In a smart move, Javier Escalante pivoted his startup from building Wi-Fi systems to the fast-growing IoT for logistics market, which he reckons is at least 20 times bigger.
He was researching for potential clients and competitors in the Wi-Fi systems market when he found that companies in fleet management lacked innovation. The big companies were slow to move and their clients were unhappy with the service. And those companies were ready for change – if someone could show them a better solution.
“So in 2017, we started with IoT and from BeWireless, I created B'Smart,” Escalante, a serial entrepreneur, told CompassList at the recent 4YFN conference in Barcelona.
The fleet management market is also a fast-growing one. "In terms of revenue, it is at least 20 times bigger than the Wi-Fi market,” the CEO of BeWireless and B'Smart added.
According to Market Watch, the IoT fleet management global market reached US$3.8bn in 2018 and is expected to hit US$12.7bn by the end of 2024, growing at a CAGR of 22.2% between 2019 and 2024. The overall smart fleet management sector will be worth US$565.1bn by 2025 according to projections by Grand View Research Inc.
Anticipate, reduce driving risks
“I'm an engineer and I've been working as a maintenance manager and automation engineer for over eight years in Switzerland. In 2015, I came back to Spain to run my own company BeWireless that was already set up in 2014," Escalante said.
BeWireless specializes in Wi-Fi systems in Europe, solving all the types of location coverage and communication problems. It runs two platforms to gather and analyse data from more than 100 locations in the retail and restoration sectors. The Wi-Fi system also operates as an automated marketing and communication tool.
B’Smart has three team members focusing on the IoT logistics sector: a programmer, one in sales and Escalante, who's in charge of sales and strategy. B’Smart’s resources come from BeWireless that pays for all the expenses and staff salaries. Both companies are based in Barcelona.
In 2017, the team started to develop IoT technology for smart fleet management to monitor and track the vehicles and the drivers. The platform can also be used for fleet analytics, predictive maintenance, fuel management and remote diagnostics.
Unlike traditional companies, B'Smart produces insights from the collected data to increase the ROI of the clients by route optimization and reducing fuel costs and risks. The data from each truck or industrial machine is sent to the cloud before machine learning (ML) technology is applied. Orders and warnings can be sent to the drivers to increase their efficiency and monitor their performance while on the road. At the moment, traditional fleet management systems only collect data from the vehicles and presents them on the dashboards without aggregating any data analytics value.
Scale-up funding needed
“B'Smart started from my own finances,'' Escalante said. “To start, I invested around €30,000. After that, everything came from BeWireless revenue.” Therefore, in the beginning they did not even see the need for investors.
"There is a big market out there just waiting for companies like B’Smart and the ability to scale up fast is vital to capture this growing IoT for logistics market. However, the lack of stability in B'Smart's development team is the main challenge and the company plans to raise funds from external investors."
Changes in the team of developers have caused a delay in the project. Although there is a market out there, and clients have been found, B'Smart has not yet been able to meet all their requirements. For example, B'Smart needs to collect and present three more parameters on the dashboard, including the detection of aggressive driving behavior.
Thus, B'Smart is now looking to fundraise €120,000 to hire another full-time senior programmer and another full-time sales staff. They're aware that the more investment they get, the faster they can grow. And that B’Smart’s projection as a company depends a lot on securing external funding. “The financial round will allow us to grow faster at a steady rate and start selling our services as soon as possible,” added Escalante.
Challenges of IoT tech
B'Smart's proprietary IoT technology was initially hinged on Sigfox and TDNext. In 2018, the platform was ready and the marketing to clients began. But unfortunately, that was when they found out that the B'Smart system did not have the capability to scale to meet the customer's market needs. Therefore, they changed to GSM and signed a commercial agreement with Orange and a new GSM gadget supplier. To make up for lost time, the pilot tests were simultaneously started before the new software was fully developed.
The IoT technology and B’Smart solution can be applied to vehicles or industrial machines, thus increasing the potential market for the company. They use small modems that work with mobile-to-mobile SIM cards, the cloud, Amazon and real-time databases like Cassandra. They can also program in PHP language.
B’Smart currently has the basic parts of the system in place, including geolocation and time accumulation to track the time usage of a vehicle or machine. It can also recommend routes, or when to stop or start in order to optimize vehicle performance. Other features include giving advice relating to a machine’s output and car disconnection to stop a vehicle or machine remotely.
Despite the difficulties in hiring developers, B'Smart will be able to generate reports and have the geofences working by the end of April 2019. In May, the API and driver allocation features will be ready. And by September, " we can have the CAN BUS parameters dashboard and start development based on the needs requested by our clients," Escalante said.
Expansion
B’Smart sells packs of services. “At the moment we charge a monthly fee per vehicle. However in the third phase of the project, we will offer the services and charge the client a certain percentage on the amount of fuel saved. The system will be totally free for the clients,” added Escalante.
The company's most conservative forecast shows projected revenue growing from €50,000 to €500,000 within three years. This means getting four clients who already in the pipeline this year 2019. The plan is to secure 10 new customers in the second year and 15 the year after in 2021 when B'Smart will be managing about 8,700 vehicles.
Each sales staff currently makes 400 calls a month. According to the company's past experience, this will produce 20 leads and between one and three clients. The conversion rates can be tripled with more staff training, for example.
For example, a client with a fleet of 2,000 vehicles can potentially generate €10,000 revenue per month for B'Smart. In Escalante's opinion, the transport and industrial sectors will increasingly look to adopting smart fleet management systems to operate more efficiently and reduce costs. Therefore, the moment the technology is available, there will be greater demand for more and better insights from data to enhance the decision-making that will improve their business performance.
From 2020, B'Smart plans to use ML technology to monitor the performance of the drivers and the fuel saving system.
“If you have the possibility to reduce your fuel costs by 20%, for instance, why shouldn't you do it?'' asked Escalante.
