Entrepreneurs: Don’t fall in love with your technology
Fall in love with your customers to solve a need. The rest will come naturally
Ever been stuck in a long line-up at airport security and wondered how it could be sped up? Eric Bergeron did, and so founded Optosecurity in 2003, which provides the world’s first and most deployed remote screening and centralized image processing solution that helps airports reduce costs, increase throughput, and enhance security. Optosecurity has recently been acquired by Vanderlande Industries, the global market leader in logistics process automation for airports, express delivery and warehousing. Twelve years later, Eric was at it again with FlyScan, which provides automated, airborne leak detection services for the oil and gas pipeline industry. In recent years this sector has been at the forefront of political, environmental and economic debates due to highly publicized pipeline spills, which have made future pipeline project proposals contentious. Monitoring pipelines and detecting leaks quickly (even underground) can prevent these from becoming major environmental disasters.
Q: What drives you? What’s your vision?
I’m one of those rare breeds. I’m an engineer, but I’m not an engineer in the typical sense that most engineers are; conservative people, who look at data only. I’m more entrepreneurial, driven by gut feeling; an engineer by training, but first and foremost, I’m a business guy. When I did my engineering studies in the 90’s, I already knew I was going to be a businessman, not a researcher or an engineer in a big company. I preferred to learn engineering at school, and then learn financial mathematics after, rather than the other way around where you do a business degree and then people try to explain to you quantum physics and you’re clueless. I preferred to do the hard part first, and then the easier part… when you’ve done nuclear physics, financial math is a joke after that.
I love technology. There needs to be a high content of technology in the business. That’s what excites me. That being said, I’m a very versatile person. The first 12 years of my life I was in telecommunications, the second 12 years of my life I was in airport security with Optosecurity, and now I’m entering the pipeline integrity phase of my career with FlyScan. So, this is the third phase of my career, right now.
Q: Is there a common thread between those different phases?
A common thread is solving a need. Solving a problem in the industry, and doing it with a high-tech solution that nobody else has done before. I like to be a pioneer. I like to be a first mover, even though it typically means receiving all the arrows and daggers in the back. But still, I like to be at the front. I like to be at the leading edge of technology and business model. I like new technology, and I like new business models.
Q: How do you find out what are some of the pain points or problems that need solving — that’s the essence of entrepreneurship, isn’t it?
Yes, the first time I did it was with Opto, which was more like a gut feeling — “let’s try that”. I think there was something, because it was like a year or two after 9/11, so security screening was a problem. I spoke to some people at the airport here in Quebec City and I saw that at the checkpoint they had no software to help detect a threat. So, my gut feeling was that, “hey, there’s something to be done here”. That was after I was introduced to the research center at INO in Quebec City, the National Optics Institute. I said, “Okay, you have a solution to recognize objects at high speed. They don’t have this at the airport security checkpoint, so I’m sure there’s something to do here.” It is very much like that for most entrepreneurs; like many, I’m sure I have ADHD, an impulsive personality, and gut feeling driven, so I said, “Okay, let’s do this.”
The second time around, I was much more disciplined. Maybe because of all the pain and the difficulty we had at Opto, which ended up successful, but it was rough. It was a rough ride at times. So the second time around, I met again with INO and they offered me a series of technologies, and I said, “This time around I will document first, if there’s a real need….. Not be an engineer who falls in love with technology, and that there must be something to do with it.”
This time I did it the other way around. So, when INO showed me a list of technologies the second time around they had just finished a project for an airborne sensor to detect oil pipeline leaks. So, before I really started FlyScan, I hired a consultant to do some research because I had money. I also went down to Houston, and met with CEO’s and VP’s of pipeline operators to document whether there was a real need. “Is this something that you would like to buy? Is this something that you need? And if you need it, do you already have it? Or, if you don’t have it, will you buy it?” The last question I asked them was, “do you care? Or, do you think it’s irrelevant? And finally, if you think you would never buy it, let me know right now, and I will move on to something else.”
So, the second time around I had a gut feeling, but I took the time and spent the money to validate if there was a real business need and I talked to the business decision-makers,…. for whom technology doesn’t matter; what matters is the end result. I asked them, “Do you have that? And if you don’t have that, will you buy it?” So that’s what I did the second time around.
Q: This is the second startup for you — what are some of the key challenges to running a startup?
The first one, of course, is to find your purpose. So, what is your purpose? When you start a company, you start a company for a reason, not just because it’s cool. So, you must find a need that you wish to fulfill, the solution that you need to bring, for which there is no solution out there. Then you need to validate that, and once it’s validated, then you need to execute on building it, and selling it. What I found out is that technology is always cool. The hard thing is never the technology. The hard thing is raising the money, and then selling it. Sales is always the most difficult thing to do. The technology, if you mix talent and money together, it will work eventually. The hardest thing is to convince a customer that it’s worth taking money out of their pocket. When you start, you need to validate the market, talk to customers, and then put in place a financial plan to execute. So, where we are right now; we validated the market, we validated the technology, then I found the money, and now we are in the building phase, and we start the first test flights early next year.
At Opto, it was more like a technology push. My gut feeling was that the market would buy it if we built it. We built it, and the first solution was weapon detection — so gun detection in luggage — and we found out that it was more a nice to have, than a must have. Then we did liquid detection, and we found out that this was driven more by regulations, so airports didn’t really want to buy it. They would buy it if the regulator told them to buy it. We found out the hard way, and that this was a hard way to earn a living. Then we developed a remote screening product to save money for the airport, to increase the throughput, reduce the operating expenses, reduce the capital expenses, and we found out that this was what they wanted to buy, because it saved them money.
So, at my first company, it was a hard lesson learned — start with the business case, start with the money part, and then technology was secondary. The most important thing was solving the business need of the customer. More than, “Hey, I’m engineer, this is cool. Let’s build it and somebody will buy it.” And…. it always takes more time than you expect to sell anything. So, for the sales cycle, you must have a good padding, financially wise, to survive the long sales cycle. Especially in the airport market.
The second lesson learned is that it’s all about people, so hiring is extremely important. You must be sure to hire the right people. The biggest mistakes I’ve made have been in hiring either too many people too fast, and then hiring the wrong people. I also hired great people, and they are still with Opto. Over the years now, the most valuable lessons I learned were mostly related to human resources. It’s never been the technology so much…. hiring is extremely important. Firing is also extremely important. You must fire people quickly if you have any doubts.
I’m a big fan of this now — psychological testing and profiling — and it’s mandatory for hiring at FlyScan, because you want to have, as a team, people who are complimentary. You absolutely don’t want to hire people who are like you because then you will crash and burn. I’m the intuitive, impulsive type, and the last thing I need is a CFO who is intuitive and impulsive. I need somebody who is methodical, logical, like a Vulcan in Star Trek. That’s what I need to compliment me. If I’m a sales-driven guy — an outside-looking guy — I meet with customers and I meet with partners. Then, I need somebody who’s going to run the show in-house, and will manage the timelines, the projects.
So, as far as the steps, step zero there’s always the technical skill. But step one is the psychological complementarity of the team, in terms of style. You need a complimentary team, and then you need people with whom you will have fun. If you hire somebody who’s very aggressive and negative, it’s going to fail. If you hire somebody who’s controlling and he wants to take your job, it’s going to fail. You need to hire people who are complimentary to you in terms of skillset, in terms of style, and in terms of personality.
Q: What do you see as being some of the biggest challenges in the aviation sector, when it comes to introduction and adoption of new technology?
Well, there are many factors. First of all, it’s a great industry. I love that industry and I’m still happy to be at Opto as a board member, because I like to follow what’s going on there, and there are great people in that industry. But there’s a big difference between North America and Europe. What works in Europe, will not necessarily work in North America. It’s changing now. You see today that airlines are aligned with airports, and airports and airlines are aligned with TSA, so I think we’re getting there. In the 90’s through to the late 2000’s there was a disconnect between the business drivers of the various stakeholders, as compared to Europe where these were much more aligned.
In Europe, the airports are privatized and business-, or profit-driven. They’re responsible for security and therefore they want to control the cost of security. So, if you come to them with a solution that saves them opex and capex, increases the throughput, increases retail revenue, they will love that. Because there’s an alignment of interests from the airport financial need, with the passenger need, with the airline need, and the security cost. In North America, in the recent past, there was a disconnect in business model between the security of the airport, and the needs of the airline, and the airport. For agencies in charge of checkpoint security, their goal was to find the bad guys, not to facilitate commerce at the airport. The airports did not control anything with regards to security technology at the checkpoint, not did the airlines — it was a nationalized approach. Today, I think the situation in North America is changing for the better.
Q: Turning to FlyScan, drone technology is developing very fast and rapidly. Do you see that as the next step in terms of evolution of the product offering?
I think that drones are only a means to an end. They are not an end in themselves. What matters to the customer, once again, is that they don’t care about the technology, they care about the end result. They care if you can solve their business needs, so in the case of a pipeline, they want to find out if there’s a leak. They will not care if the leak detection is provided with a drone or a helicopter, or a satellite, or a guy walking on the line. It’s outcome based. They want to find the leak, and they want it to be fast and cheap. Then it becomes a question of, well how do you implement the delivery to make it fast and cheap? Drones, I think, are getting there, but I think that drones are cool for a short range punctual inspection. But, because of current regulations they are not there yet for long range, autonomous inspection. What would make sense at FlyScan is to install our device under a drone, you enter the GPS coordinates of the pipeline, tell it to go for three hours, and fly back, or go for four hours and land, and tomorrow do the rest of the segment.
It would make sense, but today regulations in Canada and the US will not authorize us to fly long distance at low altitude at high speed. Because our sensors are in the hundreds of kilograms, flying something at 100 meters altitude at over 100 km per hour, just think about the amount of kinetic energy in that flying object. No regulator will authorize a flight with no humans on board. So, I think the technology is not there yet to have the collision avoidance, and the regulation especially, is not there yet, even if there was collision avoidance software. The regulations would take years to authorize what makes sense business wise.
It’s very much an evolving thing, so that’s why we’re starting with helicopters, and then we move to fixed wing aircraft, and one day we’ll move to drones. But, it’s one step at a time. What matters is the sensor picking up leaks and whether it’s on a helicopter or a drone, this is secondary. Customers will care about the price, but they will not care about the delivery method.
Q: What advice would you have for future entrepreneurs? You spoke to some of this already, but if you had the same opportunities, would you do it again?
Well, if I knew, I would do it again — yes! But, right from the start I would start with a remote screening solution to save money for the airport. That would have saved ten years and $30 million of venture capital. My advice would be; don’t fall in love with your technology. Of course, you must be excited about your technology; how good it is, how you will beat everybody else with it, but don’t fall in love with it. Fall in love with your customers and fall in love with your business model, and then the rest will come naturally. That’s the first advice. My second advice is; take your time to hire, and when you hire somebody, you must be bullet proof certain that this is a great person, and the minute you have any doubt; fire them! So, ask yourself, would I trust this guy with my life? And, if the answer is no, don’t hire them.
As a concluding point of the interview, I could not help but reflect that I had heard this time and again from entrepreneurs who’ve done startups. For a startup, having the right team is extremely important, even more so than financing, since individual team members play a crucial role in turning vision into reality. Make sure you have a group of competent and complementary team players.
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Eugene Hoeven is President and Founder of EH&A, a strategy and business development consulting firm that helps small and mid-sized organisations grow and drive profitability in the air transport, aerospace and aviation sector. His articles appear in industry publications like Momberger Airport Information newsletter.