“8 Questions with Playfair” ft. Sai Ranganathan @ SensorFlow
This is the eighth in our “8 Questions” series — in which we sit down with founders in the Playfair portfolio to share their entrepreneurial journey.
We first invested in Sai and Max back in 2018. We were inspired by their vision to massively reduce energy consumption in commercial buildings; an annual market worth $400bn, of which it is estimated that 30% of that energy is wasted. Sai and Max met at Entrepreneur First in 2016 and have since built a full-stack proprietary Internet of Things (IoT) solution that automates heating, ventilation, and cooling (HVAC) systems in hotels that also provides in-depth analytics for better decision-making so hotels can be more energy efficient, operationally productive, and sustainable.
Fast forward to 2021 and SensorFlow has been recognised as a ‘Top 10 Hospitality Solution Provider’ and works with the likes of The Ascott, Novotel and Sheraton.
Today, we sit down with co-founder and CEO, Sai, to hear his story, from deciding to take the plunge as an entrepreneur to building SensorFlow to where it is today. We hope this can help other founders and aspirational entrepreneurs in their own ventures.
1. What inspired you to be an entrepreneur?
I’ve always been intrigued by problem-solving and my personal mission has always been to build things that change the way people live, for the better.
During university, I built social apps using HMTL5 technology that was cutting edge at the time because it made the same app accessible on all kinds of mobile platforms my friends were using. I then built what is now Uber, where taxis could find your location through an app; back in the day in Singapore, you had to call a number and tell them exactly where you were which wasn’t easy if you didn’t know the area well. We didn’t execute as well as Uber did (obviously) but we had a small scale rollout with some friends and family.
Thereafter, I joined Goldman Sachs and focused on building large scale distributed systems before joining a Singaporean startup where I spearheaded the technical development of their new product focused on connecting different smart devices in a smart home to share data with each other and work together. Sadly we couldn’t find a product-market fit and the company closed down.
I then joined Entrepreneur First (EF), met Max and SensorFlow was born.
2. Can you take us back to the beginnings of SensorFlow?
Interestingly, both Max and I had worked on the same problem of connecting different smart devices in a home but in different capacities — Max worked on it from a research perspective and I was building this product at the startup I worked in.
So when we first met at EF, we agreed that the cost of buildings implementing an IoT solution was extremely expensive due to their capital expenditure requirements. This is why it was hard for the industry to adopt IoT at a rapid speed. We realised however that with our collective technical skills, we could design and build the entire stack end-to-end; vertical integration meant bringing costs down.
We wanted to fix an important problem and climate change was one of the biggest problems to address; buildings represent 40% of the world’s CO2 emissions. Therefore, we decided to work on a wireless system for buildings to alleviate that problem.
Hotels were the perfect fit as there is so much wastage e.g. when guests leave the air-conditioning or heating on at ridiculous temperatures. We realised that we could automate hotel systems and save them huge costs.
3. What is the hardest lesson learned since day 1?
If you don’t achieve product-market fit, you spend a lot of time building the product for the wrong customer.
One of our first customers was not that keen on the product but the buyer we were speaking to wanted to look good in front of management by speaking with startups. We weren’t making any progress with the opportunity because SensorFlow had no track record and had been established less than a year ago; their corporate processes would not allow them to engage with us.
At that point, one of our early investors recommended we talk to some other smaller customers we were engaging at the time, even if they were not as big of a deal commercially. In doing so, we were able to work with other customers and quickly identify the right customer which prevented further time wastage.
The key lesson: consider how fast you are getting through the sales cycle and process. Have your customer journey mapped out with the buyer, with clear dates to ensure you are making progress. If they are not interested, they may be sending you messages to keep you warm without any real progress.
4. What has been your strangest day as a founder?
In the run-up to the EF demo day, we went on stage in the EF Singapore office everyday to practice our pitch. Pitch coaches recommended founders use hand gestures throughout their pitch. We never questioned this as we practiced 50 times a day and it became like second nature.
On the EF demo day, when presenting to investors, we clocked how strange it looked that we were all using the same extravagant hand gestures as if it were coordinated. It was a strange and funny realisation.
5. What have you learned from your investors since you first fundraised?
Always hire the right person for the role even if it takes longer and you need to do the work yourself.
Don’t just hire someone to simply delegate your tasks to, otherwise the amount of work you do to compensate for their weaknesses far outweighs the benefits of having them join the team. Also, doing the role yourself long enough helps you understand the kind of skills and person necessary to hire when the time comes.
6. As a founder, what is your proudest achievement to date?
How we pivoted our business model multiple times in the early days.
We quickly learnt that the Capex model, where the upfront investment for hardware and installation is made by the customer, is something that customers weren’t able to do. Hotels are Opex-driven rather than Capex-driven. Our first pivot was to a fixed monthly subscription fee model.
Then, Covid hit and occupancy rates dropped. Customers were not comfortable sticking to the same fixed amount. Our second pivot was to a savings-only model, where the hotel got to keep 30% of the generated monthly savings. As a result, we saw zero churn during this COVID phase.
Our plan is to shift back to a subscription fee when the economic climate stabilises. We have already laid this out in agreement with our customers so they’re happy and we’re happy.
Working with customers and doing the right thing for them without worrying about short-term profits is key. We didn’t sit back and wait; we were proactive and considered the long-term health of our business.
7. Crystal Ball: What are your plans for the future?
Making smart buildings a reality. For us, hotels are just the start. We want to go beyond hospitality and help make all types of buildings more sustainable: schools, offices, shopping malls, warehouses etc.
To make this a reality, we need to make it super easy to capture the right data, provide the relevant insights to drive action and automate systems to improve the productivity and energy efficiency of these buildings resulting in lower carbon emissions, making these buildings more sustainable to run.
8. #1 piece of advice to an aspirational founder?
There are so many things that go wrong when you first start. There’s always something that needs fixing, or the product isn’t scaling as it should, or the customer is not happy. But what will help you get out of bed during these difficult times are:
- Believing in what you do. Make sure there’s nothing you’d rather do — if you feel this way, you’ll be motivated to make the wrongs right; and
- Building a team around you with the same collective belief that you have, you will go further and faster with 10 people who believe in your vision vs. a 100 people who don’t.
Given the impact of Covid-19 on the world, and startup and tech communities, we asked Sai a few bonus questions on challenges and opportunities from this pandemic, as well as some founder-to-founder advice on how to get through it:
1. What has been the biggest challenge to come out of Covid-19?
Before Covid hit, we grew 80x between 2019–2020, from 120 to 10,000 hotel rooms.
Then Covid hit and everything took a turn, especially in the hotel industry. Our customers were no longer able to operate and they could not pay what they normally could.
We had to adapt our business model and cash flow to survive and beyond that, prepare to thrive post-Covid.
2. What has been the biggest opportunity to come out of Covid-19?
The need for our product became even greater because hotels became aware that they needed to bring down significant operating costs in order to remain profitable at lower occupancy rates.
Breaking down costs, the highest is staff and the second highest is energy. Our solution addresses the latter.
When hotels start opening up again, sales and marketing awareness will be much higher. If they want to stay competitive with low occupancy levels at the start of re-opening, they need to bring down energy costs per room. This is something our technology can help them with.
3. What advice would you give to other founders starting or running a company during Covid-19?
Be prepared for the worst-case scenario. Use this as your base and then build on top of it. You don’t want to go through cost-cutting exercises and headcount reductions more than once, it destroys momentum.
If things go better than expected, that’s a good place to be.
Don’t be optimistic in this season; it’s the uncertainty that can kill you!