SaaS Founder Interview with Daniel MacGregor, Co-Founder of Nexxiot
Tony Zayas 0:00
Hey everybody, welcome to another episode of the SaaS Founder Show where we get to talk to amazing SaaS founders who are doing really interesting things, learning about their journey, how they got to where they are and glorious some of the bumps and roadblocks along the way and how they got past them. joined as usual, Andy Halko, how you doing Andy?
Andy Halko 0:20
Doing well just spend my day making some sausage and trying to, you know, make the magic happen. How about you?
Tony Zayas 0:27
Yeah, no, having a good day, busy week got a lot going on, we actually want to talk before we get to our guest today. We have an event coming up little over a month out, we have our Tech Throwdown, I will actually add it to the screen so you guys can see to learn more about it but it is want to give an overview of tell everybody what this is about. We have founders, you know, people who are have startups out there that are watching. And this is an opportunity to get a little bit of a stage and potentially win some cool prizes and things.
Andy Halko 1:03
We just explained it right there. But you know, Tech Throwdown we’re going to be having a pitch contest for startups, where they can win some money in some prizes. It’ll be really cool. We’re trying to give back and help some startups scale. And so we’re having our own pitch contest, people can apply at that link, as well, as you know, give, you know, prizes of services or cash to that can boost up the pool for our startups. So should be a fantastic event, Tech Throwdown, you know, make sure that you sign up.
Tony Zayas 1:35
Yeah, absolutely. So check it out. And you can go to insivia.com/slashtechthrowdown2021, to learn all about it and we would love to have some of you that have, you know, early, early stages want to participate. We’d love to love to hear from you. So check it out. With that, I want to shift gears, and we can talk about today’s guests. We have Daniel MacGregor, he is the co founder of Nexxiot. I’ll bring Daniel on in a second, but I just wanted to share Nexxiot from Zurich, Switzerland, and they’re a driver of digital logistics of tomorrow. They say the company’s goal is to enable a 5% reduction in global CO2 cargo emissions by increasing cargo transport efficiency, and eliminating waste caused by empty runs and inefficient routes. So pretty cool stuff. We had found a pair of founders, co founders on yesterday, talking about the logistics space and about increasing state of sustainability. So pretty interesting theme. Looking forward to hearing more Daniel, how the heck are you?
Daniel MacGregor 2:39
I’m really great. Thanks. I’m sitting here in Chicago. What a wonderful city. Great to be traveling again, you know, I did a lot of traveling over the last five years, as you can imagine. But, you know, it was we had to change our working style, but it’s so great to be on the road. And actually, you know, as you’ll discover, as we talk, the market invented our our business and our products, but they didn’t know it at the time. Yeah, it was just about asking the right questions.
Tony Zayas 3:07
Yeah, for sure. Very cool. So let’s, um, let’s hear about, you know, next year, where did the idea come from? What is the origin story? That, you know, where, where did the idea come from? And then how did you launch that through that idea into a reality?
Daniel MacGregor 3:24
Yeah, so I just give you a little background on where I come from. Originally. I’m actually from Manchester in the north of England. And I actually, I moved to Zurich, in Switzerland in 2002. At that time, I was a headhunter. So I was always floating on top of technology markets and selling contract candidates into high-level roles. And, you know, when you’re floating on the technology markets, you’re always very much aware of the next new thing is just around the corner. What will that be? And at the time, you know, add friends and networking around the topic of ultra low power, embedded hardware, energy harvesting complex systems, and big data analytics. And, you know, this is the perfect sort of combination of experiences and knowledge to create IoT solutions. So IOT Internet of Things was on the radar and, you know, it was clear from an early stage that if you want to raise money and have success as a co-founder or as a founder of a company, you need to create a path for storytelling around the investment side, to reach recurring revenues, to do scalable volume business with recurring revenues. And it needs to be a combination of technologies that don’t sort of creating a sort of, you know, an individual hardware device or something, but actually, you’re focused on solutions, and creating value for multiple stakeholders from data-driven You know, value perspective. So, you know, I’m going to hog the airwaves a little bit, because I’ve told this story a few times, but it’s a great story, and I hope you don’t mind. And it was obvious to me quite early that, you know, there’s a, you can track your luggage through the airport, you can track your new shoes, through the mail to your front door, you can track your child on the way to school, and, you know, you can track your pets in the garden if you want to. But why can’t you monitor a shipping container full of Apple products across the planet, it just doesn’t make sense. And, you know, we started to dive into this topic and realized, you know, that actually, the hardware isn’t there. And there is there are challenges on what to do with the data, managing battery, and connectivity topics, what will be the standards, all these things were barriers and blocking, you know, customers in whichever sector from really getting onto this IOT train for commercial applications. And we realized we didn’t want to do consumer, we wanted to do B2B, it had to be, you know, large volume, we’d rather close a deal for, you know, 100,000 objects to monitor then actually, you know, sell individual, you know, products to individuals. So that was the sort of premise in the background. And we started looking at some mesh network solutions for specific applications. But we realized it wasn’t scalable. And often, this is is one of our early devices. I don’t know if you can see this, but it’s pretty, it’s a pretty primitive, kind of, you know, chip. And one of our early lessons was that you know, that’s not enough. And, you know, it needs to be packaged. And we quickly realized that actually, this is a lot more attractive to the customer. And you can see that it’s got an energy harvesting, you know, capability in there, and it’s got a box on it. And you know, a bunch of sensors inside, this starts to be more usable. But actually, it’s not about the hardware. The hardware is an enabler, it’s about what do you do with the data? So, you know, we started the journey, we said, okay, let’s build the devices and sell those. And then we realized the customer’s not so sophisticated. So we moved on and said, Let’s build a front end with, you know, dots on the map, and you can see that asset moving around and things like this. And then we said, Actually, no, we need to build a fully integrated, intelligent IOT cloud platform where you can retrieve the value. So that’s like my little introduction, I hope that adds some value to the understanding of this.
Andy Halko 7:41
Yeah, for sure, I’d like to unpack because of the idea that you started with the device and then moved into the software, was that always the plan? Or was it a realization after that, like, we were originally going to be an IoT business, but no, we need to be a data and, you know, visualization platform?
Daniel MacGregor 8:02
Yeah, it was that. But I think that it was a lesson that we learned pretty early on from our experiences in the market. Because as a technology, you know, fan or as a, as a, as a progressive, let’s call it I don’t know, if that’s, you know, an exaggeration, but, um, you know, we were assuming that the market was poor, and perhaps more advanced than it was. And, you know, you think to yourself, well, it’s, you know, GPS has been around for 25 years, and we’ve got connectivity as a standard. Everyone’s got a mobile phone in their hand, and, you know, that’s doing superduper things. Surely, the business world is more advanced, you know, then this actually, that was naive. So, you know, we imagined that we would provide the data from the hardware, and one of the major problems to solve was the power question. And once that is solved, and it’s not just a matter of adding a solar panel or some energy harvesting unit, it’s about managing the packet size of the data down. And it’s about, you know, creating meaning from that data as well. So, you know, once we realize this, and we understood that the market didn’t just need a data stream, but they needed help to create meaning and value from that data, then we evolved pretty quickly to fulfill those expectations or requirements.
Andy Halko 9:18
I am always interested in understanding building a product, like a physical product, you know, you’ve got an idea in your head. How’s it started? Do you go to a design? Or do you go to a consulting firm? Then, you know, what, how do founders take some idea for a physical piece and turn that into something real?
Daniel MacGregor 9:42
Yeah, it’s a great question. And I think that you know, one of the things that’s very difficult to understand is, you know, what, is data and you know, we have zeros and ones now is that data, and what about once it’s been cleaned up and algorithms have been applied, so that it means you know, sort of more than zeros and ones. And then what about when you take it into the real application layer, and you mix it with other API data, and you start to extract more and more meaning and value. And then what about when you pass that data up to different stakeholders and start to give it to them so that they can improve, you know, a part of their service or their processes. So actually, you know, for me, data is all about the automation of business processes. But it’s that to make that step, you need so much context, and you need to be able to process that data to make it more meaningful. Now, this brings me to a very interesting point, I would call the next car, it’s one of the first hardware-enabled software as a service company. And we don’t sell the hardware, we sell subscription that includes the hardware, and one of the great sort of, we believed in open source and not proprietary, and we believed in creating a meaningful standard. And we know we wanted to support the whole industry, in this process, we assumed that everybody was a little bit more advanced, maybe than they were, but actually, someone’s got to stand up and do all of that stuff. And we took it on ourselves to do that. And sometimes it’s a naivete is a good thing, you know, you have like, big goal, the big target. And, you know, nobody else has that big picture in their head, because it seems too ambitious. And it’s only through that, that we can address the global supply chain today. So you know, this idea of hardware-enabled software as a service, but creating value from the data side, once that hardware is enabled, then, you know, that’s, that’s the route that we went. And I’d say, that’s quite a unique, you know, sort of path to go down to the stage that we went down, and lots of people trying to do this now. But you know, we’ve got, I would say, an uncatchable lead, because we have so many devices deployed, we’re gathering one 1 billion data points a month already, you know, we mixing it that with other API data, we probably got the biggest weather station in the world, because of our devices, measuring ambient temperature, we probably got the biggest evaluator of global connectivity providers in the world, because our devices go to 160 countries. So all of a sudden, you know, you realize that you’re in a sort of a considerably advanced position relative to the rest of the market because of the path you chose.
Tony Zayas 12:17
So back up a little bit, Daniel, you’re blazing trails here, especially early on, you said there’s some, you know, competitors in the space now, and you guys have a big advantage over them at this time. What were some of the challenges you said, you didn’t you expect, you know, businesses to be a little more advanced, as far as what they were doing? How did you overcome those hurdles of having something that’s an innovation, taking into a space that wasn’t necessary, you know, engaging in the way that you wanted to? What type of challenges that that cause? And how did you get past those?
Daniel MacGregor 12:52
Yeah, there’s a many challenge, we could focus an area, you know, there are probably 500 or 5000 moments that could have broken our neck, and we weren’t aware at the time, yeah, so you have to have a lot of luck. And a lot of the time founders, they say, it’s my great vision, it’s my hard work, and it’s my, my determination, but, you know, you need to have some luck. And you need to have, you know, a core team that has diverse, you know, interdisciplinary capabilities from the off, and you have to have a lot of resilience, and you need to find some traction early. And but one of the major challenges I would say, is in the invention process, and if we take an example out of another, another founder and inventor from the state, so Mr. Henry Ford, and you know, he the famous story, he went to the market and said, What do you want? And everyone said to like a faster horse? And he said, Well, no, actually, what you need is a combustion engine on a chassis. And, you know, this was Nobody could imagine a combustion engine on a chassis at the time that he could, okay, so if you ask the customer what they want, they probably won’t know. But if you ask them, you know, what problems they’d like to solve and why it’s unsolvable today, then maybe we can fill the gaps and we can start to go and get the data and start to look at that data and work out, you know, what the data is telling us about those problems. So one of the areas that we’re we’re very sort of, you know, deeply committed to and entrenched in this the rail, the rail car, or rail, freight sector, and most of our devices are currently deployed on the rail. And you know, if you think about something like a simple event in rail, something that happens every day, all around the world, think to get hit. It’s a heavy, dirty industry, lots of moving steel, and your reliance on third parties all the time to provide services, but you don’t have your own eyes on that asset. It’s with your customer is with, you know, a marshaling yard on a terminal. You’re, you’re paying for shunting services, etc. Now if you have any impact events, something gets hit in that in all circumstances. Currently today, everyone’s pointing the finger, those guys did it. And then you speak to those guys, and those guys did it. And it’s an ongoing chain of kind of blame and finger-pointing. And, and, you know, this, there are challenges over making claims, there are challenges over service level agreements that you get caught up in lengthy court battles. And, you know, if there’s an accident or an insurance case, nobody has a single source of truth. So, um, you know, when you think about that, actually, we, I’ll give you an example, if you look on our website, you see, you know, there’s a video of a train that we got from our customer, and we crushed it, we dropped things on it, we smashed it up pretty thoroughly, it was a lot of fun. And, you know, we have it covered in sensors, we take that shot data to the cloud, we do pattern recognition on the shot data, supervised machine learning. And that gives you enough context to know exactly what caused that event. So if something’s dropped from a crane, perhaps you want to train the crane driver. And if something’s you know, say, um, you know, there’s an over overzealous shunting event. And you know, maybe there needs to be an insurance claim, or maybe you need to make a pre-trip inspection on the cargo to make sure it’s not damaged. But you can’t make those decisions and those automated business process outcomes until you have the context. And that’s about gathering data reliably. It’s about collecting it into a repository, it’s about processing it, it’s about building the algorithms that are going to understand it and interpret it, and then creating new digital services for all kinds of stakeholders. And this is the single version of the truth and the digital twin of these sorts of things.
Andy Halko 16:52
Now, it sounds like you were in the recruiting space before this, which I assume that you had an understanding of tech, but you’re not a developer, or a data scientist. So how did you bridge that gap? To, you know, be able to produce a technology solution?
Daniel MacGregor 17:11
Yeah, it’s a good question. So I mean, for me, technology is a little bit like cooking, okay, if you know, something’s possible, and if you know the principles of it, and then you can combine things in different ways, it needs to be fitted around the business needs. So it’s about communication and understanding the client’s expectations or requirements. And in the founding team, we had some great expertise, it was kind of a hacker type of culture, you know, don’t reinvent the wheel, take what exists, you know, make it work, test it, prove the concept, and then we can scale it. And, you know, moving through that sort of, you know, that early development phase. And, you know, we had some skilled and committed people in the team. And obviously, the recruitment background helps with this too, because it means that you can quickly identify the types of profiles that are going to fit. And it’s not the corporate profile of somebody who wants to stay in their lane, it’s somebody who wants to be radical, who wants to make a difference? Who doesn’t see, you know, the risk is an interesting question, you know, what represents what’s represents a risk, for some people risk is about having sort of a secure life and having a predictable life. And in business is the case, you know, in most of the use cases, and for myself, you know, rescue is not fulfilling my potential, it’s not exploring the world, it’s not trying things, and it’s not, you know, making an impact, you know, and if you want to make an impact, you’ve got to be on the latest technology, you have to be visionary. And you have to be, you know, highly motivated to deliver value to the world. And, you know, back to the motivation to reduce, you know, emissions in the cargo transport chain, if you look at 40% of shipping containers on the roads are probably empty, because of asymmetries of flow, you know, or moving things to customers, and so on. And, you know, optimizing the operational performance of the fleet is one thing. But you also need to create or drive value to all the different stakeholders. And you know, so one of the critical things is, if you’re, you know, in the transport chain today, you’re not necessarily taking care of the whole journey, or all the processes. And, you know, everybody needs a little piece of that information to increase their efficiency. And if you’re in a chain, you’re only as strong as the weakest link in the chain.
Andy Halko 19:38
Was sustainability something that you were thinking about before you started the company? Or did it arise after?
Daniel MacGregor 19:46
No as one of my personal goals, you know, I studied environmental science at university. And, you know, I realized that you can sit in the academic world and write papers and probably only a couple of people will read them and actually, no one’s going to act on them. And then if you look at the governments of the world, at the moment, there’s a lot of sort of populist, you know, sort of policies and so on. And, you know, to keep everyone happy, you know, there’s a tendency to do nothing. And if you look at them, you know, the corporate world, you know, we need to create an atmosphere of innovation, that many corporations struggle to integrate themselves. And, you know, so, you know, views our innovation approach, integrate it, and we’ll create products and services, you know, that can take you into the next, the next level of sustainability.
Tony Zayas 20:39
Daniel, I’d be curious to hear about the team. What is it?
Daniel MacGregor 20:45
Yeah, we’ve got an amazing team. And, to be honest, the success of next year is, you know, I’ve got to give them props. And we’ve got about 25 different nationalities, we’ve got about 8090 people, and you know, we are creating a very flat hierarchy, where anybody can raise their hands and solve a problem, you know, problems, identification is to be embraced, we never shoot the messenger. And we have a culture of being very closely collaborating with our customers, and our customers know, their business, they know the challenges. And we tend to find that within each client that we have, and you know, there are individual champions who’ve been dying to do this stuff. And we have to enable them and support them to communicate internally because it’s not just a technology challenge. It’s a cultural challenge. If you look at the rail sector, specifically, not much has changed in 100-150 years, but, across the whole supply chain, you know, the mantra from the carriers and the shipping lines has been our customers won’t pay more. So you know, if that is the mindset, then it’s the industry’s already been commoditized. And the only way to create additional value or, or a path forward for the growing the business is to offer new digital services to multiple stakeholders and increase both the client base and as an app, and, and the, and the, you know, the capabilities within each of the clients to deliver new services in turn to their end customers. So, you know, it’s a, it’s a long journey. And it’s not just something you do overnight, you know, it’s about changing the world. And, you know, that’s not a straightforward thing. And there are lots of cold dependencies, but we’re making incredible progress. And it’s very satisfying to make such progress because we know that this is visionary stuff. And it should be, you know, something that’s available to everybody in the supply chain, whether you’re a finance, whether you’re you know, a partner, a third-party logistics provider, or the cargo owner. And that takes me to the next point that actually, it’s not just about the asset. It’s actually about the cargo owner. In the end, it’s about the shipper and the cargo owner. It’s about increasing transparency, accountability, trust, timeliness. And optionality to reach sustainability targets to achieve commercial goals, etc.
Andy Halko 23:20
Given your background, can you help other founders think about how to find great people? And how to, you know, how do you evaluate who’s a great person for for a startup for a software company?
Daniel MacGregor 23:35
Yeah, we had to, we had a different approach, I would say, and we still do, I’ve got to say, and in the early days, we said, bring your projects, bring your projects, bring the things that you’re passionate about, I don’t want to see your CV, I’m not interested in a piece of paper, bring them back and tip it out on the desk, and impress us, okay. And that was the first thing we want people who are ultra passionate about. So we have people who’ve, you know, self-developed certain, you know, platform computer games, from an early age, we had people from diplomatic backgrounds who, you know, created some sort of innovation, we had all kinds of people, we’ve got makers, and breakers, you know, we’ve got people who tweak things and hack things. And we’ve got people who, who always think about, you know, how to take another angle, another approach. And now it’s a bit the same you know, so we say to people, you know if you’re passionate about what we do, and you’re a talented person, then come and join us and find your perfect role.
Andy Halko 24:38
Yeah, it’s really cool. I like that idea of asking people come and open up, you know, what you’ve done and cool things and just show it to me. I love that.
Daniel MacGregor 24:48
We had a hackathon recently and you know, we’re always experimenting on new technologies and the ideas that came out of, you know, just those couple of days because, you know, we’ve got these interdisciplinary teams We have no friction, there’s no politics, there’s no, there’s just kind of joy really to go to work and invent new stuff. And everybody’s an inventor in a way. So, you know, you can imagine the atmosphere in the office, you know, it’s really fun. And we had some projects where we were able to map an a4 piece of paper from space, down to centimeter-level in a couple of days, you know, this type of thing. And this is a mixture of, you know, the diverse backgrounds of the individuals, the passion, commitment, and the lack of hierarchy and politics.
Andy Halko 25:32
Now, you make it sound, you know, oh, you know, teddy bears and hugs. But have you had challenges on the people side, and
Daniel MacGregor 25:41
Oh massively, I mean, one of the big challenges is, you know, going from startup to scale-up, where, you know, you’ve raised considerable amounts of funding, and there is, obviously has to be an oversight, but there’s a mismatch between what it means to be in the logistics, technology, space and the logistics space. So you know, the old, you’ve got two sorts of generations, you’ve got the sort of the protectors of the existing status quo, and then you’ve got the visionaries of the future. And to sort of marrying those two cultures or two, to manage those two cultures is a challenge, and to also, you know, to communicate to investors, and you know, what the long term game is, and how, why the certain building blocks needs to be in place before you can go ahead and do the big, the big things. And, you know, this is always a challenge. And, and, you know, it’s not been a smooth journey, we’ve fought for this, and, you know, sort of situation that I’ve just presented now, very hard, we’ve worked, you know, carefully to get the right culture. And to eat constant communication, I would say, the biggest part is effective communication, it’s understanding how to package things to different parties, different stakeholders so that it makes sense. And that it’s understood, to qualify that our understanding is the same as it goes forward, and then to keep updating and to keep, you know, sort of regenerating yourselves as you learn things, because, you know, it’s this so that we are here, this fail fast thing in the startup world, but really, this is very important that, you know, when your pivots, you let go of the past each time, you know, you move forward without holding the trauma of mistakes, and you know, and things that didn’t work out, and that you take the best bits forward and you leave the bits that you don’t need behind.
Andy Halko 27:42
Yeah, I agree those sunk costs aren’t worth you know, are sunk effort isn’t worth staying focused on.
Daniel MacGregor 27:50
I think a lot of the time, you know, we have our egos is our worst enemy. And actually, what you want to do is you want to hang on to something you’ve worked hard on. And in those early days, you know, I was working hard, maybe we’ve pivoted so many times before we found ourselves, and you work on something for three months solid, and at the end of those three months to chuck it all in the bend, and to take just the finding that it was wrong, forward. And start again, it’s tough, you know, you’ve got to be you’ve got to know yourself, you’ve got to feel very comfortable with your mission. And, and your, your, your sort of mega objectives. Rather than looking at the micro and get caught up in the day to day, you have to sort of Yeah, kit slay the ego and make sure that you’re able to, to move with the learnings and not get caught up in your past negative experiences too much.
Tony Zayas 28:40
Daniel, as a, as a cofounder, we often hear from, you know, cofounders, and we like to learn about the dynamics between them and, you know, their, their, their cofounders, what given what you just said about, you know, the egos involved and having being able to remove that and learn on the fly and kind of having a big picture, you know, vision, how did that work with you and your co founder, co founding team and, and how do you guys operate today?
Daniel MacGregor 29:10
Yeah, it’s a good question. I mean, I think, you know, with the, with the founding team, and it was a challenge, we obviously had one of the guys was was a from the investment side who’ve done his own technology company in the past and believed in the in the potential of this and understood the you know, the sort of the long term picture and the the other cofounder, he was from the technology side research, you know, fantastic individual very experienced in all kinds of areas of technology and was able to you know, quickly move forward and take the learnings on and you know, we had very good relationship. I think in the end everybody has slightly different priorities for themselves and we have to recognize that and you know, my the, the the Technology Co Founder left the organization to pursue or the personal lives trysts, um, you know, often the case for technology inventors, you know that they want to work on the future thing. And, you know, obviously, we are still working on the future thing, but actually, you know, there’s a certain amount of appetite for making as one solution, then you take those learnings and experiences and you want to work on something different. So, um, in the end, you know we balanced it up, and you realize that everyone brings something specific and valuable to the table. And you have to be pragmatic about your own personal needs and expectations, and manage those relationships and make sure that everybody gets what they want.
Tony Zayas 30:38
How does your role look like compare today to how it did in the early days? How has that changed and evolved?
Daniel MacGregor 30:46
Yes. On the in the early days, I was making 100 phones caught phone calls a day caught saying, Have you heard of IoT, and, and then now I’m a thought leader in the space and considered something of a visionary. And I’m writing thought leadership pieces for major news or news outlets. And I’m actually speak public speaking, I did. In those early days, I did 150 flights a year, which sounds like a terrible carbon footprint, but you’ve got to invest something in order to make an impact on global, the global supply chain. And, you know, now, I’m still speaking at events, meeting customers at the high level, and always imagining the next thing and the next version of the product, and how it might integrate with a market needs, how we should communicate that which stakeholders need which messaging, it’s more on the communication side, although I’ve always been on the real great believer in relationships. And, you know, we have to also integrate all the ideas. So it’s very important to keep the culture of the organization, right, we’ve got a fantastic management team in place, fantastic CEO, who really understands the culture that I called Stefan Carlmont, he’s not from an IOT background, but that’s also great, because he brings, you know, sort of a unique perspective from, from financing from, you know, different, you know, sort of the the business model side. And so, so I think the main thing is to remember that we’re a team, it’s not just about the founder or the co founder, it’s about, you know, the team and about how we can collaborate, and included in the team, I would say, our clients are there, too, because they’re part of the team, we talked to them every day.
Andy Halko 32:28
How important do you think it is for a founder to become that thought leader that you talked about someone that’s a visionary for the industry is that is that something you think is a necessary piece of what a founder does as part of their job?
Daniel MacGregor 32:42
It depends a little bit, you know, how visionary something is, you know, you can find a company, which is essentially a clone of something else and doing it slightly more efficiently. But you know, if you think about it, you know, we were really market makers, because, you know, nothing like this existed, there was no integrated supply chain solution going from sensor, so open for, you know, non proprietary open source, any sensor, link to the Gateway, any gateway to the Cloud Platform, managing standards, managing connectivity, device management, data management, and then through to analytics, machine learning and business process automation. That’s the full value chain. So, you know, this is this is really a radical thing the world hasn’t seen before. And then not only that, but we packaged it up as a subscription model to take care of CapEx because we knew that it will be a challenge for our clients who have you know, you know, 200,000 data sets to get the money up front when the ROI is not absolutely clear and defined. So, you know, we have to be innovative on every front on the on how the client integrates, and buys the solution, how we integrate data from third parties, and that we provide the connectivity and we integrate that contract into ours and bundle it all together. So you know, there’s a way you can always bundle and unbundle but in the end, you know, it’s the right thing for the market at the right time. And this is an under built on an understanding of constantly speaking to the clients about what their barriers are and where their roadblocks are, and why can’t they pitch it internally? Why can’t they get the board’s approval, and then we have to evolve. So you know, like, it’s constantly remove removing the bat, identify the barrier, remove the barrier and continue to engage with the customer in terms of where they create value. And every client is different.
Andy Halko 34:28
You know, something we hear a question all the time from founders is you know, how do I price my product? How do I figure out what the the model is for it? How did you go about that and how has it evolved over time for you?
Daniel MacGregor 34:43
Yeah, guys, you just gonna have to bear with me I just seen and I’ve got a 6% battery. I’m gonna plug it in just a second. Okay.
Andy Halko 34:51
So Tony, I think that that’s always an interesting question is the pricing piece for sure. How do companies figure out what The price and so
Daniel MacGregor 35:01
Yeah, I agree with you guys, you know, this is one of the critical topics actually is how do you price it and one of the things that you really don’t know is you don’t know how much value it contributes. So you go in, you know, with a PLC type model with a few core customers, and you have to do you know, sort of a an analysis of the different use cases, which ones are most realistic, and how many devices need to be deployed, what needs to be done on the data side, and those early adopter customers are really your partners because, you know, like, they’ve got to tell you their problems. And to some extent, they’ve got to trust you enough to give you transparency on the cost that they bring, in order for us to work out a price that’s realistic for the market. So um, you know, if you think about, you know, a rail company that owns physical assets, that, you know, very heavy metal objects that have been traveling around the world for a long time, and, you know, how they, how they didn’t, you know, sort of close the gap between their traditional business and the future of their business. But you know, if they want to grow their business, then there’s issues with monopolies and mergers, their assets, the assets cost a lot of money, hang on a second, the future is to add digital services. And that’s a different game. Yeah. And that’s actually as you know, there’s, there’s, there’s very little risk, if you go with our, you know, our sort of CapEx model that we’ve come up with that we actually supply the device. So they start making money, and we start making money from the moment of deployments, I think this is very important. So but obviously, you know, this in terms of coming up with a price, and you know, you in the end, you probably give, you know, the first customer an incredibly good deal in order to get that sort of understanding into your organization. And then you start to price it slightly more aggressively as you create value. And as you demonstrate that nobody else can create these products and services, and that were quite unique, I’d say we’ve got an uncatchable lead. Because we’ve already gathered so much data, and we’re gathering so much data we’re deploying, you can’t just create a hardware device overnight, that does what our still does, it’s, you know, it’s got to meet standards we have, it’s intrinsically safe, it doesn’t create a fire from you know, in a in a hazardous environment. Also, we can operate an oil and gas terminals and things like this. And, you know, these are the these are the details that make all the difference, to be honest. And this is the, you know, the these are the hard won learnings from going on the journey and doing during the distance, you know, with with customers and clients.
Tony Zayas 37:41
Daniel, you expressed a couple times, you know, the importance of your customers, like they’re part of the team. And that’s kind of how you look at them. And that’s a great way to look at it, you know, for purposes of growing, how do you? What is the process that you go through to collect and manage the feedback that you get from your customers? And then how is that cycled into the roadmap and how you move forward and make changes? How do you prioritize, prioritize all that information?
Daniel MacGregor 38:12
Yeah, I mean, obviously, we have a product, a great product team. And I want my, you know, we we had a guy on very early, who’s got a super high level view on technology and understands, you know, the whole technology ecosystem. And then it’s very much about understanding the customer’s ecosystem, and you know, how their business works today. And you know, where the pain points are? And often, you know, when I talk when we talk about big data, you don’t know what you don’t know. Yeah, so you’ve got to start gathering data and significant volumes of data, I would, I would suggest, we have the principle and the the, the maximum value in the data is hidden in 0.01% of it. So you know, it’s about processing and filtering that data. But you that’s why you need to get the data that started gathering the data. And, you know, one of the findings or one thing that made us unique in the early days that when we reached the market, everyone’s talking about how long does your battery last on your device? And we said, Actually, that’s not relevant discussion. Generally, battery discharge discharge is around 10% A year anyway, even if you’re energy harvesting, so you probably got a 10 year battery life. Question is, how many messages can you send? Because, you know, if you can’t send more than four messages a day, then you’ll miss a state border or, or a national border, you might miss the whole country, or the whole state, you know, without any events, you can be well behind the game. And what we’re talking about now is real time, we’re not accumulating, or, you know, we’re not gathering old laggy data and trying to smash that together like the digital freight forwarder platforms are, we’re actually taking live data and mixing it with other live data and creating immediate value. And you know, you can think about safety or you can think about trust or you can think about you know, connecting different modalities in the transport chain. So, you know, if a rail rail freight composition arrives and there’s nothing to collect the assets that it’s unloading, then that’s the problem. It’s not the fact that the rail freight wagons leads, you know, so it’s an interesting question. You know, it’s, it’s very much about communication, it’s about relationships, it’s about trust.
Andy Halko 40:24
What’s been what’s been the biggest challenge in trying to grow a software company?
Daniel MacGregor 40:30
Yeah, the biggest challenge is, I would say, understanding the market needs and, and being nimble and fast enough to take your learnings and to iterate them into a product, and then to test it on the market and to get confirmation that that’s gonna solve the problem. I think that’s the maybe the summary. I mean, obviously, on the other side, it’s the, it’s the, it’s the humans, the human element, both in terms of culture on the client side, but also, you know, what we talked about before, in terms of going from the startup, which is, you know, super wild into a scale up where you need to, you know, start to deliver to service level agreements, and, you know, have, you know, the quality controls and the, the, the processes in place. And this is very much iterative, and, you know, we’ve gone through lots of cycles and learnings and, you know, I think the biggest challenge is to be resilient enough and faithful enough to the to the vision to, to allow something good to happen, you know?
Andy Halko 41:37
What’s the funding story that you had? I mean, some founders, they debate, should I, you know, build an MVP, and Bootstrap? Should I go out and try and raise cash on an idea, you know, what was your funding story? And how do ya
Daniel MacGregor 41:52
MVP all the way. And, and whether you bootstrap or go out to, you know, to, I mean, we did a, we did a, the first rounds, you know, was probably your best business angel type arrangements. And then, you know, we gradually move towards more, you know, institutional investments and so on. And we had, probably second, second round third round, I mean, depends what you call around, you know, because obviously, there’s various sort of mechanisms, but there was a lot of interest from, you know, private families in the logistic space locally. And we’re based, we came out of Zurich, in Switzerland. And so obviously, there’s a lot of, you know, financial institutions there and a lot of money, but it’s a different mindset in Switzerland to the US, you know, in the in the US, you know, you say, oh, you know, I need 2 million, and they say, Well, I don’t think that’s going to cut it, you’d probably need 20. And in Switzerland, you know, they’d probably say, Well, what you’re going to spend you 2 million on you probably need 500,000. So, you know, there’s a bit more conservatism, but at the same time, you know, in the global marketplace, it’s a global business. And we have very much an international mindset. And, you know, we have we have investors from all over the world now.
Andy Halko 43:04
Yeah, how has that impacted? Is this international peace? Like, have you had to approach internally, culture, externally clients, you know, growth across borders? How have you approached the international side of growing a business?
Daniel MacGregor 43:20
Yeah, well, I mean, I just went on the road. In those early days, I was going to all the conferences and speaking on stage and we had some real adventures, you know, I took the I took the concept to Dubai, I took it to the to the US, you know, we went all over Europe. And, you know, again, it’s about, you know, probably speaking at 20 events a year, always the next thing, the thought leadership parts, you know, did lots of trade fairs, constantly visiting customers. And, you know, we had an international mindset from day one, we’ve got a very international team, we don’t really think of ourselves as you know, we’re Swiss based companies important for quality for standards, we don’t produce our hardware in Asia, it’s all made in Switzerland, Europe to extremely high quality, you know, if you think that we actually have to provide hardware devices, and critical thing is that things got we’ve got to believe in it. Because we only get paid if we can provide the data that’s that’s creating the value. So you know, that we’ve got to put our money where our mouth is, you know, where in terms of customer assurances and take on some of the risk as well. And also, you know, we’ve got great finance partners so we can finance the capex, for rollouts to de risk the client side. And this you know, really helps them to to to get the cot to convince the you know, the board that this is the right way to go. Sometimes it’s a POC that scales up and sometimes it’s a big bang approach there. Let’s do the whole fleet from day one because we believe in this
Tony Zayas 44:52
Daniel from a growth perspective, what have been some of the channels from you know, from marketing that you guys have utilized? and seeing, you know, great gains,
Daniel MacGregor 45:03
I’d say it’s purely thought leadership. Because you know, we don’t go hard sell to our customers and pitch them. We don’t sit there and say, you know, we’re the only ones that can do this. We talk about the next, the next iteration on the products, we talk about where the world’s moving we, I’m constantly thinking 510 15 years ahead, you know, we were 10 years ahead of the game, when we started this, I would say, because, you know, as I said, at the beginning, you know, we had to, you know, educate people about what IoT even is, and then now, you know, we reached a point where then we had, you know, a free four years ago, I was talking all the time about the digital twin, that’s a very interesting topic, maybe would like to talk about that in a second. But, you know, at the conferences, you know, we were talking about the digital twin and the value that this brings. And now if you go to a conference, everyone’s talking about the digital twin, and I actually became conference moderator instead of speaker, because in the end, you know, you have to actually bring the all of our competitors, all of the different parties together. This is Big Data play. It’s about data driven value. It’s about multiple stakeholders. And it’s about connectivity. And it’s not just connecting our device, it’s about connecting all kinds of sources of value to the platform and creating new services for every stakeholder through the chain.
Andy Halko 46:22
So talk about the digital twin, I’d like to hear more and
Daniel MacGregor 46:25
Okay. Right, very quickly. Back in, I would say 3040 years ago, even probably 30 years ago, Rolls Royce and companies like this, they realized that they, their customers didn’t want to buy a jet engine for that plane, they wanted to buy flying hours. Okay, so one of the first subscription models for hardcore technology. And you probably maybe didn’t even know that, but actually, that was the first digital twin, because what do they want to do, they needed their ground crews to be able to service that engine before it landed. So they soaking all the data in real time and shipping it to shore and processing it. So they knew exactly what tweaks or what amendments or what parts to replace, before the plane landed, that was probably the first of the one of the first iterations of the digital twin. So a digital twin is a simulation model of an asset, a machine, an object that runs in the cloud, that you can do predictive analytics, you can look into the future and you can make what if scenario judgments. So you can say for example, you know, if I gave it to this customer for this period of time, and they transported this, this this commodity it it? And will it make me more money than if I give it over there to that customer? What’s likely to break next on it? What should the service intervals be all those kinds of questions that you previously didn’t know. So you take the live data from the asset, so you’ve got the flying asset, and then you’ve got the digital twin asset. And you’re predicting things from the digital twin, and then feeding that back into the business processes. So you’ve got the digital twin can work on the asset level of a single box, or a single object and all of all the moving parts on it. Or it could be the components that are applied to it. So on a rail freight car, it’s the wheel sets, for example. And, you know, if you’ve got overheating there is it the bearing is, is that as the spring set broken, things like this, and then you’ve got the digital twin of the fleet, you know, the operations of the fleets, and then you’ve got the digital twin of all of the business processes that are related to that. So in a sense, it’s like a, you know, it’s like a future cockpit that you can say, you know, what if, what if, what if, and you can make business decisions before, so predictive business decisions before making, you know, a commitment to a contract or a particular customer?
Andy Halko 48:45
So I think a lot of companies today are about collecting data. Can you talk about ways, you know, besides just delivering that to a client unique interfaces? But do you you know, leverage it for predictability? Do you sell it to other industries? What do you do with all this data?
Daniel MacGregor 49:02
Yeah, the question solid on the question of data. First question is what is data as zeros and ones or post processed data, or apps and widgets that people can understand? Okay, then the next question about data is, first question that people ask is, who owns the data? And then you go back to question, one of what is data? And then the next question is, you know, can I trust the data? And then the next question is, what can I do with the data? Yeah. So so, you know, I would say that, you know, this whole journey of, you know, creating value from the data, again, back to the discussion earlier is that it’s about, you know, understanding the unique challenges of the client, and looking into into the data with them and saying, you know, what does this mean about your business, if you change your business model in this way, or if you change this partnership, or if you change this service level agreements, then what would happen? And then let’s just imagine that or you can pass off a part of the fleet. And you can say, Let’s make an experiment on this. But the point is that you’ve got real actionable empirical information coming in. So you know, the point is, it’s not, it’s no longer guesswork and a lot of the time in domain expertise, and you know, a lot of domain experts, they’ve got a good instinct for what’s causing something, but they’re not able to prove it. And that’s now the difference with real tangible data in hand. So we’re working very closely with partners and clients to define their individual use cases. And we also have defined our our relationships very clearly that if they come up with some in some IP from their business, you know, that we protect that for them, because that’s part of their, you know, their their initiative, and that it’s not just a product for the market.
Tony Zayas 50:54
Daniel, we’re getting close to the top of the hour here, and this is all fascinating stuff. So love to you’d love for you to share, you know, where people can find more out about next year, as well as pay attention to what you’re up to. And follow that thought leadership.
Daniel MacGregor 51:12
Yeah, I think the best place to go is our website, we’re working on it hard, it’s evolving, it’s one of those things, that’s always iterative, iterative. And we’ve now got a new part of our website. So if you go and look at the newsroom, and, you know, they there’s, there’s, there’s a blog, and there’s multiple sort of, you know, options in that, on that top right hand side drop down menu. And, you know, all my thought leadership articles now gathered in one place. So if you’d like to look at, you know, a specific part of the industry and dive in deeper, either look at the website, send an email to our marketing team, or to myself, and send it to the info website, if you want to have contacts, and say hello on LinkedIn, and or attend some of my events, which, you know, I’m speaking at multiple events, and, you know, also online events like this. So there’s quite a few things and resources, but really reach out to next year, we’re very happy to hear from anybody who’s involved and feels that they might have something to gain, you know, from from that discussion. And as I say, you know, the whole thing has been built on on fantastic communication principles, and being very much open to all, you know, the people that we speak to no matter who they are, whether they’re small or big players, and because, you know, everybody’s got a different perspective, everybody’s got a different value to extract. And, you know, we want to be the connector, we don’t see ourselves as a, you know, sort of the, selling a commodity, you know, we’re really creating unique value. And, you know, we have a long roadmap and lots of ideas, and we, we bring in new things to the market all the time. So, you know, watch this space, it’s evolving, we’re still at the beginning of this journey. You know, I that’s maybe the last thing to say, you know, to all the other, you know, budding founders or co founders out there that wants to make an impact on the world, you know, you probably think that you’ll be done and dusted in a couple of years. But generally, it’s a lot longer that journey, and you have to really enjoy the the experience and you know, be tough and stayed, stay resilient, and keep going and take it through to it. So final conclusion, because, you know, if we’d have stopped at selling devices, we really wouldn’t have added that much value. To be honest, we might have enabled somebody else to add value. But you know, we’d rather do that ourselves.
Andy Halko 53:32
So one last question that I like to ask every one of our SaaS founders, if you were able to go back in time before you started the business and have coffee with yourself, what advice would you give,
Daniel MacGregor 53:44
I wouldn’t change a thing. I mean, I really wouldn’t. Yeah, we’ve done I don’t want to say we’ve done everything perfectly well. But, you know, I’ve really enjoyed the experience. And I wouldn’t I would recommend, you know, everybody, I used to have the comments sometimes from people who are working in conventional corporate jobs, you know, I’ve got a young family, I could never do what you’ve done because it’s too much risk. I’ve got to ask, what is risk? Yeah, risk is all around us risk is invisible. Risk is for me not fulfilling one’s potential or not exploring one’s limits. And, you know, I’ve got to say that it’s really a tough journey, but we’ve got to, you know, stick together as a, as a species. And, and, you know, do what we can to improve the quality of our lives to reduce poverty, to distribute wealth more effectively, and to, you know, create a path forward to sustainability and greater trust and continuous value. And this these are not buzzwords This is really serious. We’ve got to do this. Yeah, we’ve got a limited time frame and talking isn’t going to cut it. We’ve got to make some serious decisions and act.
Tony Zayas 54:55
Awesome. Thank you so much, Daniel McGregor from Nexxiot. We really appreciate your time here today. And thanks, everyone for tuning in. We will be back next week with another interesting and fascinating founder. We’ll see you all next time. Take care, everybody.
Daniel MacGregor 55:13
Andy Halko 55:14
Tony Zayas 55:15
Thank you. Bye bye for now.