Why we invested in Galgus
Maximizing WiFi performance through software-defined AP management
1. Maslow pyramid and the ubiquitous connectivity
You may well know Maslow’s hierarchy of needs, defined in the 40s to study how humans intrinsically partake in behavioral motivation, which has ever since remained a very popular framework in sociology research, management training and psychology instruction.
Such hierarchy is often portrayed in the shape of a pyramid, with the largest, most fundamental needs at the bottom, and the need for self-actualization and transcendence at the top. Long story short, the theory is that individuals’ most basic needs must be met before they become motivated to achieve higher level needs.
Despite some revision over time, this theory has had quite a wide support over time, hence its fame nowadays; of course, some have argued against it, and some others have simply updated it and adapted it to, well, new times and human needs:
Yes, WiFi has silently, but progressively become our de facto gateway to the Internet whenever we are in an indoor environment, be it at home, in the office or in a station, a plane or a train, a library, at school… Even some public spaces now offer free WiFi service to access the Internet in the ubiquitous world we live in. This is not foreseen to change anytime soon, despite the increasing volume of data our mobile plans offer.
2. Can I have your WiFi password?
Let’s admit it. We all ask for the WiFi password as soon as we enter our relatives’ or friends’ home. In fact, if anyone would be asked which technology they have used today for sure, probably through more than one device, for the longest and almost anywhere they have been, their most likely answer would be WiFi. Raised with honor as the queen among the many wireless technologies that surround us nowadays, and forecast to remain so[1], WiFi makes our daily lives easier, but has grown to such an extent, it is increasingly at risk of dying of success.
Slow, awkward connections at the office, on a train, plane or even at home are mostly caused by channel interference (nonetheless, service providers -telcos- are well aware that home WiFi performance tops the ranking of end customer complaints). This in turn affects the connection speed, which can be basically solved by deploying more costly access points to cover the same area, to allow them to use different, frequency separated channels, similarly to more mobile base stations being deployed in high-density populated areas.
It is expected that by 2021 there will be 22,200 million devices connected to the Internet wirelessly in the world, through WiFi accesses in its various versions (WiFi 6 was the last to be launched), quadrupling the number in 2016 in just 5 years, with a sustained growth rate of 20%[2]. The emergence of IoT solutions will further increase this figure, regardless when and how intensive such raise finally is, it is estimated that up to 40,000 million in 2025[3].
But, why does this happen? Is there any solution ahead? Let’s look at how Wi-Fi works from the underneath:
Access points, routers or APs manage users, traffic and the overall performance of the network. So far, those have usually been proprietary hardware elements with their own software provided by top notch manufacturers like Cisco, HPE-Aruba Networks, Juniper Huawei, etc. This means a business model based on device sales and a closed management software mostly incompatible with other brands in the sense that these devices don’t “speak” to others, thus constraining network design to just one brand. As a consequence, the only option to add and improve major features had been to renew the hardware every 4–5 years, with the resulting cyclical expenditure for customers.
3. Galgus’ secret sauce
Galgus’ proprietary CHT technology (Cognitive Hotspot Technology) is a 100% software solution that can be installed in virtually any AP, managing to increase the connection speed up to five times (5x) and to improve coverage in any area (stadiums, trains, airplanes, buildings), by coordinating all APs, automatically minimizing interference and distributing users among them to optimize the network performance, thus maximizing data rate for each individual user.
This way, Galgus manages to save providers (telcos and integrators) up to 72% in CAPEX, thanks to the software configuration and its updates, taking the need to frequently change the hardware out of the equation and maximizing the sale and installation of their devices.
It’s a multi-platform product (valid for equipment from multiple manufacturers), distributed (it serves the entire network, for example on a train or plane, not just a device) and self-optimized (thanks to machine learning techniques, APs self-configure themselves dynamically).
Without CHT, client devices decide which AP to connect to, leading to unbalanced and unfair load distributions. APs equipped with CHT continuously assess and automatically optimize network load and interference levels in real time to maximize performance.
But, is WiFi not a highly standardized technology? Is there any margin for innovation in such a crowded space? Indeed, you might think Mesh and WiFi 6 standards, just to name the latest ones, must provide some degree of solution to the congestion issue (I must admit I thought this myself at the beginning); in fact, one of the flagship features of WiFi 6 is its design for crowded environments.
We had the chance to talk to top network equipment providers, Galgus’ customers and also telcos, both in Europe and the US, to assess its technical advantage. You would have been surprised at their reaction when they heard what Galgus’ particular work on WiFi technology could do. “OK, I definitely want to know more about that” was the common answer.
4. The right moment, people and place
But, as our colleague Damien Balsan pointed out in his last article, is the timing right? Is the market ready for a shift from a hardware-based business model to a software & subscription-based one? WiFi market figures suggest much more than greed for solutions in many years to come, with double digit growth estimates; the SD-WAN framework market could have impressive growth figures (50% CAGR), too.
However, software has been eating the world[4] for quite a while now, and networking wouldn’t be an exception. What if you could install a management software in any middle-end device and provide it with all the required features in a modular software-based manner? The so-called WiFi as a Service is here to stay and Galgus’ CHT technology could be pivotal for many players in the area to challenge premium CPE vendors, still working with a “business as usual” hardware approach.
Add a pinch of team’s deep knowledge, professionalism and capital efficiency to this recipe and the fit with Conexo’s investment thesis becomes more than evident. José (CEO and co-founder) and José Antonio (CTO and co-founder) have bootstrapped the company to achieve technology inception, product development and market fit with already many relevant vendors and end customers. Galgus have reached that far with so little thanks to the fact that they are based in Southern Europe, as Conexo has always defended as a competitive advantage; it’s worth remembering, too, that the importance of capital efficiency has returned and is here to stay for a while[5], if it ever went away. Interestingly, Galgus already have many relevant customers in the Us, as well as a commercial structure on the ground, where their sales future is headed and where Conexo can add most value in this travel.
And now that we talk about traveling, the icing on the cake in this deal are the co-investors’ syndicate that have engaged us as companions. The final picture includes Mundi Ventures as major co-lead investor, Wayra, also providing a direct dialogue with Telefonica, one of the most relevant telcos in Europe and LatAm and GoHub, the corporate investment arm of Global Omnium, a recent but disruptive player in the Valencian innovation ecosystem, who will in addition provide direct support in Galgus’ new growth phase based in Valencia.
Fresh news from those last weeks, right after closing our investment, Galgus has been chosen as a partner by Telefonica to deploy WiFi networks in the inner, less populated regions of Spain[6] and Facebook has selected Galgus for a similar project in areas of America with a low degree of connectivity[7].
5. Conclusion: be here now
Is Galgus poised to become a new David defeating the many Goliaths in the area? Time will tell, but we believe this deal has many ingredients to make it happen.
As I write these lines, we are commemorating the 40th anniversary of John Lennon’s death; I have always remembered he once answered the question from a journalist “What is the purpose of Rock’n’roll?” with a “Rock’n’roll is to be here now” (a simple, but overwhelming reply that was lately quoted by Oasis to name one of their albums). A gut feeling, indeed, but I have the impression that Galgus will rock!
References
[2] https://www.statista.com/statistics/802706/world-wlan-connected-device/
[3] Worldwide Global DataSphere IoT Device and Data Forecast, 2019–2023 (IDC #US45066919)
[4] https://a16z.com/2011/08/20/why-software-is-eating-the-world/
[5] https://medium.com/swlh/the-return-of-capital-efficiency-e4d08ab19e3b
