Podcast #116: Contactless Supply Chain

Good day and welcome to another addition of our digital industry leadership podcasts. Today I’m pleased to feature Tim Williams the co-founder and CEO of NanoThings, a company rethinking cold chain tracking. NanoThings is one of our Momenta adventures portfolio companies. Tim is the visionary behind NanoThings, and prior to NanoThings he was the first employee and Vice President of Business Development for a start-up named Acquisition Labs, which exited less than two years after inception. Before Acquisition Labs, Tim was the director of Business Development at Rakuten Loyalty, where he developed their largest and most profitable business signed to date. Tim was also the president of a private consulting company, which delivered over $20-million in revenue for his clients in under four years. Tim received his BA from Skidmore College. So, Tim welcome to our Digital Industry Leadership Podcast.

Thank you very much Ken, excited to be here.

0:59    

And excited to have you too, it’s probably long overdue given that it’s been over a year since we first invested in you guys, and I always loved what you were doing. For our listeners sake, we had a webinar actually just yesterday, so as we’re recording this only a day after our supply chain webinar, Digital Impact. Some really good discussions coming out of that, well worthwhile if you didn’t get a chance to see that to go back and listen. Tim was one of our three featured portfolio companies in that as well.

1:32    

Let's start with your professional journey Tim. Tell us a bit about your background and how it has informed your views of digital industry-

Let’s go way back in time to 2007 when I graduated from Skidmore Collage with a degree in business, and my grand plan at that time was to go into the finance world and conquer finance. Little did I know that at the time that was probably the worst decision of my life. So, I started working for a little corporate bond shop just in time to see the entire finance world collapse, I’m sure everyone recalls the great recession that took place in the 2008 timeframe. That really took the wind out of my sails and had me pondering life there for a little while, and after weathering the storm for a few years and really not seeing much light at the end of the tunnel, I decided that finance wasn’t for me.

2:27    

I jumped ship and figured that I would take a stab at an industry that was showing serious promise and growth, despite the recession, and that was digital media. That was probably the best decision of my life, and I had the privilege of working with some of the greatest media companies of all time, and it’s really shaped the way I think about digital industry, which is still in its infancy. The way I think about the emerging world of digital industry is really, why change a recipe if it’s already nearly perfect, and that’s in reference to the way that the digital media industry has grown. So, really all I’m trying to do is use the same approach to digital industry that made the media industry so successful, and that approach is all about data.

3:25     

The media industry was really the first big data industry in my opinion, they figured it out long before anyone else. The value of tracking user activity around the internet is pretty similar to tracking physical goods around the supply chain, and the value of collecting as much data on people as possible, to make informed decisions around what ads to target them, is really no different than collecting as much data that we can on physical touchpoints in the supply chain, to determine which of them is performing the best, and which needs improvement. It’s all really the same concepts just in a different industry, and obviously that’s why I think NanoThings will eventually emerge as an industry leader here.

4:10    

And we certainly hope it does. It seems you have a pretty well-rounded experience space, consulting, finance, sales, all prior to NanoThings, and you’ve mentioned already some of the key insights that you applied into the supply chain space. Let’s talk briefly about your prior start-up experience at Acquisition Labs, what led to your success in exiting there so quickly?

4:35    

First of all I was pretty lucky to be working with some really smart guys, so I must give credit where credit is due. Acquisition Labs is a pretty interesting concept for a startup, we actually started as a sort of hybrid between a digital agency and an advertising platform. Basically, I was going out running around trying to convince the world’s largest advertisers to run bake-offs with this little company called Acquisition Labs that they’d never heard of before, against their other existing ad platform, these platforms that were at the time much-much larger than Acquisition Labs. At that time the little secret that I probably never told anyone before, is that our platform at that time was far inferior to any of the other platforms out there; we were newer, smaller, the tech was a little buggy, it wasn’t really super well developed, but what we had over all the other big guys was better customer service, better support, better people that actually gave a darn about the customers they were working with, and that really made a huge difference.

5:53    

So we were able to win a lot of business just by actually listening to our customers and what they needed, and working with them towards their goals, building these strong relationships with huge customers, even though our tech was inferior, allowed us to play catch-up with our tech. Eventually our tech became as good, if not better than the other guys out there, and we had all these huge loyal and fast-growing customers that were spending a ton with us, which we were able to intertwine and do a very nice story, that our tech was always the best and that’s why we have all these great customers! And of course, we were able to lead that to a nice exit.

6:37    

I believe it was AKUA first introduced us to you guys, and of course we heard about you separately a couple of times. One of our principles in the Ventures Fund said… because we always look at the background of individuals, that’s the first thing we’ll look at is, do they have that deep industry DNA? I said, ‘Hey Ben, so tell me about the team,’ and he says, ‘They have a digital media background.’ And I’m really glad you already drew that conclusion of digital media to in essence digital industry, and the red thread as we like to say is really in the data itself. So, I think it was interesting in terms of the jump that you made.

7:21    

Let’s jump right into NanoThings. Tell us a bit about the problem you’re trying to solve, and what inspired you to co-find the company with David Gruber?

7:31    

In one word, traceability, that’s what this whole industry is all about, that’s what you and I were discussing yesterday on the webinar, and our play on this, or our vision is to provide contactless cold chain traceability; cold chain meaning temperature-controlled product, whatever that may be, the real key is temperature monitoring and delivery monitoring, that includes physical whereabouts.

8:08     

We talked a lot about this yesterday, this this huge waste problem in the supply chain and cold chain, and the cold chain alone, forget about the supply chain, the cold chain alone there’s over $1-trillion of product waste, and that’s all due to a lack of traceability. That lack of traceability leads to a lack of accountability by any individual party in the supply chain, and it has this trickle down effect where it just continues to basically snowball on itself, and make the problem worse and worse, especially in an industry that is growing so much every year just due to the simple fact that the population continues to grow so much every year, and people need more food, people need more drugs, etc.

8:48     

And so, there’s this huge-huge waste problem that we’re trying to solve, and the existing technologies, especially in referencing temperature monitoring technologies, physical sensor technologies, they’re really inferior, they can’t get the job done. They have proven to be unscalable, they’ve proven to be inconsistent, they’re all too costly, and that leads to poor adoption, inconsistent adoption, and really inability to capture data easily, and share that data in the way that it needs to be shared throughout the cold chain to create some of these traceability efficiencies.

I’ll pause there if you have any comments or questions there Ken, otherwise I can continue rambling on!

9:48    

No actually this is quite good. If you don’t mind maybe let me go in a little deeper on the technology use, because I think that may help the listening audience to put that into context. What attracted us originally around this investment was our own experience in passive RFID, and many of the audience may remember the Auto ID initiative, and MIT Media Lab work, I like to say around the turn of the century! It really was the much-heralded work between Walmart, Gillette, and a number of other consumer package goods companies, this idea of putting disposable tags, or electronic product codes, EPCs as they called them, onto pretty much all packages, pallets etc. And in essence what we saw and what you guys were doing with these disposable or one-way tags was the equivalent of it without a lot of the infrastructure that needed to support it.

So, I guess let me ask, how do you see your solution differing from a lot of that early pioneering work that was done in both passive and active RFID?

10:53   

I love RFID as a technology, I think it has some fantastic applications, I think it’s a really cool technology and will continue to find more applications in the world. No offense to RFID but it’s never going to become a dominant player in the industrial track and trace world. The major problem with RFID which it will never solve is its regrade. Passive RFID tag, and this is generally when anyone refers to RFID, they’re talking about Passive RFID, can only transmit a few feet, and so that means that readers need to be installed within a few feet of any tag that you want to collect the data off of. So, as you can imagine, that’s an enormous amount of infrastructure, that’s an enormous amount of labour, and of course cost, just to collect a little data off of a tag. So, it’s basically a non-starter for a lot of the industry, and RFID has been around for 25-years, it still doesn’t have very much of a foothold in this industry, and I think that’s the reason why.

12:06   

But again, I’ll give credit where credit is due, in building our nano tag sensor we copied a lot of the DNA and principles behind RFID that have made it so famous in many other applications. So, if you’ve ever seen a nano tag you’ll notice it’s really-really small, in fact it looks very similar to an RFID tag, in fact we get confused for it being an RFID tag all the time. But that’s really the only similarity that we have to RFID, and everything else is basically different other than size and cost. So, our real focus at NanoThings in developing a better sensor technology was range. We had to have a significantly better range than a few feet.

13:04   

We really took an open mind to our approach to developing this solution. We knew what the problem was, we knew the problem we were trying to solve, but we didn’t know exactly which type of wireless technology would be the best to solve this problem. So, we looked at RFID, NFC, Bluetooth, Wi-Fi, all the different flavors of cellular etc. and eventually whittled it all down to LPWAN as the only real viable solution here that could allow for a tag to be the size and cost of an RFID tag but provides cellular-like range. So, our devices, our nano tags live on a flavor of wireless called LoRaWAN, and LoRaWAN does a few incredible things for the wireless world, for the industrial IoT world, that really no other wireless technology can do:-

            1) Support ultra-long range.

            2) Support ultra-low power.

            3) In theory LoRaWAN is completely free form a connectivity standpoint.

14:22   

In essence, you, and your clients many times rollout your own networks, or use the publicly available networks, and the beauty of LoRaWAN as well is you get that optionality. If you want to completely control the communications and all the data coming back from it as a client or end-user, you put up 1 in 10 and you’re ready to go. I can understand why you and especially industrial clients, would want to use a standard like LoRaWAN, because that allows them to fully control the communications there. So, I get an idea of what drove the choice, how has it worked out in practice so far?

14:57   

Yes, you brought up a really great point that I forgot to touch on, which is that LoRaWan can be deployed publicly, semi-publicly, or privately, and we’re trying to leverage all of the above. I think eventually the public LoRaWAN coverage will be as strong as your 4G coverage for example, but it’s not quite there yet. So, we can’t just rely on the publicly available coverage, that’s at least in the United States still very limited to the most populated cities and metropolitan areas, that’s slowly spreading out organically from there. [15:36 audio lost] this is huge, and it took cellular companies 20-years to cover the entire United States.

15:45   

Western Europe has a lot better LoRaWAN coverage, some of Asia has better LoRaWAN coverage, but unfortunately for a LoRaWAN company we’re in the United States and the public coverage isn’t that great yet. So yes, we deploy on-demand coverage, which means we will actually install a gateway which is the LoRaWAN version of a reader or router, wherever we need realtime connectivity. So, what we’re doing is lighting up different touch-points in the cold chain, so a touchpoint could be a food processing facility, a cold storage facility, it could even be a truck or a ship, a distribution centre, a grocery store, a pharmacy, whatever it may be, these are all what we call touch-points, and we will actually put gateways at each of those touch-points to ensure connectivity.

16:41   

It’s actually because of the range of LoRaWAN we only require one gateway per touchpoint, and it really doesn’t matter how big the [16:50 audio lost] is. The range of LoRaWAN is astounding, our nano tag can talk to a gateway up to 10 miles away, there’s nothing else in the world like it. That’s what makes what sounds like a very unfeasible proposition very feasible, no one wants to have to install 15 gateways at a single touchpoint, no one wants to have to maintain all those and wiggle them around in the right direction to make sure that they work. With LoRaWAN it’s really-really simple, we don’t even need to be on the site to do the installs, we just mail a gateway to the customer, the gateway is the size of a wireless router, and they plug it into a wall and that’s it. That’s instant connectivity, we call that lighting up, so they instantly light up their sight, and now nano tags can talk to that gateway and solution will work.

17:46   

I like your terminology there of ‘on demand gateways’ it’s a great way to refer to it. Let’s talk a little bit about your key installations, and yes, we’ve covered a lot of this in the webinar yesterday and I think you did a great job, but for the listening audience talk about some of the key customer use cases that you guys have seen, and some of the results.

18:06   

Sure. Before I get too far down any tangent, our two main use cases are, cold chain monitoring which is effectively just temperature monitoring throughout the cold chain, and then static asset monitoring, which is just temperature monitoring of static assets. An asset could be anything from a refrigerator, to a 50 million ft³ cold storage facility, to a piece of equipment, and everything in-between. We’ve had great early traction across both applications but let me focus on our cold chain application first. We actually co-developed this, worked very hand-in-hand with one of the largest players in the cold storage industry called the United States Cold Storage. They helped us develop our value proposition, and actually our product for the cold chain industry. Obviously they’re our first big customer, they’re also our first big partner, and they helped us learn about all the different problems that they were facing in the industry, and why they were so interested in our technology, and what they thought it could do for this industry. We actually worked with them over the course of a few years, to learn everything we could about the industry, especially of the problems and how a technology like NanoThings, using a wireless protocol like LoRaWAN could potentially solve some of these problems.

19:43   

Just to go into just a few of the problems that they were facing, and don’t get me wrong, I love this industry because it is the Wild West, but it is truly still the Wild-Wild West. Its temperature monitoring and quality monitoring seem like such simple concepts, but in practice it’s so hard to do, everyone is doing it differently. Most temperature monitoring devices used today are unconnected, they’re data loggers or temperature probes and they require an enormous amount of manual labour, reliance on human beings to get it right, which obviously doesn’t happen all the time. Most data is still collected via pen and paper, inter-party data sharing doesn’t really exist at all, and that’s just a few of the challenges. So, you can imagine how hard it is to manage a cold chain, or a part of the cold chain when no one else in the chain is sharing data with you. How are you supposed to know that the product that you took in hasn’t already been spoiled, and how are you supposed to know that the product that you delivered didn’t get spoiled, or the reason that it got rejected was that in fact it did get spoiled, because no one is sharing the data back with you.

21:08   

Those were some of the issues that US Cold was facing when they came to us and said, ‘Listen, we really need a temperature monitoring solution that’s completely automated, that’s going to guarantee that we get the data across our entire cold chain, because the way it’s happening right now is really unacceptable. So, we started putting connectivity, which means physically installed gateways at all their different cold storage facilities, and we’re now in the process of rolling out connectivity or Gateways at some of their biggest customers. I can reference some of them but obviously I can’t reference a lot because we’re under NDA, but one of our other big reference customers is a company called Trident Sea Foods, which is actually the largest seafood company in North America.

21:54   

From all of their processing plants around the United States, we’re tracking every single load that comes into a US cold storage facility and passes through down to a grocery store. [22:04 audio lost] now has access to the same data, the grocery stores are getting traceability all the way back up to the processing plant, the processing plant is getting traceability all the way down to the grocery store, and this has never been done before. So, it’s a pretty cool time for us.

22:27   

It is. In the webinar yesterday one of the key topics of course is COVID-19, we’ve referred to this as the digital accelerator, and especially relevant to supply chain technology. So, thinking about your focus on contactless cold chain as you mentioned, seems like you’re truly in the right place at the right time. What are some of the changes you’ve seen in client requirements since the start of the pandemic, and what do you think this ‘new normal’ will look like in terms of long-term implications for supply chain?

22:58   

Well certainly there’s a renewed focus and emphasis on traceability and quality control. We saw during the height of COVID-19 that the supply chain completely broke. I think what no one really knows and understands unless you’re in the industry, is that the supply chain was really never a working thing to begin with. It’s been held together with sticks and tape since I’ve known the industry at least, for decades, and so it only took something as slight as a run on toilet paper to break the entire supply chain. That just shows you how much new technologies, digitalization, is needed in this industry that still very much runs on people, pen and paper, physical filing cabinets, it’s just crazy.

24:04   

There’s a serious focus now on digitalization, removing the humans out of as much unnecessary process as possible, making sure that that data is then shared across all the parties that need that data to do their job. So, we are now seeing a major focus on this, and that obviously plays perfectly into NanoThings and the value proposition that we provide, and other startups in the space as well.

24:45   

Absolutely, as I said you’re really in the right place at the right time. Speaking of other startups, as digital industry investors we always like to know which startups people see as the ones to watch. In particular, which sectors do you watch for in terms of interesting young companies?

25:03     

Well, not to be biased but, LoRaWAN startups I think are showing incredible potential, and I think that’s an area to watch because it still hasn’t popped yet, but there’s so much buzz around it. If you talk to anyone that’s in the LoRaWAN community they’ll all tell you the same thing, there’s no better wireless technology for IoT, or machine to machine communication, than LoRaWAN. We could have a whole podcast on why that’s the case, but I truly believe that. It’s still so early, LoRaWAN has only been around for a couple of years, and already you see so much activity around it, such a huge and fast growing ecosystem that it’s only just a matter of time before, I believe, that LoRaWAN and the startups that are supporting it will start taking over the world.

26:06   

It’s been a key thematic for fun too, so we couldn’t agree more. I think what makes it interesting as well compared to other communications protocols is that it is not dominated by large industry players, in the sense it’s an alliance of companies that have really put it together backed by Semtech, and so it’s investible. Again, it’s a very flexible deployment model which means even small companies can afford to roll their own networks if they want to or deploy on larger ones. So, it is in essence almost a crowdsource style ethos which we like overall from all of our investments.

26:46   

In closing, can you provide any recommendations of books and/or resources that inspire you?

26:57   

In terms of books, I use reading books as stress relief and to help me get to sleep at night. Most of the books I read I would be embarrassed to publicly state, so I’m not going to do so! I’m not reading anything too scientific at night, let’s put it that way. In terms of resources that inspire me, of course I’m a huge fan of digital media, digital news, that’s how I’m keeping track of what’s going on in the world. So, I spend a lot of time, obviously I’m running a digital startup, in the digital world and just making sure that I’m always staying up-to-date on what’s going on out there, especially as it pertains to our industry and similar technologies etc.

27:57   

Very good. Well Tim, thank you for taking the time to join us for this insightful interview.

28:02   

Yes, thank you very much Ken, it was fun.

Yes as well, and again long overdue. So, this has been Tim Williams, co-founder, and CEO of NanoThings, and I’d say Chief of Contactless Cold Chain, so four C’s there for you!

I love it!

Thank you for listening and please join us next week for the next episode of our digital industry leadership podcast series. Thank you and have a great d