Andrew Matlock, CEO, Industry Corporation (Communitech photo: Anthony Reinhart)CEO Q+A: New platform set to spark global growth for Industry Corporation Anthony Reinhart September 22, 2016 Columns, Startups, View from the ‘Loo When Andrew Matlock and Tim Nosal started Industry Corporation, they did it for fun – literally. It was, after all, a gaming company, and it was born in 2008 when the two high school buddies reunited in Waterloo Region after finishing their post-secondary studies – Matlock at the Norwich University of the Arts in the U.K.; Nosal at the University of Waterloo. Their first game led to 40 more, a revenue stream and ultimately, a deal to produce software for tabletop kiosks in hundreds of North American restaurants. With no institutional money and less than $1 million in seed investment from private backers, Industry has made its way forward in relative obscurity compared with other local startups, but now stands on the doorstep of its biggest opportunity yet. It recently launched Spark – a software platform to centrally manage content on virtually any type of display – and has landed its first big customer, a top-ranked private hospital in Hong Kong. For Industry – whose 10-member local team has moved back into the Communitech Hub to take part in the Digital Media Accelerator supported by Christie, the local developer of digital displays – the hope is that Spark will ignite global growth, as enterprise clients look for a single, easy-to-use platform to manage content on their digital signage, kiosks, tablets and other devices. I sat down at the Hub recently with a jetlagged Matlock, to talk about Spark, and the unconventional route Industry has taken to get to this point. Q – So you went to Asia recently. A – Hong Kong and Taiwan, yes, Q – What took you over there? A – This was probably somewhere in the range of our 15th trip to the region over the course of about a year and a half. We were in Hong Kong and Taiwan as the second sales mission to Asia since Spark launched this summer. I’m there on a monthly basis doing fresh sales meetings and follow-ups with existing leads for the platform. Curtis, our Director of Business Development, lives in Taipei. He moved there a month ago to better service our new and our upcoming channel partners. The reason we he’s in Taipei is because you have the concentration of all the world’s largest electronics and hardware manufacturers, who are kind of the most natural fit for large licensing opportunities for Spark. Q – Let’s back it up a bit and explain what Spark is. A – Sure. Spark is a software platform that deploys to most kinds of screen hardware. These are electronics, like kiosks and tablets and digital signage, that exist within public spaces. They’re owned by businesses and they’re used to communicate with their consumers and their audiences. The Spark platform centrally manages all these different types of hardware from a central content management system (CMS), and within the Spark CMS, you can use drag-and-drop tools to compose any kind of unique interface that you want to use to communicate with your customers. Q – So we’re talking about places like hospitals, airports, virtually any public place that uses displays? A – Exactly. We have about a dozen verticals defined, but it goes even beyond that. Pretty much any business that has any kind of a public, consumer environment will have some type of display presence. Q – What’s your total addressable market? A – Worldwide, based on our research, it’s about USD$100 billion. I don’t expect to get all of it, but . . . Q – How much of that market do you think you can exploit in the short term? A – The short-term goal is what we call the land grab. We have a very agnostic, universal platform that can solve a lot of problems for our customers and for our partners. Right now, we have a significant competitive advantage over every other type of platform in the world that comes even close to doing what Spark does. So right now, our goal, 100 per cent, is just to gather as many installations as possible. We define an installation by a screen licence. This is a SaaS-based model. In the next four years, my target is 30,000 licences deployed. We are decently on our way to getting there. Within the first couple of months, we’ve hit our metrics and then some, so we think it’s possible. The long-term goal is to be the global ubiquitous platform that runs any kind of display. We want Spark to be synonymous with any kind of a public interface. Q – You said you have a big competitive advantage. What can you tell me about that? A – There are multiple layers to the advantage, and we developed it this way intentionally. First of all, the platform is totally flexible. It doesn’t rely on any kind of interface templates. We work hard to try and remove all limitations from a design point of view, so that any business from any sector can come in and likely support their particular use case, whether it’s patient entertainment in a hospital, or some kind of information kiosk in an airport or a transit station, or curriculum tablets in a school. We work very hard to be able to centrally support all visions that an individual business would have for its particular display type. Another huge competitive advantage that we are quickly seeing to be probably the biggest advantage right now is the agnostic support for hardware types. Because we can support interactive and non-interactive displays, it really blows open the market for us, because we centralize the control system for all sorts of different types of hardware. Before, you would have a business think, ‘I need one platform for my interactive kiosks and I need a separate platform for my tablets, a separate platform for my digital signage, and then some.’ We’ve been talking to hospitals that have eight different software platforms for 100 different screens. We are able to centralize control, which really lifts a strain off of IT departments, off procurement managers, and really helps marketing with our easy-to-use tools and easy installation process. So, that’s big. The third one that I’ll mention is that we support a variety of data integrations, so rather than having to make the client rely on manual updates to the content, or come to us for content updates, any client can easily insert their live data feeds into the platform and drive dynamic content, on a real-time basis or whenever they want to schedule it. We’re also fully multilingual. From launch, we knew we wanted to support every single culture and country and sector in the world, so we have total multilingual support; it’s all included. We also include all cloud hosting within the price model. We see a lot of companies that are surprised to hear that; they’re used to paying for whatever they’re hosting, or their server situation is outside of the actual licence fee. The last advantage I’ll mention is our price point. We intentionally decided to produce Spark and offer it as the most affordable screen management solution in the world. The cost is USD$1 a day per device licence, so a deployment of Spark to an actual piece of hardware will cost one dollar a day. It’s super-affordable for every market in the world. Even in developing nations where economics are a bit more difficult, we still fit the bill, and that was important to us, to be able to have consistent pricing worldwide, and to support any culture worldwide. We’re able to look at markets from the get-go that no one else is. Q – Obviously with a low price point comes the need for big scale, right? A – Yes, certainly. We’ve been very careful to make sure that we still produce healthy margins within that price point; that’s because not only do we run a lean business, but the platform has been produced so flexibly that we’re not typically doing custom work or custom projects to support an individual client. We offer free finished-product demos from the get-go, and that doesn’t cost any money. Because of the way the platform has been designed and built, we have very little overhead when it comes to supporting any unique projects. Q – So they can set it up themselves, and it’s designed for them to easily do that? A – Exactly. Certainly, in growing our valuation and growing our own prospects and revenues and whatnot, that’s the land grab. That’s where getting a lot of licences comes into play. Q – What can you tell me about Spark’s early customers? A – I’ll highlight our anchor client, which is a private hospital in Hong Kong. Contractually, I can’t mention them by name, but I can tell you everything else about them. They’re the highest-ranked private hospital organization in Asia. They have a landmark facility in Hong Kong and about a half-dozen satellite locations. They have a high volume of patient entertainment screens; they also have kiosks, and they’re looking at other solutions from us, too, like digital signage and clinical tablets one day, perhaps. We were a good fit for them. They were making a procurement of hardware and software, and they had been looking for three years at all sorts of options, and were unable to find the right solution for them. It was kind of the right place at the right time when we met them, so that was very fortunate, but we’re very pleased to have them as our anchor. Q – How did you find each other? A – We were just on a previous sales mission. We were actually talking about some other software, and they ended up asking us about Spark when they saw it within our portfolio. At the time, Spark was still a year out from being ready, so we just made steps to keep the conversation warm. We kept in touch with them every other month or so, and when it came time to show them the demo, we did. They got their own personalized demo, and in a month or less, they procured. Q – Asia is about as far as you can go from here. It’s drilled into every tech company that you have to think global right out of the gate and be ready to sell anywhere in the world. Why do you think you’re getting business in Asia before you’re getting it elsewhere, and what does this say about the importance of being globally minded as a startup? A – Asia’s the farthest time zone from Canada and it’s not an easy market to tap, so I guess we’re just addicted to pain (laughs). There are a couple of reasons, and some of it’s just been synergistic for us. Our Director of Business Development, Curtis, about two years ago decided to specifically target Asia. He took a particular interest in the area. If you draw a circle around southeast Asia, there’s more people and more money in that circle than there is outside of it, in the rest of the world. “There’s just more momentum here than anywhere else that I’ve seen.” – Andrew Matlock, CEO, Industry Corporation (Communitech photo: Anthony Reinhart) So, as a socioeconomic zone, you certainly want to make it there eventually. Maybe not first, as a little startup from K-W, but because Curtis built so much traction there, and because we had been there so many times, it made sense to leverage those experiences and those relationships into Spark’s business development once it was launched this summer. Like I said, we’ve been to Asia about 15 times, and only the last two have focused on Spark. But we were able to catapult ourselves, through the Trade Commissioner Service, through existing relationships with partners, and open sales discussions, and it just made a lot of sense. There’s clearly market demand in Asia for Spark. We had a lot of experience there; we had fantastic service and support from the Trade (Commissioner) Service, and our strongest trade relationships are in Taiwan and Hong Kong. You also have, in Taiwan, the largest concentration of the world’s biggest electronics manufacturers, who are known very well for their quality hardware, and it made sense for us to start talking to them about embedded licence deals, to see if the Spark software could be a value-add to their hardware solutions. Q – So that, out of the box, a customer could start using Spark? A – Exactly. What we’ve found is that clients often think of their screen solutions first from a hardware perspective, because that’s what’s tangible and that’s what they’re actually installing into their facility. A lot of times they’ll ask the hardware provider if they have software recommendations or solutions embedded. The hardware providers, funnily enough, have little ecosystems of software platforms that they procure, and they have the same problems that the clients have, which is that they have disparate types of hardware and they have multiple platforms to support certain product lines. So we’ve found, at least through early discussions, that we’re a very good fit there, to centrally control an entire hardware company’s solutions. And, because we’re also more affordable than their existing solutions, or even their internal solutions on the software side, we’re kind of sliding into a nice place. Q – Tell me about the journey of getting to this point for Industry Corporation. When did you start and how did you get here? A – We began eight years ago. It’s a long time. Back then, it was just the brand label for myself and Tim’s partnership. Tim Nosal is my co-founder; he went to University of Waterloo and he’s our CTO. He and I met in high school. We went to Resurrection together. At Res, we founded the game developers’ club, and he went off to UW computer science and I went off to art and design at a school in the UK. When I came back, we were chatting and decided to kick off a little company, with the purpose of producing a game. And that one game turned into 40 games over time, and turned into a staff and a real organization. We did fairly well on the game side of things. It’s certainly a burning passion of the whole team, to produce games and to exist within that world. It’s a really interesting intersection between art and technology; the creativity that goes into it and the challenges on the technical side that you encounter are pretty much second to none. I would attribute the games experience as giving us the qualifications to produce enterprise software and enterprise platforms. It was through the games experience that we began to be approached by enterprise clients – people like universities and governments and organizations – that wanted their own games. They wanted offshoots of games, so they wanted apps and websites, even software applications and platforms. Our biggest project at the time was in 2012-2013, when we were asked by a hardware manufacturer to produce the kiosk software for a tabletop touchscreen. This was deployed into some of the largest restaurant chains in North America. There’s over 1,000 of these kiosks now in daily use, by millions of users, and they are used primarily to play games on. It was a pretty neat deal for us at the time, because it allowed us to stretch our muscles on the software platform side, and also to do some game licensing. We came out of that experience in 2013, and we thought that was really neat; that was really, really a lot of fun and a great learning experience for us. We wanted to leverage that experience somehow. We looked at the worldwide screen-management market and realized, our own client project included, that everything out there was being tailor-made for specific customers. There was no universal solution that solved the main pain points for customers which were of a platform that could power both interactive and non-interactive screens; a platform that was agnostic to the hardware host, or to the actual use case, to the actual sector, to language. We realized wanted to produce that kiosk builder. And in the course of producing Spark over two years, it grew to be much more than a kiosk builder. It grew to be digital signage; it grew to support a lot of ideas that weren’t conceived at the beginning, but were kind of built from market feedback throughout development. That brings us to today’s Spark platform. So we went through games, enterprise software solutions, and Spark, for all intents and purposes, is our real, big, first platform product. And it certainly seems to have bright prospects. Q – Have you raised much outside investment? A – We’ve raised about $800K to date, and we’re about to close a growth capital round. The $800K was from high-net-worth individuals. We have investors here in Canada, in the U.S. and in Singapore. They were strategic fits for us. We never did any big institutional funding rounds. It would have been a difficult fit for our particular journey, in terms of our process, the way that we tackle projects and the amount of projects that we’ve had in the past. It brought us to this day, so it’s worked out as planned. Q – And you were presumably earning revenue from the beginning. A – Yes, we’ve been profit-positive almost since the beginning, and that gave us the confidence to bootstrap as much as possible. It’s always been really important to us, in our own corporate ethos, to have corporate sustainability, from pretty much the beginning of any given project. In fact, Spark is probably the biggest risk to date, given that it was a two-year project, making it the largest project that we’ve ever done. Thankfully, we had two years to really get our ducks in a row on the business development side, and pretty much hit the market running. But we’ve always been profitable. Q – And you’re raising a round? A – It’s not Series A; within the venture capital field you’d define it as like a seed-plus. When you’re as far off the track as we are, it doesn’t really matter what you call it. Q – What are the biggest challenges you’ve overcome to get from 2008 to here? A – It’s certainly a lot. I mean, every challenge of running a business, we’ve hit. I can’t speak for other businesses, but we’ve gone through a very linear education cycle, where we’re still learning every day. It felt like maybe the first five or six years was a very intense education, and we came at this with no prior business experience. So, it was like taking a live MBA where, if you failed, you’d literally be in debt and homeless. So the gun was certainly to the head. The ones that come to mind – certainly the sales mentality and the sales process was a big one to wrap our heads around, and to be so detail oriented, to be so diligent in our follow-up, and to basically embrace all the things that are the least fun about being a creative enterprise. The irony is that now, they’re probably the most fun things that we do in terms of interacting with clients and partners, figuring out how to solve their problems. Having produced an entire platform, the Spark platform, from the clients’ perspective was a lot of fun. So, I think once we embraced those mental exercises, it’s really helped our business grow and succeed in a big way. Q – Did you have to bring in outside help with developing that sales mentality, or did you learn it yourselves? A – We’ve certainly surrounded ourselves with mentors as much as possible over the years, so I can attribute a lot of our success on the sales side to the Communitech EIRs, to people in sales in the sector we’re in. Mentorship has been key. We haven’t hired any outside sales professionals yet. I think a lot of it has been actually learned from exposure. That’s probably the biggest thing, that our interactions with the Trade Commissioner Service and directly with clients and partners has been pretty key. We just listen. We ask them exactly what they need and what their frustrations are, and then we implement those solutions into our business. Another difficulty – I think because we have taken an atypical path to success – which is, no institutional funding, having such a large creative component in our enterprise, coming from games – we’ve never been a natural fit with the tech profile that is so often celebrated. I think we’ve fallen outside the mould a little bit. For instance, only recently have we become the very privileged beneficiaries of government grants and whatnot. We’re so, so pleased and grateful for those things, but for the longest time, we just didn’t seem to fit the eligibility criteria because of the definition of our company. I think once we kind of figured out how to tap into those streams, it certainly opened up a lot more options for us. Q – In what ways, specifically, did you not fit the typical mould of the startup? A – I think having more than one project at a time has been one of the biggest criticisms that we’ve seen. This means more than one game project, more than one client software project and more than one platform in production. The irony is that the diversity of our portfolio is what gave us the profitability and sustainability to survive, and to self-finance Spark. So, without having multiple products in market, we would not have had the revenue to actually grow ourselves and to hit our targets. Q – And you haven’t had the big, splashy VC announcements and so on. A – No, which is, I think, both a blessing and a curse. A blessing in the sense that we still have a lot of control of our company; we steer the ship every day, ourselves; we don’t answer to anybody besides our clients and our partners. And we wouldn’t have had the latitude to do the pivots we’ve done, and to have picked up the expertise and experience that led us to Spark, if we were in bed with VCs. The curse, of course, is that with VCs, if you are a fit for them, they come in with a lot of money. So, we’ve never had that huge amount of rocket fuel, cash in the treasury, but at the same time, we’ve never owed anyone that kind of money. So it’s good. Q – What’s your headcount these days? A – Here at the office, we’re 10. We have about five more partners and contractors dispersed around the world. Q – What led you to leave 305 King St. W. and return to the Hub? A – We were invited to be in the Christie accelerator program. We were one of two of 25 companies that were chosen, alongside Lumotune (to move into the Hub). One of the greatest benefits of the program was going to be residency here at the Hub. We were here between 2011 and 2013, and it was a phenomenal experience. At the time, it was just the main floor, and we grew a little too large for the space, so we moved across the street to 305 King. And just as we were outgrowing 305, we were invited back into the new expansion space, so it made a lot of sense. It’s been great for our foot traffic here – new clients, new partners, new government colleagues – since we arrived two months ago. Q – What has it meant for your company to be here in Waterloo Region versus some other place? A – Tim and I always joke that it’s such a coincidence that we stayed here. We’re both from Waterloo Region; we grew up here, but back in the 90s, you wouldn’t have imagined that all this was possible. So it never occurred to us that we would necessarily stay here, doing the jobs that we do. But when we began the company, and when we were first invited to join Communitech, there was absolutely no reason to leave. And it is nice to be able to thrive where you grew up. Waterloo Region and Communitech have been everything to us and to our company’s growth and success. The altruism isn’t found anywhere else in the world, as far as I’ve seen. The level of support and success is unmatched – and this is globally, not just in Canada, but in every incubator I’ve seen in the world, and what I’ve walked through, doesn’t have the rare magic that Communitech has. Q – And I’m guessing you’ve seen a few. A – Let me think. Toronto, L.A., Singapore, Hong Kong – all fantastic centres, and all people we’d love to collaborate with and do work with, and in some cases, we are. There’s just more momentum here than anywhere else that I’ve seen. Anthony Reinhart is Communitech’s Director of Editorial Strategy and senior staff writer. View from the ‘Loo looks at the issues, people and events that shape Waterloo Region’s technology sector.