 Yeah, this is a bit about sailing and financing and the merit team and the financial world. Riot and Ion are passionate sailors and they started to develop a system where you can on one hand replace the chart plotter that everyone of you knows, of course we are all and crew management and ship management. They came into contact with the financial world trying to raise funds and they are going to talk about it and tell the progress they have made, what they have made and what they're going to do. So please welcome Ion and Riot. It's very warm in here. Thanks for showing up. Thanks for being here. My name is Ion. I will be holding this talk together with Riot. His microphone is being fixed here. Come up here later. Yeah, Hackerfleet, what happened? We founded in 2011 a startup, the Hackerfleet to build hardware for the oceans. The mission is to connect up the other 71% of this planet surface. The land masses are pretty well connected but on the oceans there is just no infrastructure except for satellite connections and those are pricey. So the plan was to mount standard hardware with proper antennas on every ship and to do a Wi-Fi mesh network with them to make ship owners connect their sensors to their hardware that they could have bought with us and then to share the received data with all other ships in the area so everybody can profit from wind measurements or depth measurements, better charts and better weather information. And then finally all that information gets displayed on a web application through a web server that's on board on our hardware and displays full Nordic pursuit to all of the crew and guests on board through the devices they already own like smartphones, laptops, tablets, everything with a browser. Yeah, the initial business model on which we tried to raise funds was pretty simple and consisted of three different income sources. The first one was to make and sell hardware. The second income model we estimated about 10% of our total net income would come through a participation fees of commercial ship owners because they would obviously save a lot of money on satellite connections by using the mesh network to get weather data. So we thought we could build them a bit and the third part was customization. The range there would have been from a very simple, can you make the interface look like the color of my couch on my yard at the low end to please implement a full FEM analysis for towed objects like all platforms so we know the strengths and forces in every single girder that is being towed over the ocean. That would be the range from possible customization features and on that business model we started to search for investors. We did that with the base factor on that where that we plan to outsource the end production to a company. Buzzerwood Bingo would be contract manufacturing and the other thing that we didn't want to have in-house was the e-fulfillment another buzzword for a company that stores packets for you and relays them to owners of devices as soon as an API received their address which is basically an Amazon warehouse that you can rent. E-fulfillment, fancy stuff. We estimated that we needed about 4.7 million euros over the course of three years to pull this operation off in such a described way and in that time we plan to go from two employees, me and my business partner Riot, is your microphone working by now? Yay! His slides are coming later but anyway. I'm Rioter from Co-Found now for the hacker fleet and lead developer of the software package. Thank you. Yes, so we estimated that we would go from two employees, me and Riot to 60 over the course of those three years. So how can we get that money, those 4.7 million euro that we estimated? We learned that there are three main money sources, first government grants, second credits and third venture capital. Let me explain you the reasoning why we opted for venture capital. The government grants that are available in Germany are usually rather small if you can get them without private investments. That would mean something between 10 and 50,000 euros as a total government grant for a small-sized startup that you can get pretty easy with just some pitching effort and some business development with suits and ties and expensive consultants but that's not too hard but it's too little money. There are a lot of big grants that give out a lot more money in the millions and several of millions but they work a bit differently. They work like the government is adding money to an investment. So when a private investor let's say invests 1 million euros and you get a government grant with a quota of 45% that would mean that the government then would give you 450,000 euros. Depending on which program those quotas are between 45 and 85% on the private investment on top of that. So we looked for those. We talked with some of these agencies and they were like awesome high-tech finally some proper idea not the next cookbook app with recipes for cooking at home and said yeah awesome please come back as soon as you have a private investor and we were like yay that's how it's supposed to go. Venture capital would be easy. So we started our search for venture capital with the perceived positive answer of some government grant organizations. One would be the htgf high-tech entrepreneur fund. The other is from the Investitions Bank Berlin EBB. Anyway with these automations in mind gathering venture capital was for us the logical decision and so we started to do that. We estimated that there were some risks in our company and organizations attached to that investment that is the true list of risks not what we told our investors. Some we kind of kept a bit short. So first one software we until today have no idea of whether our concept of a mesh network based on what was it called better approach to mesh networking? Batman yes. Batman whether our concept based on Batman will actually work with the protocols that we thought. There is still a big chance that as soon as we set it up with a couple of hundred chips in some denser areas of the oceans that it will result in total lockdown because the mean transfer unit will get too small as compared to the overhead in the transmission. That's one risk. Another would be the stability of our software and hardware. There is no use if it needs to be serviced regularly because in commercial ship owning if something breaks you either have a replacement or the technician can get to it in let's say eight months in that port on the other end of the world for six hours. That's how they do service of electronics on big ships so it has to work or otherwise it's it won't be bought stability of the software and the hardware. With the hardware the risks that we learned about were that we might encounter problems with our subcontractors as soon as you have e-fulfillment and contract manufacturing. Wow awesome buzzwords. As soon as you have that if they can basically you're in their hands. If they decide to raise prices you need to come up with a lot money to change your manufacturer. Secondly we although we built and bought housings to military standards we were never really sure whether they would withstand the environment although that's a pretty low risk I think because it's all military standard. Yes another thing would be price inflation of political opponents and we until today have encountered a supplier that can make that type of antennae that we specifically require for this project but those are problems that can be dealt with as soon as there is money we always thought so yeah some some other questions that we had was how much data will we actually get from the ships like will it be a couple of megabytes per day will it be a couple of hundred megabytes per day and because of that we were never really sure how much money we need to account for in each product for storage. Technically it's not so complex to just add more but on the business perspective or things it's a significant cost factor so that's another risk that we didn't talk to our investors about. Yeah and the last one that no startup ever talks about is that we feared that if any of the above goes wrong then we might have too many returns due to hardware failure. On the sales side of things there are some things that our investors actually pointed out and where we learned that from that we have from there we were never able to calculate the cost of customer acquisition which is basically you take the number of products you've sold within a given period of time and then you take the costs of your whole sales department and marketing and you divide those two with each other and in the end you have theoretically the cost of customer acquisition for your product. We were never able to come up with any model that could predict or even give a rough range on where we should put this number. We also feared that the installing of the hardware and the perception of the installing of the hardware on board might be too complex for our customers or too time consuming and thus off-putting with the sales decision and in the end the obvious too little customer is too late which is a failure reason for a lot of startups and in the end the team issues and those were never brought on any table with any investors. We are up to up to today very conscious about that risk that as soon as you have serious money in the company then there might be a conflict between open source versus proprietary software blobs that conflict hasn't been able to be resolved by us because we fail to gather investment who would guess on that track philosophy and the other thing was that obviously through all the sensors and all those ships we would harvest a lot of data that's currently just being thrown away it's got this there on the bridge and then it's gone the storage function is just not there for wind speed or wind direction why would it so those informations and a lot more that we would gather through our hardware are of value but there is an ethical question attached to whether you can actually sell that data or act on that value and we as two open source conscious persons were always thinking whether future investors might actually force us with a majority of shares to change that which is kind of hard finding investors and because for those cases we were always really sure that in such a case we would need to yeah burn our baby so nobody gets harmed yes so with the numbers the two slides earlier and with some of the risks that I just told you and calculation and a lot more we went to investors and to pitch events and to investor speed dating which is one of the weirdest things I've ever done and usually on these events I was some of them I went there alone at some riot came with me and usually there were there was a lot of bullshit I've I've formally met about 10 bleeding edge internationally operating globally recipe apps for cooking on those events and a lot more stuff affiliate marketing from dust till dawn it's it's crazy it's crazy out there what you can see so and because of those craziness as soon as somebody comes there with a let's say proper idea of how we can make humanity better and earn money with it because that's what investor wants to know how fast can he get his money back and more um we received always the feedback oh it's an awesome idea but and I have some uh excerpts that I would like like to read to you of of those answers that that that we received so it's a hardware startup we are developing hardware but we were met by one investor with the expectation of being cash flow positive in nine months and ready for exit in 18 months that's like not even possible with an proper e-commerce startup like maybe one in a thousand but not with hardware it's absolutely impossible um then investor was like like telling me 10 minutes how awesome that idea is because he owned also a yacht uh and then he told me but that they can't invest because they only do b rounds so the second investment not the first investment uh I don't know why that investor then couldn't just say no it's it's a nice idea let's let's do that but if you only do b rounds I guess you buy shares more expensive um and then we heard at least twice or three time something along the lines of great name no great idea but the name is not appropriate for your audience you need to change your brand and do uh do a case study on your brand perception we can't invest until you have come up with a new brand name and perception so yeah it's called hacker fleet it's open source um I think that name is good we'll keep it the product's named open sea data mesh i was dm um yes and sure if necessary we're definitely going to build a sales organization with something like digital sea systems or whatever that name might be already taken but something serious um just for sales not for development and then one of the better ones great idea but can't you do something about the hardware it's expensive and hard maybe develop a business model and product with just software please please take the heart out of hardware that's that's what investor told us to to do like seriously that's what you want like to you want to destroy the idea and then invest in something that's less difficult okay and then uh oh yeah um we were told that we need to remove the requirement to own a ship before you can become a customer which is especially awesome for a company that makes ship computers yes so so please remove the requirement to own your ship before we can invest in you because your target audience is too small if you have to own your ship before you can buy the product yes awesome and and probably like the best until last um we we are I was told by a russian-born israel-based investor um that we are not investable until we have sold all data that we might gather in the future preemptively to ship insurances yes yes yes so uh that was one of those ethical questions that I told you earlier about at which point we would need to burn that baby of any a majority of shares would have such an idea that we need to throw all our data privacy concerns overboard and sell everything that we might have in the future to an insurance company but that's somehow how it works but as soon as you heard all of those reasons um you were probably thinking exactly as I am that that can't be the true reasons that that can't be the truth that that's uh the reason why they don't invest in us and took us about one and a half years to figure out what the true reasons were and uh we came we came to this like we were told think big magic capital you need to think big so we said 4.7 million euros for building a company that makes hardware um so we designed a business model to get hardware out fast within three years because that was what we estimated what any investor liked to see uh before cash flow positive and much longer periods until the company gets cash flow positive is with today's venture capital market not possible anymore because they are looking for e-commerce and through years there is a standard so we made a business model where we can get hardware out fast and earn some money on the hardware um but the investors never really understood that the big value in the organization comes from the operation of the global mesh network the infrastructure the connecting of the other 71 percent of the planet and all the benefits that come from it the some like most of them just didn't got it and thought that they would need to get their money back from just the hardware sales but uh capitalizing on the mesh network takes at least five to ten years at least at least an hour estimation and no investor likes to wait that long yes so we learned from investors that hardware making and selling is not a sufficient business model because you can only triple or quadruple your investment that way because you need to pay for hardware it's it's not an indefinitely scaling business model it's a business model that can only scale linearly but not exponentially because in the end you still need to make that hardware and bring it out there so just making and selling hardware is not enough to get better capital and then in april we learned that we accidentally designed from the business development side of things uh medium-sized hardware manufacturer instead of a buzzer words instead of a bleeding edge global operating business with exponential opportunities to the operation of the infrastructure again that was a bit fast okay um we accidentally built a medium sized hardware manufacturer instead of a bleeding edge global operating business with exponential opportunities through the operation of the infrastructure yes yes i can do that and i did that a lot for investors but i thought i should spare you the hassle a bit um so in the end like by now we failed to raise money but while we failed to raise money obviously the software development never stopped so um i am very very happy that i can hand the stage to riot and have him show you uh how far we got there will be an unrelease party tonight we're doing an unrelease because we're doing continuous integration and version numbers don't mean anything we would like to celebrate that you're all here with us and that um we can yes look at what we did i can do this this is the core menu the startup menu when you launch the system on your mobile phone or your tablet um our goal is to actually do the the step from like static open office like software to ethopad like you can collaborate together that's why we bring this on your phone so the whole crew can pick out their phone and use the system um the software is served from a machine on your system on on your ship and via wi-fi for example you can actually connect clients you can also use ethernet cables and static devices but wi-fi phone easiest solution this is actually one of the the core elements it's obviously the c-chart but what you see here is a view that can be shared um like when you you do the first trip planning you discuss the route you're going to sail and the skipper can move the chart and arrange the waypoints and everybody else can watch it on their devices and see what's what's going to be planned and discuss this together there's a lot of features that make navigation easier like um yeah waypoint planning and stuff um we also have integrated a chat function because when you're on a larger ship that makes sense or when someone is in the harbor for example the chat function is uh everywhere but so it's it's an overlay yeah sorry for the small font also we integrated a terminator and the twilight zone um this is uh the the form for crew management where you can actually edit your profile and and set your settings like you can uh your your map markings when you add some waypoints for example they have a certain color so they can be distinguished and we also have um client configuration so you can actually remote configure other clients on your ship which you have user rights to the user right system will be incoming in the next few months and this is the vessel detail form there is lots lots lots of fields on there we will optimize this a little bit but most of these fields are sort of purposes where we plan to add new features like uh your your bunker um status so you can actually uh get an alert when the the when your fuel is going low and other data um also the bank account for example is for crew management so you can actually plan the head um also another point is the the the dimensions of your ship are all in there so you can actually see if the bridge you're going to cross is too high or too low or your ship is too high so you can actually remove parts on top yeah so so it can give you a warning when it thinks that you are about to pass under a bridge that might be too low for your high state most ships can be like stuff can be taken off or flipped down or moved down so you can pass on the bridges we also added a wiki i'm not sure if i need to explain this for obvious purposes we can document your ship whatever um this can also be synchronized later on with the internet and there's a lot more to come you just we just i just threw an screenshot from waffle i o because i like it to go through our github features you can see the code and contribute and make the code better and help us do this at github.com slash hacker fleet slash half us so um and right now we will do some yeah world first we will attempt to do management by crowd um we have uh four strategies we need to pick one and we will and we will decide which to pick depending on your input um we will have a discussion right right after this talk in the ba avalanche together everybody is welcome to join in it will be streamed and recalled it as well and we will present four strategies that we will discuss there um let me get it get quickly through them it's we're going to start that at 1915 uh and we will discuss each strategy for 20 minutes the first one is that we continue our search of anti-capital it has pros and cons but we are a bit over time so we will discuss pros and cons over there and not here uh second strategy is uh that we continue with the crowdsourcing or a very very early pre-order so you order and pay and get the product like two years later uh and third strategy is that we would be relying on DIY hardware and just continue with the software and hope that enough sailors enough maritime personnel starts to throw as the software on any computer that is connected to the sensors on board and the fourth strategy would be that we would sell that idea to a single ship owning company like a yacht charter company or a big cargo company so um strategy five and others and more uh is up to you please tell us at 1915 over in the ba avalanche on their stage here's how you get there we are right now in track north and you walk south from here in that direction on the russell route until you get to the weizenbaum week and there you turn left and walk behind the teepees and behind the teepees is a stage and that's where we will be after we have walked there over as well um do we have time for questions if we stretch it a bit i would say we have three minutes okay it is 1800 now okay okay so if you have any questions regarding the strategies like i haven't even explained them by now but i will do that over there um if you have questions regarding anything else please ask them now let's do one or two maybe it's okay yes please i'm just wondering how many shipping companies you spoke to or like how big your research was and how intense uh i spent uh that like about two years of my life full-time only speaking only speaking to the shipping companies or because i've got a slightly different view this strategy of selling this to a shipping company is one that we haven't yet chosen uh but that's an option on the table and we will discuss that option later sorry the way i understood your presentation was you see your hardware on the ships on the oceans right yes so you obviously need to speak to the people who own the ships or who run the ships yes we did that and we were met with oh yeah awesome we need that and nothing more yes okay another question obviously there are a lot of different features and business models that any shipping company would have asked us and discussed with us whether they are possible and in some cases we were able to impress them and in some other cases we said um maybe too complex let's ask them to use again ansi yeah i really like this idea it's i think it's really awesome but i wonder um this idea of a mesh network on the ocean this sounds for us hackers very obvious is it is it not already in the mind of some ship equipment companies until now we haven't found any mesh networks on in shipping companies they are all relying on satellite and pay three two ten thousand euros a month for each ship just for connectivity that's what they do and that's how they operate because like just the fuel for a big tanker per day is like in the area of five hundred two a million euros just the fuel for one day operation on at sea so um a couple of thousand euros for internet is uh affordable for the by those but for all these small sailors all these small smaller ships the privates the yachts the fishermen it's not affordable so let's do a mesh network okay uh once uh we meet up very soon right after the stock at the br i figure down the street down the line uh you see a buckminster fuller a sphere a semi-sphere and then it's it turns left so so thank you very much