on some of those advantages, Alex. 

Alex Gunz 

I guess the way I’d answer that, Andrew, is by almost stepping back. If you think about the premise behind modern economics, if you will, it’s all about the efficient allocation of scarce resources. So if I’m a business owner, how do I get the best ROI on any given investment? 

And the great beauty of having a humanoid, let’s say, relative to an old-fashioned, real-world human—you touched on already the fact that robots will not, as far as we know, take holidays. They’re not going to get sick. They’re not going to need parking spaces for their vehicles. They’re not going to need insurance provision. They’re not going to need to take bathroom breaks during the day. They’re not going to get headhunted, as it were, by another organization. 

And I suppose there’s also a dynamic where, in most jobs, we are, broadly speaking, quite happy getting into the office at 8 or 9 a.m. in the morning and leaving at 5 or 6 p.m. in the evening. That’s the convention, broadly speaking, around the world. 

If I’m a robot, and maybe battery packs can be swapped in or out—some robots may be tethered to a permanent power source via a cable—you could have a scenario where humanoids are actually working 24 hours a day. 

So when you do the maths and you say, okay, even today, where these robots are arguably at their most expensive and most inefficient they will ever be, the cost, as we said, is only going to come down as the technology scales and improves. Your ROI for a business is actually going to go up massively from here. 

Andrew Wilkinson 

Everybody around me in the Interactive Brokers office is here. They’re all proper human colleagues. Tell us some of the— 

Alex Gunz 

Capital as well. 

Andrew Wilkinson 

Tell us some of the current use cases for humanoids that you’re thinking about or seeing. 

Alex Gunz 

Yeah. In some ways, Andrew, it’s not dissimilar to the path that conventional robots have taken. 

So, in other words, there are some industries that are naturally very well suited to the deployment of humanoids. Probably the best use case—and maybe where some of Elon’s optimism comes from as well—is actually in the auto industry. So, where Tesla models are being built, for example. 

But equally, there have been very public details about what BMW is doing, what Mercedes is doing, and a few other carmakers, I believe. Robots go beyond that very simple spraying of paint that an old-fashioned robotic arm might do. They can actually be lifting body parts of a car, fitting wheels—whatever it might be. And that can be a very clear cost-saving measure, particularly in an industry with quite low margins, as our listeners know. 

The other really obvious industry where we are seeing robots being deployed today is within warehouses. And if you think about warehouses, again, you might have certain robots picking or packing goods. 

But actually, again, think about the visual and haptic clues or prompts that we touched on earlier—being able to distinguish between a blue book and a red book, let’s say, or picking up a book that has quite a thick width. It’s actually quite complex. 

And then you have to, say, pick up a soccer ball. And for a human, that’s very easy. For a humanoid—oh, sorry, for an old-fashioned program—it’s quite complicated. Now, it’s getting increasingly easy. 

The other great or cool thing about humanoids—and certainly, many of the things that I’ve read would suggest—is that they can actually lift weights of about 15 kilos, which means, again, in terms of the speed and the tasks they could undertake in a warehouse, that’s quite compelling. 

The third use case I’d touch on, just in the interest of time for our listeners, would be construction sites. If you’re doing remote monitoring of, say, telecoms or electricity infrastructure—even window cleaning, which we’ve read about, which is quite a dangerous task that some humans are quite reluctant to undergo—these are quite plausible scenarios where we may see humanoids deployed. 

Andrew Wilkinson 

I think one of the most talked-about gaps that humanoids will fill is in elderly care. Alex, can you talk a little bit about that? 

Alex Gunz 

Of course, Andrew. We touched on this earlier, and I think the clear scenario that you have is where people are going to be retiring. We’ve got a huge sort of demographic dynamic at work here. And we regularly say in our conversations with our clients that when demographics come up as a discussion topic, demographics basically mean that the future has already happened. 

So we know what’s coming down the track—more elderly people and a shrinking available workforce to care for those elderly people. And this is exactly where the humanoids come in. 

And as we said, given their lifting abilities—bear in mind also one super exciting thing we didn’t touch on earlier—is that, just like your iPhone, humanoids will receive regular over-the-air updates and new software functionalities built into them. If you think about how human lives will work, exactly the same thing will happen. New suites of learning, ways of interacting, or helping elderly people will continue to evolve. 

The other thing is that if you’re a humanoid robot, and Patient A, with whom you’re dealing, is a native English speaker, but Patient B is a speaker of Mandarin, the robot does not need any specific language skills. The software module, if you will, will simply allow it to translate and perform tasks in any language, which is a massive cost-saving or beneficial feature for any healthcare institution. 

Andrew Wilkinson 

Alex, in the piece you wrote recently on the Heptagon Capital website, The Real Robot Revolution—a very informative piece—you said that we should expect a swath of product launches in 2025. Give us a few examples of what you’re expecting to see revealed this year. 

Alex Gunz 

I guess the way I’d answer that question, Andrew, is perhaps by giving some framing. Last year, we saw $11 billion of venture capital money flow into the humanoid space. And there’s a whole list of exciting startups that we cited in our paper, which is available on the Heptagon website, as you mentioned. 

Equally, for anyone who attended CES in Las Vegas in January or read about the commentary there, a lot of noise was made about humanoids. Similarly, the third point would be to look at the commentary from NVIDIA. Even, I believe, earlier this week, both Apple and Meta—sorry, Amazon and Meta—have made commentary about humanoids and how they may feature within their universe. 

Rather than actually pointing to specific product launches, I think it would be very fair to say that we are going to see increasing noise, increasing momentum, and—just as we said earlier—we’re at a very early stage today. There are at best 1.3 million humanoids in circulation, I would say, and that number is only going to increase exponentially from here. 

Andrew Wilkinson 

Brilliant. Thank you very much, Alex Gunz, Portfolio Manager at Heptagon Capital. Thank you for joining me today. 

Alex Gunz 

Always a pleasure, Andrew, and I look forward to continuing our dialogue on a subsequent occasion. 

Andrew Wilkinson 

Brilliant. And I will put a link to The Real Robot Revolution article in the show notes below on the IBKR Campus website, so take a look out for that. And if you enjoyed today’s podcast, don’t forget—please subscribe wherever you download your podcasts from.