Conversation with Jaap Groot
Good day and welcome to our Digital Leadership podcast produced by, for and about Digital Industry leaders. Today, I'm pleased to host a longtime colleague Jaap Groot who just became CEO of Fractus Antennas. Jaap has founded, built and sold several businesses during his career and worked for Qualcomm, MiX Telematics and Sigfox. He was most recently VP of Business Development for the LoRa team at Semtech and Vice Chair of the LoRa Alliance. Jaap graduated with an MS Physics and Management from Eindhoven University of Technology. Welcome, Jaap.
Hey Ken, thank you for this introduction and the opportunity to discuss the digital IoT landscape with Momenta. Really appreciate it.
Yeah, no, absolutely this has been long overdue. You and I have crossed paths several times I guess starting all the way back in your Sigfox days and so it's it's been something I've wanted to do for quite a while. So, I'm glad you took the time and we were able to do it. So, let's start with your professional journey. Tell us a bit about your background and how it has informed your views of digital industry.
Well, frankly, right after University, which seems ages ago, now I jumped to Comdex. Perhaps you recall this was one of the major global events for computers and software in the days.
I do remember it. Good old Las Vegas.
Exactly, yeah, this is where I connected with Roadshow, who was one of the first companies with maps on a computer using huge laserdisc at the size of an LP record. And what attracted me was their ability to build digital road maps on top of the actual scan of the paper map stored on the disk. In the end user solution this was enabling a whole new era of routing and scheduling optimization for tracking and logistic companies. And when Descartes acquired Rocio after a couple of years, I decided to start a new venture Triptech, using what I knew by then about this kind of technology. And we were using the digitized road maps from Teleatlas, which is now part of Tom Tom and then adding on board truck computers to the solution such that we could wirelessly exchange information about the load and the driving hours in the truck. And actually, we ran the first ever data communication service with trucks using KPNSMSC, and I can tell you latency in those days was measured in minutes. When Qualcomm wanted to expand their only tracks business, they decided to acquire Triptech. So, we merged that GSM TDMA centric business with their satellite business by that time serving I think about 1,000 customers and 100,000 trucks. And a little later after that merger, the first cloud type of solutions started emerging. Until then, it was just PC based software.
So, we decided to build another startup called FindWhere which was obviously driven by a cloud centric service to track mobile phones through cell ID and GPS. And that service became very popular for private investigators, and I must admit it was great fun as we ran into plenty of curious stories. Well we had to explain that the person in question was really in the place indicated on the map, and at some point, we even considered selling fake locations as a counter for the cheating husbands. Yeah, it was a fun time. But in the meantime, I had moved to France, and simply because the climate here is much better as in the Netherlands and real estate more affordable. And that's where in 2012 I became aware of Sigfox and LoRa and I kind of realized there's a whole new wireless disruption starting to happen, and I wanted to be part of it.
And you and you truly have been I'd say much more in a part of it you been an active proponent leader in it as well. I was impressed to kind of go back to your background again. My times kind of starts at Sigfox, I always thought you is kind of the LPWAN guy, but when I go back and look at all of this early work you did in geo location and specifically in Europe, which doesn't produce nearly as many out of college entrepreneurs, I'd say then the US. And so, you were really quite progressive at the time, Roadshow, digital map company exiting to Descartes, founding Triptech telematics company sold the Qualcomm and then FindWhere which I believe is still very active in in this space. Let me ask what attracted you generally do this geo location space originally into being an entrepreneur or serial entrepreneur within it?
Yeah well keep in mind I truly like disruptive ideas and to me entrepreneurial blood or DNA is something you cannot learn. You have it or you don't. And so I like to scale up companies and I always like to look for common denominators or so-called horizontal solutions which can serve multiple requirements in different markets, and by doing so you kind of de-risk the failure of 1 market, or you protect against general headwinds in certain solution environments. And geo location is just one of those elements that basically is part of many vertical solutions and there are many different ways to determine where someone or something is. Some very accurate and power hungry, others embedded in the radio technology, however, often with less accuracy.
So, when we started around 2003 with the web portal to offer opt-in only sell ID tracking of mobile phones, many people, including analysts and press, were worried about or even complaining about privacy. I was in many papers and people you know, we're kind of aggressive even maybe. But nowadays can you imagine, TikTok follows you every 30 seconds and people simply consent to it. It is even in the small print but of course you don't read it. So, there are these waves of technologies that are evolving or sometimes completely new and disrupting. And those enable whole new galaxies of business. The challenge being of course to pick the right one at the right moment, or abort in time because not everything has been a success to be honest, if you identify something is not developing as expected.
Well, I suspect that your move into the LPWAN space follows really kind of that same thematic horizontal solutions, waves of technologies and making the right move at the right time. So, as you mentioned, you jumped into Sigfox I believe it was 2013, or at least that's when we met each other. What really inspired you to move into this emerging LPWAN space and very specifically, of course, unlicensed spectrum?
Well, indeed in those days, let's say that the market was dominated, the M2M market because it wasn't called IoT in those days was dominated by cell players. You bought subscriptions mostly for phones and modems, and then we kind of hit a wall with the power consumption and the cost of using 2G or GPRS. So, we couldn't connect more objects. You could do trucks in some cases vans, some machines that were expensive enough where it was justifiable. But when Sigfox service with a new wireless technology as I think you recall; they had been promoting $1 a year connectivity from the get-go. That technology eliminates power constraints and creates ROI for even very simple objects. So, this is an opportunity to connect almost anything. And in the end, the people started calling the industry the Internet of Things and we nailed the connectivity part with Jim Morrish that you also will know as low power wide area. So LPWAN really was invented in those days.
And this was the beginning of a new era, the first period was extremely intensive. Moving a new tech into new markets is always the hardest and building the right business model and the go to market strategy and the brand awareness from scratch took a huge effort and related funding. But think of it like giving a kid or box of LEGOs and ask him to build a car without any instructions. I bet out of 10 kids you will get 10 different cars in all forms in shapes, some good and some really more driven by fantasy. In business typically, experience helps to avoid common mistakes. However, if you're doing something that has not been done before, you need strong leadership and an agile team to respond to the market feedback and issues that the technology simply is not yet ready for. At Sigfox we had to deal with an enormous expectation triggered by the investments made, which in my opinion led to overexposure resulting in nonachievement of the plans and frustration both internally as well as in the marketplace. However, it has been proven before many companies that bring the first disruption are not the ones that ultimately become successful. Before Facebook launched in 2004, there was Friendster during 2002 and MySpace in 2003, both of which do no longer exist.
So, in a move I would say is akin to jumping from leading the Coke Company to leading Pepsi, you move to Semtech in 2015 from Sigfox, helping to build and scale LoRa and LoRaWAN. I recall being at a conference where you were on the stage. Actually, I think it was in Berlin as soon thereafter you were debating LoRa versus Sigfox with your former head of marketing there Tomas if I remember. It was at that time, I think, I realized what a brilliant salesperson you were, because the ability to make the change and then ardently defended in front of a very large group of people was pretty phenomenal in my mind. So, you might have mentioned at a moment ago, but why the jump?
So, I compare Sigfox to the T Ford. You know it was the brilliant first carmaker which was able to mass produce cars at a very affordable price that drove success. The problem with that was you could pick any color as long as it was black, and I'm not sure if people realize, but there is a business reason behind it simply because black paint dried faster. As a result, reduces cost to the manufacturer and increased the production levels.
The same kind of logic applies to Sigfox. Very solid radio technology solved in a proprietary business model and using the unlicensed band to reduce cost. So, the black for Sigfox on the technology side is their uplink only, or to be frank, the very limited downlink, which certainly does not allow for upgrades. So, you can't put devices in the field for five or ten years and assume that everything is going to be stable. You know every six months we have new mobile phones in IoT there is also upgrades needed.
Second, there is no real security meaning that the ecosystem has to deal with the encryption, which is not easy in a 12-byte message. And last, there are limitation capacity not so relevant in the early stage. However, if you become successful and millions of messages float around the technology better be ready for it. And all these implementation choices were made for good reasons given the rules that exist in the unlicensed subkey band. Free, in the end, means everyone should have access to the band and that requires regulation. In hindsight, it is nowadays kind of clear why LoRa has about a tenfold bigger installed base in terms of sensors connected to the cloud, and for Sigfox it continues to limit their true fit or value for many IoT solutions.
On top of that, there is a longevity risk in the business model. Remember Sigfox has burned well over 300 million and the company is still struggling to be cash positive. When I tried to warn them during my tenure there for this kind of topic and provide clear alternatives, there seemed to be little appetite to change. For example, we deployed a business model in Spain, where Sigfox was the licensor and Cellnex the tower company that rolled out the network and operated it, and very sure as end customer with a very clear anti-jamming solution for home alarms. And that has proven to be a success. Even today, this is still the single biggest customer. But it became clear to me that the core issues like non-exclusive operator model, distributed cloud allowing data to stay on premise and country, and more open device in gateway ecosystem. All of this were part of my vision for LPWAN but not acceptable to Sigfox. So, I opted to put my energy towards an open technology and build a standards organization around it.
Well, you must have done something right because in your 10 years at Semtech their market value has tripled and as we're recording this, they are at a record $64 a share which is over a 10 year high for them. So, the market seemed to recognize the value of the potential of LPWAN and specifically LoRaWAN in that. What do you see as the future of LPWAN? When and how do you think this breaks down between licensed spectrum plays like NB-IoT versus unlicensed ones like LoRa and Sigfox?
So, in my opinion, the future of LPWAN is that there is no future. The issue being that low power will need to become no power and wide area networks will become massively deployed through extremely low-cost small cells, like what you see in the cellular industry. Meaning the wide or the long-range aspect becomes less relevant because you simply have more access points or gateways. Unfortunately, I cannot disclose all that's on the horizon, but by the time this interview will go online, I'm pretty sure you can find a real good story for LoRa and Semtech on a next generation network type of deployment that will disrupt the market. So, in my opinion, LPWAN will disappear and in a few years, everyone will most likely refer to LoRa like we refer to Wi-Fi today. On the edge, I predict that the devices and stocks will become multi-radio technology or multi-rat, potentially even fully software defined and enabled through the cloud with dedicated application containers and hooks in the next 10 years. And with the current opening of the spectrum for Wi-Fi 6E, which is happening all over the world, I do believe unlicensed will be dominating, certainly in terms of volume and so called massive IoT. And the licensed band will be merely used for low-latency extremely high service level agreements and high throughput solutions and markets.
Well that’s quite a set of predictions there I probably couldn't have predicted that the future of LPWAN is no future. But I love this idea of low power to no power in wide area to effectively a microcell if you will or micro-location, pretty interesting stuff. And I'm looking forward of course to hearing what you know what the markets have to say about some of the announcements coming up. So, all of this deep entrepreneurial and LPWAN experience, if I can still call it that, has culminated in your newest venture, Fractus Antennas. So, tell me a bit about the company and the problem you are trying to solve and why.
I regularly make analysis of bottlenecks to take a technology to its full potential. In the end, I've become less of an engineer, many people are much better at that than than I am today despite my University background and title. But about a year ago, after many discussions with wireless designers and software developers and device makers, it became clear to me that antennas and the related design complexity are holding back the IoT markets. In the end, this can be explained if you lose a couple of DB’s, it reduces the range of a device by 50%, the end result being it can't connect and the perception is that technology is not good, but it's an antenna issue. And the same DB's that you have lost in your antenna design also require you to transmit with higher power, which has an impact on battery life. So, the reason for that today is the antenna is mostly at the end of the design cycle, something which will need to change because it's a critical part of the edge system. And impact score values as coverage and battery lifetime.
So, the ideal world obviously would be that devices automatically adapt the antenna performance to the actual whereabouts of a device. Take a smart watch which is close to the human body, that's not very ideal for antenna performance. So, when I learned about Fractus Antennas I got really excited as they have developed antenna solutions and IP that reduce the complexity to something that any developer can understand and apply in their devices. And on top of that, it does not require custom designs. It covers all the subkey cellular bands all the way up to 10 in one product, enabling once skew for a global deployment and dramatically speeding up time to market. Moreover, this is after I met them, the team is very well educated and motivated. The companies financially healthy and well and it's located in the beautiful city of Barcelona which is practically in my backyard. So, I truly look forward to this new challenge and I'm confident Fractus Antennas has a true opportunity of driving extreme value for the IoT market with our solutions.
You know it's interesting as you laid out the reasons why and you hit Barcelona, actually, I probably would have put that one at the front quality of life being what it is. But yeah, phenomenal a team from what I've seen so far, and technology based, and I think having you in as CEO is the piece to really help drive them and drive growth in there. So, congratulations, I think it's a great choice and it's what we call a pinch point technology as you call bottleneck. We look for those specific pinch points that represent a technology or two that could be invested upon. Kind of like how Warren Buffett is purported to make his investments in infrastructure per say as well. So, I guess with that background of Fractus now and really with your deep background in terms of let's say LPWAN, what do you see as the largest opportunities and challenges for LPWAN deployments?
Yeah, as I mentioned LPWAN probably will disappear as an acronym. However, every edge device needs to connect to a network to transmit data to. The larger opportunity is to embed the radio access network, the rung, either as a chip or as a software defined radio into almost any gateway, router, setup box or even TV set. To give you an idea with the range of LoRa, you only need one out of 50 households to have a gateway type of device to connect the whole city. So, you get my point, you don't need too many to have coverage. and the one who enables those kind of roll outs will become a winner. Certainly, in consumer, but also for Industrial IoT. Apply a data broker principle to those gateways so whatever is received now is is shared on the Internet and you have connectivity everywhere with lots of redundancy to guarantee very good even in unlicensed bands. And for those rule areas where there is not sufficient coverage, the existing tower concept will remain or be taken over by satellite.
The challenge for LPWAN, in my opinion, is the same as for Wi-Fi. Enable data access anywhere through cloud centric platforms, whereas the data is secure and shared when approved by the owner through a free of charge or paid subscription model.
It's interesting cause it reminds me a bit of Helium is what you've described in terms of the kinds of patterns that deployment and as many of you know we interviewed their COO not too long ago for one of these podcasts as well. And it really like their kind of bottom-up if you will, they call themselves ‘The People Network’, probably in contrast to The Things Network, as you know, a trademark out there. So, the World Economic Forum has used this term ‘The Great Reset’, which I kind of like referring to the longer-term impact of the COVID-19 pandemic. What do you see as the impact of this reset on LPWAN? Or I guess you're talking about more and more edge computing?
Yeah, I think this reset is ongoing. And like the IoT market will have a long tail until we have a good mitigation against COVID-19 in terms of an adequate and widely available vaccine. In the meantime, we've all learned how to adapt already. You know, companies like Zoom or Amazon truly benefit from the digital workplace needs and ripple effect.
For LPWAN or more generically IoT, any actions are as I mentioned, need to be connected the resulting in two major impacts. First of all, new use cases are servicing in order to monitor and manage the risks of people and employees being exposed. For example, most of the smart building use cases, which is a market that is well on track. While the use cases we knew before are now nice to have on topics like temperature, people counting, and social distancing have created many new opportunities. So, for solution providers, agility to be able to adapt using the same kind of slightly adapted sensors will be paramount. Good security and privacy messages will need to be agreed through standards and regulation. However, I do not see that as an issue as we all share our location, also, for traffic information I trust the service provider to handle the collected sensitive data with the appropriate privacy mindset. And as the punishments are severe, I expect the IoT market to follow what has happened online and become more regulated with clear enforcement an opt out if needed.
Second, the forced distancing results in a much wider acceptance of remote working. This has already positive impacts, for example, for smart cities in terms of air quality and less traffic delays. The people, the fact that the people and the employers have now learned it kind of the hard way drives and speeds up the general acceptance of digitalization. To me, the window of opportunity to connect this many sensors to the cloud has only become bigger and potentially may have a positive impact on the IoT industry and also on LPWAN.
We couldn't agree more. We did a webinar earlier in the February, March timeframe when COVID was first starting what we saw some early indications of a what we started to call a digital accelerator at that point and were doing the sequel to this coming up in early September. And we've actually turned this the great digital accelerator, cause all of the stats were looking at qualitative, quantitative, anecdotal are pointing to the fact that every one of our portfolio companies are doing well. Our peer companies are doing well, and you know venture capital and a lot of our clients i.e. private equity firms are doing very well. And what's the common theme? Is digital and more importantly remote asset management and all of that. So, I think edge connectivity, LPWAN, edge however you want to refer to it is an actual critical component, which is why we've of course invested behind that space in very specificly LoRaWAN as a winner. As digital industry investors we always like to ask for your recommendations on interesting startups. And I know you've had a lot because you've referred a lot over your tenure at Semtech to us who are in your minds are the ones to watch right now?
Yeah, sure, however, this is a forward-looking statement, so it comes without any guarantee, right? But I follow companies like Edge Impulse and EPs. Both are good examples of horizontal tech companies which have solutions for artificial intelligence and energy harvesting, and that is stuff in my opinion will exist in almost any IoT device within the next five years. Moreover, knowing the people who drive the core technology and for example Edge Impulse, I believe they are capable of something special in their domain. Another example is Rubix, which is known for its so-called electronic nose. Basically, one of the vertical solutions which is truly disruptive in the way of using sensors and combining this with fingerprinting. Think like Shazam knows what music is playing, they detect stuff in the air and know what kind of odors the particles are in there and propose remediation actions. In a real-world example this means 1 does not count if a toilet is being used 50 or 100 times before cleaning it, but when it needs to be clean because of the cleanliness of the air. Another great example I truly like is cable in electrical cabinet start emitting particles. It should not, and this typically indicates a risk of malfunctioning and happens long before the electrical issues cause visible smoke or fire. And Rubix is simply able to determine when the smell is not right and provide alerts.
We obviously share your enthusiasm around Edge Impulse since we were an investor in their most recent round, and I think you were influential in that. And I like Rubix. I really agree with you these again as we talk about kind of horizontal or pinch point technologies that have broad applicability to raise, especially new use cases like what Zach is doing at Edge Impulse are pretty interesting stuff. So, two very good calls in there among others. So, in closing, we always like to ask the question around what inspires you? So, can you provide any recommendations of books or resources that you know that inspire you?
Yeah, sure despite the fact that the gray hair and experience help also. I always look for guidance and how to be more effective whether from books or people, and books that help me are focused on communication and execution. If you like the Dutch approach, try Radical Candor. This is about how to motivate people with direct feedback and help them advance or abort. And the second one, is really like it's No Try Only Do from Andy Bailey which very well explains how to define purpose, align the resources and make each and every one accountable when building a team to win the Champions League. Because in the end we're not all Messi’s or Michael Jordan’s. And as for people, my inspiration comes from those that surprise me and keep me thinking. The most brilliant guy I have met is called Staale Patterson, Norwegian guy and a colleague in in the LoRa team at Semtech who has the brain power to master technology to its full detail and being able to translate and embed this into solutions for markets which initially even do not exist. And on a more personal basis, I've never had more fun than wandering through the very North of Norway with him and a few others until we saw the famous Northern Lights.
You know, they often tell people to imagine your life backwards from the epitaph that you want to have on your tombstone. And if I could, I don't think I could think of to better phrases to describe you as number one, radical candor, and #2 not try only do. And fully agree with your seconding of Staale, one of several very key people, of which I know you been a part of that kind of inner circle at Semtech, really drive in the future, and so all good. So Jaap, thank you so much for this insightful interview.
Well, thank you for the opportunity again. It was a pleasure to be here with you today and I'm sure we'll meet again soon.
I'm sure we will actually. So, this has been Jaap Groot, CEO Fractus Antennas and a long time, digital industry entrepreneur and I would say a bit of a controversial list in terms of future predictions. And I always like that in people. So, thank you for listening and please join us next week for our digital industry leadership podcast series produced by, for and about digital industry leaders. Thank you and have a great day.