Dec. 15, 2022

Crafting a Vertical Niche for Your SaaS with Dan MacGregor of Nexxiot

Crafting a Vertical Niche for Your SaaS with Dan MacGregor of Nexxiot

Episode Summary:

In this episode of SaaS Origin Stories Phil Alves is joined by Dan MacGregor, Co-Founder at Nexxiot, a successful startup in the SaaS platform space. He shares his insights on evolving simple tracking hardware to analytics and value-based SaaS platform. Dan also touches on the vertical vs. horizontal approach and how a product with bundled value is easier to market than a simple unbundled product.  

Guest at a Glance:

Name: Dan MacGregor

What he does: Dan is the Co-Founder at Nexxiot, a SaaS platform aimed at enabling easier, safer, and cleaner transportation of goods across the global supply chain. Its hardware, software, and analytic stacks improve in-transit transparency and efficiency.

Connect with Dan: LinkedIn

Topics we cover:

  • Vertical vs. horizontal approach for SaaS startups
  • The funding journey
  • Bundled vs. unbundled products
  • Why B2B selling is easier than selling to a B2C audience

Key Takeaways:

Saas Startups Should Focus on Vertical Growth Before Migrating to Horizontal

Time and money are scarce resources for startups; hence it makes sense for startups to focus their GTM strategy on companies that fall in the same business vertical. These companies will have similar needs and problems that your product will solve. By going horizontal you will waste time and money upgrading your product to solve what could be a completely different set of problems.

You can never have enough cash to go horizontal first because there will always be someone else who’s actually building that domain knowledge into their vertical. 

Funding Gets Easier as Your Investors Start Believing in Your Product

While Nexxiot has attracted over $170 million in funding to date, its funding journey started like that of most SaaS startups. The initial seed capital was $100,000, followed by rounds of one, five, and ten million dollars. One of the company's Co-Founders is a fund manager for a large investment fund, and as he started to visualize the product's potential, the funding got easier.   

As he became more convinced and more interested in the potential of the product, the interest grew, which brought in more funds.

Bundle Your Product With Value for Easier Sales

The minimal viable product at Nexxiot is a hardware device used to track shipment containers. Selling the product as a stand-alone device was challenging because the freight business is price sensitive, and the shipping lines didn’t see the value-add of the product. Hence, to sell the product, the company had to build a software platform around it.

The platform provides real-time data on the location of each container, the time it takes to load and unload it, and if there is any chance of damage to the goods contained in the container. This enabled the shipping lines to extend guarantees on delivery and quality to the final customer, and sales jumped. 

The product is not the hardware, the hardware is just an enabler. The product is the digital or data-driven services that you can create from the platform side. 

It’s Easier to Acquire and Service One Large Customer Than a Million Small Ones

A startup needs its first customer to drive its cash flow and demonstrate market validation for its investors. It’s easier to acquire and service one large customer in the B2B space to start the cash flow and provide valuable feedback to tweak your product for future sales. In the B2C space, you’ll need to acquire and service 10,000 customers to get the cash flow up and running and demonstrate market validation.

I think everything is a little easier in the B2B space; hence, it's the audience startups should target. You need fewer customers to start; you only need one big one instead of a million small ones.


You need less customers to start. You only need one big one as opposed to a million small ones, individuals. But it doesn't spread virally. You've got to pick up the phone. It's 100 phone calls a day. Welcome to SaaS Origin Stories. Tune in to hear authentic conversations with founders as they share stories from the earlier days of their SaaS startups. We'll cover painful challenges, early wins, and actionable takeaways.

You'll hear firsthand the do's and don'ts of building and growing a SaaS, as well as inspirational stories to fuel you on your own SaaS journey. Here is your host, Phil Alves. Hi guys. Today I'm chatting with Dan McGregor, the co-founder of NextYacht. Welcome to the show, Dan.

Hey, how's it going?

Great. So we are here to chat a little bit about the origin story of your company today and the question that I'd like to start the show with is, tell us a little bit about your backstory and how you come up with the idea.

Yeah, so I basically I come from north of England.

And, you know, since I was a kid, I was fascinated in technology and I wanted to make a big impact with my life. I didn't want to, you know, just sort of make one of these careers all about making money.

It's all about, you know, bringing new things that humans and the planet needs, you know, to optimize the way that we live, the way that we use our resources and the way that we interact with each other. And so I actually started out as a as a headhunter.

So when you're a headhunter, you know, that's sort of the first day they say, there's a phone, there's a desk, there's a computer, make some money.

If not, then you're fired.

You know, so it's a pretty tough, tough learning curve there. But you realize that, you know, with those basic tools and with a bit of initiative, you can ask the right questions. You can contact the right people and you can make things happen. So it was a really good, you know, background to have to think about, you know, moving into tech entrepreneurial activities.

And, you know, clearly there were lots of things that needed to be addressed. And I was just wasn't sure why it wasn't possible.

I mean, it's a interesting, you know, it's an interesting journey. And I suppose the questions are not necessarily fully formed ever. You're constantly learning and evolving and you have to understand, you know, that we really don't know what we don't yet know.

So, you know, when we ask a great question of somebody who does know something that we don't know, we don't know what we don't know. And it gives us a chance to you can either say, oh, well, that will confirm my previous biases or it will explode my previous biases.

And if I'm able to be humble enough, I will question my preconceptions and I'll actually integrate the new discoveries and evolve with my question asking and ask a better question next time. So in a way, it's always a good idea to ask a question next time. So in a way, it's always about thinking about your question, asking a better question. And how we phrase a question is very important. So open questions.

What, why, who, where, how, you know, that's the right way to start a question if you really want to discover new things. And then we can rephrase that question back to them.

So you're telling me this is that true?

And then it's a close question. Yes or no. If it's not, if they don't say yes, then we say back into the open question. So what's where, why, how, where, when.

So, you know, this is the kind of the game that you go back and forth and each time you're adding a layer to your understanding.

And, you know, if you ask a question of a traditional industry and we know next to your addresses challenges in the supply chain and logistics space. And if you ask a question, and when I found, you know, co-founded the company back in, you know, 2015, you know, supply chain wasn't such a hot topic. It was pre-COVID and people weren't aware of the impact that it has on their lives.

So, you know, if you ask a question, what would you really like to see in technology?

They won't be able to answer that. But if you ask the question, you know, why something doesn't work properly today and what they would like it to, how they would like it to work in an ideal world, then you can go into the domain knowledge and then you can go into the strategic side and then you can, you know, calibrate the right question and then get towards the truth.

Because not everyone, if you think about Henry Ford, you know, he said, what do you want the faster horse?

And obviously nobody could imagine the combustion engine and a motor car with a, you know, a gear mechanism and a steering wheel and that because that was Henry Ford's job. But he understood the need for personal transportation was growing and he understood the limitations of an animal to make that possible.

So, you know, that's maybe an anecdote.

Yeah, I love that quote from Ford because when we are building products, that's all we have to think about. We have to ask questions, understand the world. I like the keyword that you say, discovery. You're doing a discovery. So people are not going to tell you exactly what they want, but you will figure it out by asking the right questions.

I think another thing that's interesting is the number of different stakeholders that need to be involved in that, yeah, because actually it's very difficult to, you know, to make a product that impacts many different parties and to make sure that it's going to be an adoption on a significant scale because we live in a highly complex, you know, multifaceted world with multiple stakeholders, multiple different points of view.

And therefore, you know, we've got to really, you know, think about, you know, how we bring those things together and how we consolidate that information into something that's workable for many different parties. Yeah. So tell me a little bit like what you discovered when you're doing the research that led you to build the version one of your product.

What does the version one did?

Because I understand version one, like many years ago, is very different than what you have today. Like you say, the question keeps developing, but walking through the process of actually getting to a version one idea. Yeah. So naivety is your friend, Phil, in those early days, yeah, because, you know, if you remember first investors laughing in my face, you know, you're crazy. You think you can do this.

Why wouldn't this be done by Siemens or IBM or Google or somebody like this?

But, you know, obviously that kind of naivety.

So version one starts with incredible naivety, you know, why not?

And then, you know, maybe it starts with kind of the realization and, you know, without going into too much details about the journey at this point. But the realization that we've had a mobile phone in our pocket for 35 years, we've had GPS in our car for nearly 40 years, and yet, you know, we've got 30 million shipping containers traveling around the world that don't have any monitoring technology on them. It doesn't make sense.

You know, you can track your pet in the garden, your child on the way to school, your luggage in the airport, and your pizza to your front door, but you can't track a container across the planet. This doesn't make sense. There's almost an outrage about that. And then it's, you know, getting into, you know, why something does or doesn't exist.

Well, there's lots of reasons for that.

You know, the technology needs to come of age. It's a bit like cooking with technology. You know that this is possible. You know that that's possible.

So why isn't it possible to put those things together?

And it's not necessary to know, you know, every bit of how to do that, but it's necessary to know that in principle it would be possible.

And if you can then, you know, mock up a one-pager and put it in front of somebody who works in the industry and say, you know, would this help you?

Or, you know, could you imagine that being useful?

You know, this is kind of maybe a starting point to start that, get that discussion rolling. Going back to the product itself, you know, what we had in our portfolio and our sort of capabilities, our toolbox, I was working with my co-founder, who's a brilliant inventor, you know, putting things together in new ways, always sort of breaking things and trying things in different ways. And we had ultra low power embedded hardware.

We had energy harvesting, complex systems, you know, sort of the big data side, and then analytics and algorithms.

And, you know, with this sort of basic tools toolkit, it's easy to make a first version. But that first version in terms of form factor for a hardware device went through, you know, many hundreds of iterations. And you make realizations about the standards that are needed in terms of safety, reliability, quality, you know, security, and usability for the industry.

But that's done when you start working with the potential clients to realize that first version. But the naivety was, you know, there's 30 million shipping containers in the world. If we can produce a million devices and sell them to one of the shipping lines, job done. Great.

Yeah, that's already good. So that was kind of the first step. But then we learned a lot about platform, about the need to play with the data, because the clients maybe weren't so sophisticated as we first imagined. I want to dive deeper into actually building the hardware, the software working together.

But before we get into that, what is kind of like the one-liner?

What problem are you trying to solve for your customers?

So what was like, we're going to solve this one problem.

What was that problem?

Yeah, I mean, the problem, it would be different to different stakeholders.

So who is the customer?

Even before you get to that point, you could ask the question, what is data?

Yeah, is it zeros and ones?

And then you start to create value out of that data. And when we first, so maybe we get into the story a little bit. I don't want to sort of jump the gun. But we said, OK, here we have a company like Maersk, and they don't have their normal dry shipping containers equipped with hardware.

Why is this?

And we realized that the devices were too expensive. It wasn't easy to set up the pairing process and integrating it. They didn't know what to do with the data. They didn't know why it might be useful.

The customer, who's their customer, and how do they use that data?

So it was very sort of early days for this sort of digital ecosystem in the maritime space. And it actually came down to this.

We said, well, after we founded the company in 2015, we realized, well, we're going to run out of time pretty quickly. We've got a very short runway. And we've got expensive hardware to produce. It's a long lifecycle. You have lots of failures with hardware.

You're always building a new device and realizing that suddenly there's a component that's no longer available, or that something isn't going to meet a certain standard for maritime, or the enclosure's not tough enough, or something like this. So there's this sort of practical, physical side to this side of things. But we actually said, well, OK, the shipping lines, they're not ready to buy. Freight rates were in the ground.

They didn't see the need for it. They thought that their customers, they trained the shippers and the cargo owners to always expect a lower price. There was a race to the bottom in terms of pricing. So there wasn't enough margin there to actually afford. And they said to themselves, our clients won't pay for this at the very beginning.

So we actually said, well, we flipped to rail, we've already got this sort of the hardware device now.

And if they don't want to buy it, what's the difference between a rail car and a shipping container?

Well, one's got wheels. It travels inland all the time. And it's breaking the whole time.

You know, the things are going wrong. There's a lot of complexity, the moving parts. And we said, well, the maintenance case is clear.

You know, they don't know how many kilometers or how many miles that their asset has done.

How do they manage maintenance?

One of them has done 5,000 kilometers. Another one's done 300,000 kilometers. They're both in a very different state over the five-year maintenance cycle. So actually, the first case was maintenance. But then gradually, as we worked with the customers, asking these open questions and getting to the bottom of their business and understanding the challenges they face, suddenly a whole array of requirements and expectations and demands from different areas of the business emerged.

And also, it's a little bit difficult because these big companies that you deal with are B2B, you know, SaaS or hardware-enabled software as a service provider, as it is in our case. When you deal with those, these organizations are intrinsically siloed.

So we talk about the damage that is done by silos, but actually it's by design because you want to have some separation between, you know, the commercial team and the equipment team or the maintenance team in order to be strategically aligned and to manage these different needs of the business.

So actually, you know, you've got to break down those silos and speak to all the different stakeholders and also stakeholders outside the organization to make sure that they can sell this product onwards to their customers that then need it. But you've got to market it's market making in a way. You've got to create that demand by education and discussion. So it's quite consultative.

It's not like you say, oh, here's our product, here, buy it. Thanks very much.

And if you do that, if you take a hardware device and say, here, buy 500,000 of these, the next question is, you know, can we trust it?

What can we do with the data?

You know, how do we process that data?

You know, where's the analytics for this?

It's not in the transportation management system. It's not in the ERP.

Oh, no, actually, you need to build the platform. And then we get into this interesting question of vertical versus horizontal when you're building a SaaS platform. So it looks like you pick your vertical, like you start with a vertical, which was, let's help with the maintenance. But then inside there, there's a lot of other things that you could do. And then you start to go horizontal.

And I believe any SaaS business is starting, should pick a vertical and then go horizontal after. Yeah. Unless you have a lot of cash. So you can never have enough cash to go horizontal first, because there'll always be somebody else who's actually building that domain knowledge into their vertical. And that's extrapolated into the horizontal.

So, you know, to the listeners out there who sort of trying to work out what's the difference.

And, you know, basically, you find a niche, you find a vertical niche, a specific market with a specific need, and you build a product to meet that. But by doing so, you actually building out a platform that can be applied to lots of different things.

And actually, what you discover is when you go on that journey, that lots of B2B clients, lots of corporations, they've tried multiple times to build their own platform. But they're not necessarily sophisticated enough or they don't have the necessary combination of technologies, or if they're not their primary business. And because it's been held by a silo within their organization, it's intrinsically sort of defended against that natural flow towards the horizontal.

So, you know, you need to keep that in mind that you want to make an immediate splash, you know, in the market that you're addressing. But then it has to be scalable and extendable to other areas. And actually, you know, the brilliant thing for us is that it's started in rail. And rail has a massive need. There's five million rail cars in North America market that aren't equipped.

There's, you know, when we started, there's one million rail cars in Europe, and there's probably another three or four around the world.

And, you know, there's so many use cases that are now jumping out at us because we've got such a, you know, hardcore, heavy duty, you know, bulletproof, safe, secure, reliable, you know, large volumes of data tested platform, which is much more than a repository, includes analytics.

And then, you know, new customers come to us. We can talk about that later as well. They come and say, hey, wow, you know, you've got something really trustworthy here. And we've been looking for something like this.

And, you know, if it's good enough for these guys, then probably it's good enough for us.

So how many verticals are you guys playing with nowadays?

Well, you know, a bit of that story, you know, back to the very beginning, first investors, you know, you sit down there in the meeting, you know, with your with your with your to me bag and the first prototype of the hardware.

And, you know, you've created a kind of a, you know, a rushed presentation and a few one pages. And you sit there and you say, I'm going to digitize the global supply chain.

And they throw their head back and they laugh at you and they say, why would you be the guy to do that?

It doesn't seem possible. And then you say, well, we'll see. We're going to keep going. And we see.

So, you know, from that point, you know, we we realize that there's a lot of reluctance to believe in something that's so massive. It's so unbelievably big to think about. But actually, if you just follow the path and I give this as maybe as a word of encouragement to anyone who's on this journey at the moment or interested in this journey. And that is, you know, you're learning as you go.

And that each of those meetings, one of our meetings, the guy said he looked at a piece of hardware that would didn't have a housing on it. And he said, that's not a product.

You know, I left the meeting just before, you know, sort of we we stormed out in despair.

I left the meeting and said, what would make it a product in your mind or your eyes?

And this is a critical point in each of these interactions.

You say, what's missing?

You know, what would you like to see?

Because they've sometimes got a clue and the guy said it needs a housing, it needs a plastic box on it. Yeah. And then it's a product.

Well, I'm delighted with that feedback. I'm going to be on the 3D printer tomorrow and suddenly we've got a product and then we talk about what's inside the box and it can be anything.

You know, so so that's the kind of the the it's the experiment. It's the not getting depressed by a negative feedback, but it's actually integrating that into your own storytelling and understanding that the market needs to be educated. But also I need to be educated about how the market thinks. For sure. So you talk about how hard it was to convince investors to really believe in that big vision.

Tell me a little bit more about how you fund it and the investors that say yes to or how do you get the first round investment to get the company going?

Yeah. So the first round is one of the co-founders and he was a you know, it was a hundred hundred thousand books seed money just to, you know, just to say we kind of I kind of believe in you as part of a, you know, a diversification strategy, I would say, for a big investor.

You know, that it's a it's always good to have your, you know, sort of your fingers on the pulse of what's new, you know, something like this. And it's this small money for some somebody who manages a huge portfolio.

And then, you know, then, you know, as it as he became more convinced and more interested in the potential of such a thing, you know, obviously, you know, if you read lean B2B, I recommend it very highly if you're focusing on the B2B space. But any lean methodology is this iterative principle search for a minimal viable product. Keep absorbing the feedback and look for recurring revenues.

Look for scale and recurring revenues, scalability and recurring revenues. They're the principles of this. Yeah. And then you go very, very fast towards the minimal viable products.

And then you pivot and pivot and pivot according to each feedback round that comes from investors and from and, you know, one of the early investment talks, you know, we decided we needed to make a device that was absolutely bombproof, something incredibly heavy duty to convince this supply chain space that we understood how hardcore this industry is.

So we made this device we actually created a mold on the CNC machine we made a silicon mold out of that sort of reverse of it. We poured in potting resin, we embedded our, our hardware into a little cradle and sunk it into the potting resin so it's brutally heavy like a black, a black resin block.

And one of our early meetings we had family investors and the family slid the thing across the table. They were in the supply chain business they're working in the ports of in the ports and terminals. And it actually went underneath the veneer on the boardroom table and it rips up the boardroom table and damaged it had been 50 years in the boardroom.

And I was horrified I thought disaster they're going to hate us for damaging the family boardroom, but actually the guy turned around said see I believe in this technology see how tough it is, it destroyed our table.

So, you know, it's by telling stories it's by understanding the space that you're addressing and it's by, you know, making it real and tangible and saying, showing the investors how motivated you are to follow this through, you know they invest in people in the end and they invest in in storytelling and great ideas and the idea that they invest in at the very beginning, it might they know it might not be what finally flies, but they can see the way that you're relentlessly pursuing what the perfect solution is for the market.

So how much money do you guys raise it to get the things going.

Well, I mean, it was probably, you know, 100,000, then the first million, then the 10 million, then the 50 million ballpark, you know, into this direction now we've raised about 170 something like this.

Because hardware, it's kind of like an expensive game to play right I'll love to hear more about like, yeah, but you show that you can do a lot, you show you can do a lot with little that's the trick yeah so you know make sure that you delivering incredible technology and this is about being a little bit hacker style, you know mentality, taking things that exist not re redesigning the wheel but taking, you know, principles and things that existed already and working on those.

So you know I was very fortunate as working my co founder who was a brilliant technician and brilliant engineer and very inventive person and, and, you know, we were able to with my questioning and his technical skills to quickly make things real, you know, we were able to come up with minimal viable products on the hardware side quite quickly. How long did it take.

How long, say quite quick.

I mean, well it's a constant process so I mean it was literally the hardware was changing over the first two years, almost on a daily or weekly basis.

So, how long from you guys to start building the hardware to someone is actually using the hardware to get to the first customer.

Yeah, but you should start using that hardware really quickly so I mean I'll tell you another little story we went to Dubai to, because it's a logistics hub spoken event there had a crowd of people gathered round after the event. And then we went back to Switzerland built 30 prototypes put them in my bag, carried them back to Dubai a week later.

Most of the time these prototypes were failing somehow there was all sorts of quality issues but in the end you know you've got to deliver something, you've got to get the experience even if a few of them work you gather some data, you learn from that you can iterate.

So we went out back out to Dubai I got arrested actually on the entry at the airport because I was carrying 30 prototypes that weren't registered that nobody knew what they were.

And, you know, I went into sort of you know various questioning and the question sessions with the government and in the end, you know they turned somebody somebody turned around and said how much for 100,000 of these. So it piques their interest and turned into a sales opportunity you know.

And so, and then through that we met with a bunch of customers and these were all critical meetings and it's actually that almost that natural flow of experiences and storytelling that actually takes that hardware to the next place because you need the customer to trust them enough to put it onto their assets to see what it might do to so that we can start gathering real data, and then we can start discussing with that, you know, with them about what that data might do for them.

So, the product is not the hardware the hardware is an enabler, the product is the digital or the data driven services that you can create from the platform side.

So, you know, the, the, the journey of experiences okay we make a hardware device and we sell it on or that doesn't work.

Oh, we make a hardware device but they need front end with dots on the map.

Oh, but actually they need more than that they want the data through an API into their own control systems, all their control systems are not sophisticated enough we need to build the analytics.

And, you know, it goes on and on like this and you realize you have to do more and more of this value adding, you know, sort of, you know, product building in order to actually sell something.

But at the same time, you know, you're able to with each of these learnings you're able to maybe do another investment grounds and stay alive in order to keep the learning going so it's kind of like this, you know, jockeying really between the investment and the, and the clients.

So those first customers they were paying to use the product or they were just beta testing and you guys were not charged them yet. The first customer that paid was had 300 rail assets.

And, you know, obviously, we kind of, you know, we didn't we weren't very sophisticated with writing contracts. But we wanted to make sure that we could prove to our investors that there is a value in this and you have to charge for it.

And one of our ROI meetings was, you know, we sat down with customer they were looking at the screen the first version of the UI with the dots on the map. And we said, you know, we talked about let's talk about return on investment, and they suddenly broke into Dutch and started shouting and each other in Dutch and laughing and joking.

And after you know 15 minutes I said hey my Dutch isn't that great. Can you just you know fill me in on what's going on in this room. And they said, well, we've just realized that our rail cars are doing an extra 80 kilometers in Germany that we never knew about that now we can charge for. So that was a very simple learning about the sophistication of their operations today, because they don't.

It's so they made we get into the essence of the value is in transparency for the asset owner to manage their own operations, but also that they can provide transparency to the cargo owner or the shipper that they can actually provide guarantees around their supply chain.

So, you know, that's probably the in the essence of what this is about it's actually creating transparency. Then we unlock another problem and that is the semantics around a word like transparency. Just because you claim transparency doesn't mean that you provide transparency or his version of transparency might be different to my version of transparency. So what's behind the word is kind of the next layer of this discussion.

Yeah, let's go deeper on that what do you what challenges that you find out when because I find the same thing when transparency is a different thing for for each person.

Yeah, so you've got things like what's what level of resolution do you gather the data in.

Okay, you've got, you know, what are the consequences of transparency if you expose the true nature of your business to your customer. You have a semantic war, I mean, I've recently learned or in the past few years I've learned that there's no media that's like authentic, I would say, I have to be careful but it seems like there's, there's no authentic journalism anymore.

And that everything's for higher basically it's pay to play.

And, you know, we took it take an example, you know, a few, maybe a year or so ago.

Actually, less than that we announced one of the biggest deals that we've ever done. Okay. And the first idea of this 1 million shipping containers or more.

You know we closed a deal with hapag Lloyd which is now you know one of our, you know, our premium, you know, clients and partners and developments but you know sort of, I'd say, you know, collaborators in the maritime space because they've now committed to equip their whole fleet of shipping contents which is a wow moment for the whole world you know but, you know, when we, when we released that news there was something in Forbes about one of our competitors or possible customers or partners depending on how the market develops, and who I would call an aggregator a data aggregator a platform player, so no hardware, not creating new data, but using existing data bring it together and creating some notion of service and value from this.

And, you know, their sort of comments in, you know, in the tier one media was that all fantastic it's just another source of data that we'll in that we'll ingest or will integrate we ingest data from all over the place.

Yeah, but hang on a second there's no contracts in place to know that to say so that you can say with confidence that you'll get that data. So are you saying that you want to be my customer. Are you saying that naturally this will just happen that you end up getting the data.

Well, you know this is an interesting question then the next thing is, you know, if you do a lot of fundraising and you spend a big proportion of that fundraising on that budget on branding and marketing, you can blast the world with a word like transparency or visibility, but it doesn't necessarily compete with my real time, you know live assets and cargo level transparency or visibility that's coming direct from the assets, all the time.

So you know if you're bringing, let's say together, ports turn in turn out data with GPS data from trucks that might not be connected to the trailer units, or if you're bringing, you know data from third parties or historical data from shippers, but you're not actually able to look in real time at the individual processes of loading and handling around that cargo and around the assets. It doesn't compare.

So it looks like to me and correct me if I'm wrong that a big differentiator for you guys it's like you're like we're not just going to build a software or a hardware we're going to build both of them and you're going to get the information to our customers and could walk me. Is that correct and why did you make the decision if that's the case.

Yeah, so it's even more than that. It's even more than that actually to be honest Phil so I mean in the end, you think about a hardware device. It's essentially the same as a mobile phone that human users, and we charge our phones every day. Okay.

Obviously there's a bit more functionality there's a screen on it there's lights there's you know there's all kinds of things going on there, and that you know needs to need energy and but making hardware that you have to send around send away around the world and you're not going to see it again until the end of the asset lifetime, and it happens to send the data every five minutes to the cloud is pretty challenging.

Okay, so you've got your hardware design and which is you know obviously learned iteratively through working with the industry partners. And then you've got the device management. You've got the connectivity. You've got the firmware. You've got the data management.

And then you start to get through to the analytics and the business process automation and then you start talking about building digital twins of the clients assets of the clients operations of the clients processes etc. So to get to that real value or to create that value there's lots of enablers.

Now, unless you have a single partner who can manage most of those steps. You've got to ask questions about the quality of the data, or whether you can buy a device from Alibaba, you know for a GPS device for probably 50 bucks.

And you could fit it on yourself and you could do you know a bit of tweaking and hacking and you could start getting that data but it's not going to work in three months or 12 months, and it's not going to send the data every five minutes, and it's not going to be secure necessarily, and you're not going to be able to provide the customer with guarantees around safety.

For example, all of our devices they have to be intrinsically safe, but they don't trigger a spark because they might be used in an oil and gas environment or where there's petrochemicals or something.

So you know there's all these considerations and this is about driving the interests of the industry into pushing that into the technology solution to make sure that the industry served properly and that we're not going to start creating more problems that we solve.

Do you see you guys kind of like as a SaaS, a hardware business, how do you see yourself positioning the market, spending so much time and money in building those complex hardware and the infrastructure around managing the assets and everything?

Yeah, it's a good question and you know maybe you know the issue with bundling or unbundling.

Yeah, you know you could either you can do it one of two ways you can say don't worry about the hardware we take care of that. You know kind of the Gillette model you just pay for the service and pay for the data.

And the other version is you know you pay something for the hardware and then we manage the platform for you or we support you with the creating value from the data and distributing that data, securing the data and so on. But actually if you think about even just firmware, you know we've got to make sure that that device health is right.

We've got to monitor the device health and you know we have energy harvesting and we have we monitoring the hardware all the time to make sure that it's functional because without the hardware, we don't get the data.

So you know there's a kind of a question of bundling or unbundling but the reality is that you know all of those elements are needed in order to create value and therefore you know the client needs a partner who it can trust across all of those areas. Makes sense, makes sense.

So you guys are basically the one stop partner for the customer?

Yeah I think we've become that now. I mean obviously you know who else needs the data is an interesting question.

You know if you're managing a shipping container or cargo through a particular part of the supply chain, you know if you do a great great job because you've got all the data at your disposal and you're making all the right decisions and you're being you know you're being efficient in the handling and the turnaround of those things.

And if you pass it across to a partner who then takes two weeks to even put it into their ERP and it's just standing there in a warehouse and nobody knows where it is and then all of the value that you've created is lost. Maybe we can go jump quickly to you know purpose here. You know data now I say data is the asset itself.

It's not the it's not the metal box or even the stuff inside of it. It's actually the data that's surrounding it that helps us to make sure that the quality is there and that it's going to arrive on time. It's going to arrive in full. That it's not being tampered with. That there's no illegal activity going on around it.

You know all of these things they're all all significant in creating that value. And if you take a look around and you look at the things in your room you know this pen or this glass or you know this microphone that I'm using all of these things in a way came out of the ground. We process raw materials in factories.

We create value and this takes energy and actually you know it's outrageous that you know we send coffee from Kenya to you know Hamburg or Kenya to Los Angeles and you know on the way it needs maybe a hundred documents to be stamped or processed or signed or faxed or sent or photographed or emailed.

And you know actually you know these processes should be automated and the worst bit is that you know we see this stuff you know things like coffee or whatever you think is valuable in your own mind. And you know it we send it on its way and it gets broken it gets damaged it gets lost it gets stolen on route. It's not acceptable anymore. We keep talking about sustainability.

We keep talking about you know our values. You know in this you know sort of evolved world where we realize you know what we're talking all the time about what value is but also what our values are. And you know this is just not acceptable.

So this is the you know this is jump on board because this is the way to solve it by using data applying data by distributing data so that everybody can do a better job and we can push up quality and sustainability and you know route finding and reduce the number of empty assets that are traveling around and make sure that that stuff that's valuable to us arrives in the best quality in the best state possible so that it can be used by the next people in the chain.

Yeah. At the end of the day what you're trying to do is control the experience. So it's a similar experience for everybody. It's kind of like what Steve Jobs did when with Apple he was like no I'm going to make the harder I'm going to make the softer.

I'm going to make the box because I want to really control the experience of how people see my products and you basically are trying to apply that to supply chain. Why do you don't have like a seamless experience that that everyone knows where it is. It's a consistency of experience. You're absolutely right.

And why do we make the device if you look on our website you know you'll see the hardware there. It looks quite sexy. Okay. And we do that for a reason because you know the supply chains not traditionally considered to be a sexy place.

But there's brilliant people who deserve some sexy products, and it's not just in the hardware but it's also in the functionality it's the on the onboarding and the pairing of that hardware. It's the installation. It's in the unboxing process so it's all physical as well. But then it's into the applications and then into the usability and then into the way that we can share that data.

So actually it's a really great analogy you said there with the Steve Jobs experience because, you know, in a way, Silicon Valley stopped making hardware. And I say that with caution because Apple still one of the biggest companies in the world and you know I absolutely love my iPhone 14 Pro.

It's, it's one of the most complete realizations of a technology concept that I've ever seen, possibly since the samurai sword or something like that.

Yeah, although we've moved on from, you know, from from from such things.

But, you know, in a way, actually, you know, Microsoft and IBM, they were built on hardware so hardware was built and then they sold, you know, Microsoft Windows 12345678 to every business school and you know and this is how the money was made SAP, you know, wasn't a hardware.

That was just a pure platform but they were selling consulting hours and the point is we still live in a physical world, you know, so there needs to be a hardware element and if that hardware is not there then what can you really do.

And actually if you think about the internet you know we were very good in the first stages of the internet from the moment that the first developers, you know, did a hello world and center, you know, a pixel a picture of a cat. And you know humans have been connecting to humans through, you know, business, the application email business applications, and then into, you know, social media and so on.

But actually, we're still in the infancy of building out the internet we need to build a physical internet we need to interact with the objects that are important and turn those things into agents so we're talking about digital agents, and we're talking about digital twins.

So you know the first digital twin was already 30 years and 40 years ago for a you know Rolls Royce or a Boeing engine on an airplane so they knew what to fix when it lands.

Well it's not that different now with our hardware device we put that onto a rail car, the rail car becomes a digital twin, and it can announce itself, I'm available, I need to send an invoice, you know I need to be serviced, I've got a problem with my brakes.

Okay, and all these types of things. So you know now we've added a new deal recently with that with Knorr-Bremse which is one of the biggest manufacturers of brakes in the world. And like I said before where, you know, these big players are looking for a sophisticated, you know, platform or basis for bringing their data to the next level to their clients into the market into their partners and so on.

Then you know Knorr-Bremse are probably half of the things that break in the world that slow down in the world trucks and trains and so on. You know these things are using Knorr-Bremse brakes, and they're going to be bringing that data onto the next Yacht platform because they can see the scalability and the value that we can create.

So, you brought something up, you think Silicon Valley stopped building software, hardware and now everyone is just building software.

Why do you think that is?

It's a little bit about what you talk about like maybe it's kind of like this not sex industry, it's kind of boring.

Why do you think that is that that happened?

I think there was like a trend where everybody wanted to build asset-light investments. So software is less risky, the internet's built, we started to see, you know, the rise of cloud computing. Everyone saw the ease and the value of things like Snapchat. You know it's relatively simple to build something that's scalable just purely in the software world that doesn't need that you know that even just the version control on hardware.

The supply chain for getting access to the chips is an issue. Managing safety standards when they don't exist, you know you've got to actually sit there, you know in these, you know, world shipping councils and digital container shipping association and all of these, you know, bodies and governance organizations and work through these questions together with them.

And this is, you know, it doesn't suit the average, you know, software guy that comes out of, you know, education because they want something fast. They want to be able to see a prototype quickly and it's quite sophisticated to build so many different elements in the technology chain.

Do you think there's a big opportunity there for people that maybe is going to get out of just software and try to get in the real physical world and build products that connect the physical world with the digital world?

I think it's extremely tough because there's so much complexity. If you see a company for example like Nest, you know, in some cases, you know, it's obvious that it's needed.

But the, you know, the adoption is limited to the early adopters and then it's difficult to get it to go over that boundary into mainstream. It's possibly easier in the B2B space, but I don't think that it's easy to build hardware on its own. It's easier to build hardware as an enabler for a platform or for a SaaS type business. Makes sense.

And I think everything is a little bit easier in the B2B space is the place to start any kind of product. You need less customers to start. You only need one big one as opposed to, you know, a million small ones, individuals, but it doesn't spread virally.

Yeah, you've got to pick up the phone. It's a hundred phone calls a day, you know.

And you also can prove ROI, right?

Because when you're dealing with the final customer, you're taking money out of his paycheck. When you're dealing with a business, you're adding back time. You are adding back efficiency or something that's going to create value. So you are not just an expense. You become investment. That's what's different also in the B2B space. Correct.

But it's also how you frame the investments as well, because is it an infrastructure investment?

Is it a strategic investment?

Or is it a, you know, I want to see solid ROI before I go ahead and make any investment?

And, you know, unless you can get, you know, customers to believe that this is the future. And you bear in mind this is a long journey.

You know, it's an iterative journey like I talked about before.

And, you know, it's in a way you've got to be patient enough and be a networker enough to build an ecosystem. You can't just work with an individual customer because there's this very heavy risk that you become like a zombie SaaS company that is just serving one client and that you're actually almost a play thing for them.

An R&D workshop because they just want to see the things that are relevant for them and not actually for the market as a whole.

So if you make a statement, I want to digitize global supply chain, you know, where do you start with that?

It sounds ridiculous, you know, but it starts really small. And you start, you know, in our case with a hardware device or with a concept around hardware and then through our learnings, it extended into a platform and then into an ecosystem. But actually, to be honest, you know, what I always say is that you build a culture and that culture is driven by values. From the culture, you build a brand.

And from the brand, you leverage that for investment, you build the product, which is according to the values of the brand, which is quality and sustainability and so on and, you know, usability. So back to that experience that you talked about before.

And then obviously you attract the clients because you bring something that they can believe in because you've got in a sense in the B2B space, you've got two types of client. You've got, you know, within the organization, you've got the naysayers who say it's always been this way.

Why should we change it?

And you have the digital generation or the innovative thinkers who say, you know, for sure we should have this. It's too late already. Yeah. And you brought up like a point that's very important. That's the challenge of B2B too, especially like if you go after those big, big accounts and then the one account's paying the bill, but you want to build a company that's scalable and that's not fragile.

Because if you have only one customer, that company is fragile. And so that's one of the biggest challenges. You have to figure out how to not be serving just one customer. And you have to be watching your customer ratio. You can have all your eggs in one basket.

And so like if you figure out how to go those, we call those the wells, those bigger customers, we have to figure out how to serve more than one. And I think that becomes a challenge. It's great. You stay in business because now you're making money.

But for how long?

You have to be quick to adapt before you just become like a fragile company, a company that's not going to live long term. Correct.

Because you know what?

Just think about it with a big company. One case scenario is that you could have a situation where you've got, you sign a contract and you're delighted because it's maybe a whale as you describe it. But within no time at all, they own you because you signed something in that service level agreement that means that if you weren't able to deliver on one of these points, then the IPs transferred to them.

There are those kinds of contracts and it's pretty stressful to go through that. And that's maybe I would even say if you can figure out a way to start with not the biggest customers, but a little bit smaller. So those contracts are not so. Yeah. So I would say like this is exponential. The size of your customer should be exponentially growing.

So our first customer was probably, you know, couple of devices just to try it. Okay. So like when I told you about, you know, my trips, and then it was this first one with maybe 300 devices on 300 assets, but high value use case. So if something can really go wrong potentially, and then the next one is maybe 70,000. So it goes from 300 to 70,000 because you've proven it on the 300 case.

And now you need to pitch that 70,000 guy, which seems like whale at the time, but just around the corner is one with 1.5 million. I love that too. Like the whale of today is not the whale of tomorrow. That's something that I have to realize. And if that's not changing, maybe you're not developing. So there's a question that I love to ask every guest.

What's the first oh shit moment that comes to mind from the early days of your company?

The first oh shit moment. Yeah. Yeah. I think it was the realization that it's really complex to do something like this because it seems simple at the first. Yeah. You've decided simple idea. We make devices, we sell them. Okay. But then you just realized that, you know, that you're way out of your depth.

You know, you have no knowledge of your customers needs and you know, you really have to change fast or you run out of time.

So, you know, this kind of burn rates versus iteration and you know the energy that takes to drive that through those first formative years, you like, oh shit, what have I signed up to?

But you're already on the path and you would already know by now that you can't go work in a boring corporate environment and have a, you know, have one of these bullshit jobs.

What is kind of like the first very smart decision that come to your mind that you made in those early days?

To read a couple of books, I would say lean B2B and business model generation to understand the business model canvas and the way you can play with this.

And, you know, it's basically, you know, look, if somebody else has thought of that first, it's a bit like the matrix. Plug me in. Yeah. And how about I love those books that there are great books and I think everyone should read.

And how about a very bad decision that you made in the early days?

I don't think there are any bad decisions because everything's a bad decision until you learn from it. So it's a bit like, you know, there's obviously conflict. There's obviously politics. There's obviously huge challenges. There's obviously you constantly make mistakes. But like your view on yourself and the way that you're learning and whether it is a mistake or not, it's not a mistake if tomorrow you've fixed it or changed.

So, you know, I guess the bad decisions, you know what you're getting yourself in for if you if you're looking deep inside your heart. Yeah. And actually, you know, in a way to say that it's a bad decision is kind of outsourcing it. Yeah. Yeah.

In a way, it's no bad decision.

It's basically just did I learn or not?

It was learning experience. That's how you see it.

Yeah, exactly. It's only bad if you didn't learn anything from. Yeah. And then if you didn't learn anything from it, then you're then you're already over because you don't have the right mindset. And like talking about yourself, like if you could go back in time 2015, meet yourself, you have an hour with yourself.

What would you do?

What would you tell it to yourself?

I'd say you must be mad like everybody else. I'd laugh in my own face. I would I would have a serious talking to myself about whether this is what I really want. And then I'd decide that I do. And then I'd keep going and do everything the same as I did. That's great.

We talk a little bit about the Orange story, but how does the company look today?

If you could talk a little bit about size. Yeah.

What's the future look like for you guys?

Yeah. So we're in an incredible moment right now because, you know, we've got this beautiful culture where people it's magnetic. People join because it's the only company that they can see themselves working at after they look around.

You know, why would you go work for a big tech company that's already well established?

Because, you know, you're not going to be able to move the needle. You're not going to have the inventive freedom. Everybody within this company can come up with any idea today and it will be happening tomorrow if it's a smart idea. Okay. And then the next thing is we have we're based here in Switzerland. We've got offices around the world. We've got offices in Dallas and so on as well.

But it really is like being in a family. And I don't say that in a crass way either.

You know, you hear everyone say that they let it's like a family, the family of, you know, whatever company. But actually, you know, we've got 30 or 40 nationalities in our organization.

And, you know, we've got extremely diverse backgrounds and skills. And I would say that that diversity is like the lifeblood of our organization because, you know, we've got people who've worked, you know, who've been in the in the military or in in, you know, diplomacy.

Or we've got people who've been in biotech or we've got people who were looking for the Higgs boson in the data that comes from CERN, from the Large Hydrant Collider. And we've got people who, you know, came as a student to glue some things together in the first days, building those first devices. And they've reinvented themselves five times. And now they're owner of, you know, their product owners.

And, you know, it's just like this, you know, where people feel it, they join and they evolve with the organization.

And, you know, there's nothing out of bounds and people are not getting offended by things that people say.

And, you know, we're able to challenge ourselves extremely honestly.

And, you know, sometimes you have to really work on your ego and swallow, swallow your pride.

But, you know, if anybody loses their shit and, you know, becomes, you know, sort of rude or aggressive in this environment, then it just would not. It wouldn't feel comfortable for them. It would be a no go.

You know, there's no chance.

We're, you know, we're working together for a common goal.

So, you know, our our purpose is easier, safer, cleaner.

And, you know, we basically know this means making it more efficient. It means driving up safety metrics and it means making, you know, the the world a more sustainable place. So everybody can buy into that. It's not one of these long sentences that everyone's forgotten what it means after the first few weeks that we know it's absolutely clear. But really, it's about respect. It's about trust.

It's about quality and it's about freedom.

You know, our people should feel really free and therefore entrepreneurial, almost like they're building startups within a scale up, something like this.

Yeah, because it's growing and changing or growing and changing. It comes down to trust and values, I think. So it looks like you guys are in the innovation stage. You're in the stage of the company where there's a lot of innovation happening, where there's a lot of where people can really have a big impact or where the company is.

So how big is the organization in the number of people?

Yeah, we've got like 130, 140 people. But actually, we run very lean because most people have multiple skills and they work in kind of the squads and cross.

You know, it's not like Matrix organized, but it's like there's a lot of cross pollination of ideas all the time. And I would say that we've always been in the innovation stage because we're extremely innovative. But I would say that we're in the scale phase now and we're in the deployment execution phase. We're currently producing, you know, we're producing the devices that go on to 1.5 million shipping containers.

This is extremely you have to have meticulous process processes and extremely high quality in every stage of that manufacturing and delivery process. So we've got to install them around 50 different locations around the world.

So, you know, we're punching a little bit, but we're adapting really fast and we're innovating.

Yes, but also it's very serious because we've got to execute. That's fascinating. Thank you very much for sharing this story and for sharing where you guys are. And I'm excited to keep watching you guys grow.

So if anyone want to learn more about you and about you guys, what's the best way to follow you?

So have a look at That's our website. And the ex ex iot dot com look up Dan McGregor next. The same spelling, obviously, on LinkedIn. And I also have my own podcast called The Wise Machine. So if you search that, you'll find that on all the podcast platforms.

And, you know, we're just finding our legs with that. Not quite as professional as you are yet, Phil.

But, you know, we're getting there. And certainly I appreciate your great questions today and your, you know, your personal interest in this, because, you know, it helps me to communicate the value and values and the passion that we have, you know, to change the world. And we can really fix a lot of things, you know.

OK, what's the what's the outcome I want to achieve?

We want to reduce global emissions from the supply chain.

By what percentage?

It's difficult to say, because we didn't know exactly what it was before, but it's significant.

OK, next thing we want to make sure that we guard global trades data to make sure that we have normal, you know, adjustment in the in the markets around commodities and things like this. And the final thing is that we want to optimize human activity on the planet by significant percentage as well.

And that means, you know, addressing this gray energy and the waste that's gone into manufacturing and that it's not actually delivered to the people that need it.

So, you know, we have to preserve our value and we have to also create a template where we can have fun and enjoy each other's company and develop meaningful things. That's a great mission. I'm sure you guys are going to do very well accomplishing that. I'm going to keep following you again. Thank you very much for being here today. It was a pleasure chatting with you and learning more about your business.

Thanks so much for having me. I look forward to our next contact. Thank you. Sass Origin Stories is brought to you by Dev Squad. To find out more about how we help entrepreneurs launch new products and help larger businesses plug in a ready to go development team, visit Dev Squad dot com.

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