8 min read In our previous post “Internet of Things Analytics: Bridging the Physical and [...]
In our previous post “Internet of Things Analytics: Bridging the Physical and Digital” we discussed how Mnubo’s CEO, Frederic Bastien, kickstarted his career in the aerospace industry only to later realize where his passions lay: IoT Big Data.
In this post, we’ll discuss how Mnubo is transforming IoT equipment data into actionable business insights – operational efficiencies, product diagnostics, customer engagement and more.
1.How would you describe Mnubo’s business model?
Frederic Bastien: Our model has evolved from selling a ‘piece of technology’ to delivering ‘business outcomes’. When we talk to clients nowadays, they explain that despite collecting data for the last two years, nothing is being done with it. They see us as an AI platform but more importantly as a prediction provider. May it be about predictive maintenance, reducing truck rolls or any other kind of business value that data enables. We are moving from selling a SaaS subscription to an analytics software which is still part of the pricing model.
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2 . Flat feet to a more value-based pricing?
Frederic Bastien: Yes, well there is always a subscription to the platform somewhere in the engagement because we’re not a professional services company but we definitely have much more of a strategic engagement at the C level with our clients.
3 . Are the decision makers in the C level? Is it the CEO, the CTO?
Frederic Bastien: Typically, we will talk with the Head of Products. Mainly decision makers in the product or operations teams. They either have a product they want to improve or they want to innovate and want to be more efficient in the way they manage their services. There are also a lot of CTO and innovations teams, who do not want to be hardware makers. These stakeholders want to change the business model of the service they provide
4 . Although you are not a professional services company, I imagine there is a bit of tension to move in that direction, charging billable hours and having mandates that are more custom for clients who don’t understand the basics of AI for example?
Frederic Bastien: We already have about a quarter of our revenues from services and we don’t expect that number to go down. The reason for that is that there is no magic in AI. I believe anyone who sells AI as magic is lying. The beauty of it is that we have a world-class in-house built platform (the SmartObjects platform) that can collect, clean and enrich data from equipment. We’ve seen and worked on hundreds of types of machines and believe we are faster just because of what the platform does natively. On top of that, tuning a model to predict a failure of an HVAC system for example or to predict energy consumption in a given machine comes from the elaboration of large quantities of libraries that make us go faster. There will always be an element of ‘training’ needed to use that data.
5 . What is the end value for the customer? Is it less downtime? Better yield generation?
Frederic Bastien: Both! We can generate new revenues through churn prediction or new business model creation for example. Reducing cost is also essential and is relevant to both end users and the manufacturers. It happens by optimizing the supply chain, inventory, managing truck rolls, empowering technicians taking care of the maintenance, and so on.
6 . It sounds like your addressable market is huge, how do you choose what segment of customer to go after?
Frederic Bastien: There are several criteria we use. First of all, we choose markets where data is available not where data has just started being collected. Markets in the low-tech area from a data and software standpoint have also been very good markets for us, such as the building equipment market where we already have a lot of data to exploit.
7 . How would you describe your current strategy
Frederic Bastien: We closed a B round earlier this year which was very exciting. Every time you raise money, you have to think what are the two things you want to achieve that money is not solving, and then find investors that can solve them. Everybody can write a cheque but we truly wanted to enhance the technical AI offering with a business value. Munich Re, one of the largest reinsurers in the world is providing the angle of equipment breakdown guarantees and insurance on the industrial side around an analytics platform. It was therefore quite strategic from that standpoint to create joint products with them. We now want to secure the long-term viability of Mnubo and this is conventionally done by consolidating markets. We want to be the ones doing acquisitions and not the opposite. This is why getting IQ and FTQ, who are very strong supporters of the ecosystem, on board was the right move.
8 . I understand investors are going to help open new markets and M&A because now you can go and acquire more talent. There has been a lot of companies funded in IoT and we feel like the hype cycle is starting to stop. Now we’re seeing real use cases and real revenue flowing. It sounds like you’ve timed the market pretty well.
Frederic Bastien: The IoT lost its hype and sexiness about a year and a half or two years ago, which I was very happy about! In terms of priorities, we have great traction outside North America. We know we can serve North American companies really well, especially with our headquarters in Montréal. But we also have a quarter of our revenues coming from Japan, clients in Singapore, and in Europe, with very little physical presence. One of the priorities is to staff those regions in the right way to be able to support that growth. We are opening offices in Japan and in other areas of the globe. Another priority is to keep adding non-tech financial products on top of our software stock. The partnership with Munich Re is definitely going to help us move in that direction.
9 . Is there anything that keeps you up at night?
Frederic Bastien: Hiring is our number one concern right now. When we raised the B round, we were 44 employees, today we are at 60 and we still have to hire 10 people before the summer which is hard in the bubbling Montreal tech market. It is definitely a challenge as we want the best talent. You don’t start a company without the best people, that’s the main differentiator.
10 . What would you describe as Mnubo’s competitive advantage?
Frederic Bastien: Huge dataset is one as well as the best team in my opinion in terms of the stack we built and the expertise. I also think one big differentiator is that we truly understand how a manufacturer thinks. We’ve been there again and again… and again. One of our biggest clients is Johnson Control-Hitachi. They are a Tokyo-based manufacturer and the second largest maker of cooling systems in the world. They have talked to every data analytics company in the world and have even setup their own AI branch, but didn’t find the people who could effectively address their problems.
11 . From what I understand, you have the tech background but also can get in the customer shoes and make it textually relevant. Let’s talk a little bit about the industry. What are you most excited about?
Frederic Bastien: I am excited about traditional manufacturers getting into the IoT bandwagon and the new opportunities that this opens up for them as well as us. CTO’s and Tech teams used to talk with us. Now it is the CEO’s because they see the impact on the balance sheet.
12 . What’s happening in the IoT space that is not garnering enough attention
Frederic Bastien: When analysts such as McKinsey or Gartner talk about the IoT, they talk about solutions for equipment operators, the industry 4.0, but I believe this gives a very limited view on the size of the market. We are not trying to win a manufacturing customer through the resolution of a manufacturing problem, there are hundreds of companies doing it, it’s custom every time… but every robot or machine on that floor has a manufacturer which knows a lot more about their machine that the person operating it. We believe this is where we have the opportunity to build something very interesting by working with the equipment manufacturers.
13 . What are you keeping your eyes on? Is there any companies or technologies that you are checking out?
Frederic Bastien: Our market is a made of giants. We partner with the Amazons, Google, Microsoft, Samsung… but we also keep an eye on them and on where they are going with the market. We think there is going to be a lot of innovation from China, something everybody is blindsided about in IoT. The market will also start to consolidate with companies wanting to offer the ‘full stack’. For the moment there are only 3 or 4 companies having the full IoT stack but many others want it..
Thank you to PNR for organizing the interview
Find out how Mnubo is tapping into the benefits of product data by transforming raw sensor data into actionable business insights. Read more here!
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