2021 April AAIA Event Recap
“Founders’ Chat – How Engineering Professor Engineered a Startup”
On Wednesday, April 28th, Asia America Innovation Alliance (AAIA) held its 5th panel discussion of 2021. In this event, guest speakers Professor Steve Liang and Tony Qiu, along with the event moderator, Morgan Guo, shared their insights into starting their technology startups as full-time professors.
Morgan: Can you introduce your company and tell us about how you started your own startup from a full-time professor?
Steve: I’ve always wanted to start my own business since undergrad. After graduation, I was lucky enough to get into the University of Calgary to focus on my researches. During that time, I realized that I wanted to make an impact beyond teaching students, so I started my own startup hoping that my technology can deliver value to problem-owners worldwide.
We focus on the sensor technology in the IoT space, and our customers typically deal with complex physical operations. Our customers include US Homeland Security and Lockheed Martin.
Tony: I am an Associate Professor at the University of Alberta, and my company is called iSmartWays. We are a V2X hardware and software solution company founded in 2014, and we recently finished our A-round financing. The autonomous driving industry is evidently one of the fastest growing industries after Tesla became the world’s most valuable automobile company. We see this as an opportunity as we strongly believe that EVs will likely change our lives in the next 5-10 years. Our mission is to make EVs safer and better.
Morgan: How did you find the exact problem you want to solve in the early phases of your academic career?
Steve: Professors like myself tend to focus on the solution first before finding the problem, and it took me a while to change that mindset. I think the key takeaway from my own experience is to always put yourself in the perspectives of the customers. Once you’ve got the exact problem figured out, it’s important to ask yourself “how big is the problem?”. If the problem is an insignificant one then the market you are targeting might be too small to make any business sense.
Tony: Following up what I said earlier, the demand of V2X technologies is growing faster than ever thanks to the rise of autonomous driving. Our team believes that this is the right time to enter to the market. We want to help EVs become more connected to other cars, to transport infrastructure, to pedestrians, and to even police officers. Echoing what Steve said, as a professor, I really wanted to translate my researches into real life solutions that can impact our society on a bigger scale. I have published many papers that have no practical significance because most of my concepts are basically papers. Thanks to institutions such as incubators and accelerators, I was able to commercialize my technology and turn research results into businesses.
Morgan: Conversations over the control of IPs in the academia world have been building up and intensifying over the past years. While University of Calgary and University of Alberta have inventor-centred IP policies, there are revenue sharing agreements in place to for the universities to claim part of the gains that the inventors generates. Can you speak on that and share your experience with our audience?
Tony: I believe that inventor-centred policies are becoming a trend worldwide to motivate innovations. There’s a misconception that universities make a ton of money from claiming inventors’ IPs. But based on my experience, the income universities generate from doing so is insignificant. The end goal should really be to help inventors commercialize their inventions or IPs successfully and the founders in return will give back to the community and inspire more innovators. When it comes to revenue sharing agreements, it’s difficult to quantify the contributions of universities on paper. While I agree with the “freedom to invent” idea, I also believe that a strong bond between investors and universities has a positive effect on the startup ecosystem and society as a whole. At the end of the day, all parties involved share the responsibility of making our society better.
Morgan: Both of you have a big problems to solve and your customers are typically large organizations and companies. Can you walk us through the journey to acquiring your first customers?
Steve: Finding the first customers is a two-way match-making process. You will never find the “ideal person” unless you start dating. Many people think companies like Lockheed Martin and US Homeland security are the perfect customers because of their names, but what they don’t know is the amount of time and effort we have to put in to sign customers like them. So I would argue that in some cases, what other people perceive as the perfect customer may not necessarily be your ideal customers. I am a strong believer that if you focus on self-improvement people will be attracted to you organically, and this applies to acquiring customers as well. If you continuously improve your technology and deliver value to your customers, customers will approach you and stick around.
Tony: I think customers bring two things: income and value. However you choose your customers depends on the circumstances and the stages your company is in. For example, if you are just starting out, signing a paying customer probably makes the best business sense. But once you’ve acquired a reasonable number of customers, you begin to focus on finding the quality customers that will likely provide reoccurring revenue. The cost of customer acquisition is quite high especially for companies in the V2X technology space whether our clients are individuals, governments, or businesses. Ideally, we want customers who are affected by the problem we are solving on a daily basis because they are the ones that are most likely to pay for our service consistently.
Morgan: You help clients across a diverse set of industries including agriculture, and petroleum, how did you standardize your technology to fulfill the needs of customers and replicate the success in different industries?
Steve: The research professor side of me sees the customer acquisition process as a science experiment. It’s important to start testing your product with your first customers early on because the learnings gained from the experiments will help improve your products and establish repeatability. We are a platform company and applying it to different verticals is a difficult process that is never ending.
Tony: Some engineering professors like myself lack business sense, but we are quick learners. We respond to market feedback quickly and iterate based on learnings. It’s crucial to improve your product and pivot your business model as you grow into different markets. Founders often find themselves making tradeoffs between differentiated market and focused market strategies. There are pros and cons to both strategies and it requires a lot of strategic thinking.
Morgan: Can you tell us how investors or the capital you raised from them helped grow your business?
Steve: I think the investor are most helpful prior to closing the deal. All jokes aside, investors can play an important role in your company if you have a great dynamic with them. My mentor once told me that VCs are choosing companies that are likely to survive Covid. And I think we’ve done a fairly good job in making ourselves one of the investable companies that will likely survive through economic turmoil. The investor’s role is to fuel the fire, but the task of getting a fire started is in the hands of the startup teams. We received our A-round funding during Covid. Prior to closing our A round, we had to reduce our burn rate by cutting costs. This is when my investor jumped in and helped me come up alternative plans if things go south. Luckily, we managed to grow steadily despite the pandemic.
Tony: We’ve established great relationships with our shareholders since we started fundraising. When selecting a VC to work with, we tend to gravitate towards the reputable ones who can provide resources and strategic advise to help our business scale. Investors on the other side invest in people. They are betting their money on the team’s ability to execute and bring the company’s vision to life. My approach to dealing with VCs is to be transparent by giving them all the “goods and bads” of my business. When choosing VCs on an international level, I think it depends on where the founders want to grow and exit. We chose to work with a Chinese VC because China is the first and primary market we are entering.
Morgan: In your opinion, what are the next big tech trends in your industry?
Steve: I think in the next 5 years everything you can think of has some sort of built-in device to track its exact location. We want to know how can we capture the value of the location data from everything so that we can help companies become better, safer, and more relevant.
Tony: In the next few years, we will continue to focus on V2X communication technology to help electronic vehicles become more connected, both to each other and everything around them.