The month’s edition of Founders in Focus is with Matt Barbuto of Ynomia. Ynomia offers an end-to-end technology solution to enable connected jobsites.
Welcome to our Founders in Focus series.
Each month, we’ll interview the founder(s) of a portfolio company we have been fortunate to partner with and provide you with insights into how they started their business, their motivations, some of the challenges they have encountered, and how their business is run. The month’s edition of Founders in Focus is with Matt Barbuto (Co-Founder & CEO) of Ynomia.
Ynomia offers an end-to-end technology solution to enable connected jobsites. Its connected sensor network, developed in partnership with The CSIRO, gives construction companies the ability to harness real-time data to build faster and safer. By creating a single source of real-time truth for the construction supply chain and critical path activities, Ynomia minimises manual labour-intensive tasks and reduces customers’ time to value from days to minutes.
Matt: I was born and raised in Australia. I grew up studying commerce with a particular emphasis on the finance, accounting and marketing disciplines. My professional career started as a graduate at BHP where I rotated through three different business units across the country before settling into the corporate finance division focusing on merger and acquisition opportunities. That role took me to San Francisco, and back to Australia, before heading over to the UK for the balance of my time at the company.
When I moved back to Australia, which was a bit over 15 years ago, I had the desire to apply my learnings from working with large-scale enterprises to something a bit earlier. That led me to join Damian Degenhardt, who at the time, was in the early days of building EFM Logistics, a technology company that was digitising the logistics, transportation and supply chain industries, where I served as CFO before eventually serving as CEO and Director. Today that business turns over more than $250m and just last month received a significant investment from Singapore Post!
EFM produced some wonderful times and great successes, but as the business achieved genuine scale, about 3 years ago, I started to miss the struggle of the early EFM days, which led me to a realization that my true passion was in turning conceptual ideas into reality. Good fortune resulted in a chance encounter with an emerging CSIRO-developed location-based technology, which combined with some Industry based discovery, led to an identification that the construction industry, like logistics before it, had just started on its digitisation journey. This was the reason for creating Ynomia.
Matt: Anecdotally, commercialising research IP is hard. Despite governments investing significant amounts of capital to facilitate the creation of research IP, society typically does not do a great job of commercialising it (both in Australia and globally). This was something I had become more aware of and had done my own investigations about. In doing so, I eventually felt that there were significant opportunities to combine entrepreneurialism with the research capabilities of an organisation like CSIRO.
The BLEAT (Bluetooth Low Energy Asset Tracking) technology we use was developed within CSIRO’s Data61. The core capability of the technology was that it allowed for localisation, tracking and monitoring of assets in complex and disconnected environments. When I came across it, I knew from my past life that this technology had universal applications across industries such as logistics, mining, agriculture, and construction. So with my cofounders, Adam Jago and Matt Lickwar, we worked with the CSIRO to negotiate a commercialization deal, which provided Ynomia with a global, exclusive, perpetual license to commercialize BLEAT, in partnership with the CSIRO, with both parties contributing IP, cash, R&D and product development resources.
Matt: I think that is probably true of all research IP in that researchers’ remit is only to look for new ways of doing things that haven't been done before. So, for the CSIRO which is our largest government-funded research organisation with over 5,000 researchers working on projects, their remit is not necessarily driven by customer problems that need to be solved. That being said, I think that's really where the biggest opportunities for society lies. That, by harnessing the capabilities and the uniqueness of what the CSIRO has created and pointing them towards a set of customer problems, we can really deliver disruptive innovation to industries.
In terms of the decision for how we would specifically apply the technology, it all boiled down to a few interconnected issues:
The construction industry had only really gone through its first wave of digitisation which was largely led by incumbents such as Aconex and Procore solving the low-hanging fruit problems that existed in back-office operations. Then more recently, there has been a wave of field-focused or mobile-focused solutions being brought to market. However, all these technologies would operate in silos with none of their data talking to each other.
Anecdotally, this stage of the digitisation process has resulted in reduced efficiencies as technologies had not been created with the entire system in mind. This has been shown to be true in the logistics industry, and even for larger businesses like Toll, where it was recently reported that they found discrepancies and leakages in processes as a result of not bringing together the myriad of technologies acquired over time in a coherent way.
In many cases, the reconciliation of data to produce the information required to make the right decisions regarding millions of dollars of costs doesn’t get back to decision-makers for weeks and sometimes even after a month. Therefore, they can’t be dynamic enough and intuition often ends up as the guiding force for how decisions are made. It is no surprise that most projects exceed time and budget.
Lastly, you have all these macro forces such as labour shortages in one of society’s largest industries, the inability to produce the amount of buildings to keep up with population growth, housing affordability issues, etc. And society has created these technologies that didn’t really reduce the amount of work to be done but only changed the way it was done.
So, what we identified as the problem we wanted to solve was the second wave of digitisation of the construction industry – automation. We felt that IoT (Internet of Things) was still a novel concept within the construction industry and hasn’t really been widely proliferated. We believed our technology was a perfect match to the industry’s problems as the premise of what the CSIRO set out to build was a location-based technology that could use a variety of sensors that were low power and easy to deploy into complex environments. This would allow for the automated collection of more accurate and reliable data. Thus, creating more velocity in data that will eventually enable the next wave of applications such as artificial intelligence and machine learning.
Matt: What people in our industry have realised is that the deployment of an IoT network in a construction environment is 10X harder than simply understanding its value. And what excites them is that Ynomia is well-positioned to overcome the challenges of unlocking mass deployment. For example…
Connectivity - Job sites have limited connectivity. There’s generally no wi-fi or internet and 4G is patchy. The BLEAT technology has been proven to deliver instantaneous feedback upon deployment and that the network performs independently of any cloud connection, effectively creating a hybrid Local Area and Wide Area network.
Battery Life - Depending upon the use case, our hardware device battery life is maximized at > 12 months by the proprietary BLEAT firmware, which creates “smart tags” that adapt to their state and conserve power when stationary. This removes the burden of additional administrative work such as changing devices or replacing batteries. With no reliable source of power on-site and limited temporary power supplies, there is a requirement for the technology to run exclusively on battery and have a lifespan that covers any length of a construction project.
Hardware Cost - We’ve managed to develop an extremely cost-effective solution from a device perspective which can be deployed using our Mobile App, by any non-technical person, such that there are no issues with them being consumed within the building during construction or being damaged as activity occurs around them.
Deployment and Maintenance - Lastly, while we are not there yet, we are close to building a product that can be easily deployed and managed by anyone regardless of how well-versed they are with technology. Unlike the deployment of IoT in a manufacturing context where the environment is static and the amount of activity is relatively stable, the amount of activity and density of network requirement for a construction project follows an S-curve (low activity while excavating/digging, moderate activity during foundational work, high activity once you get past the structure and the shell of the building, then levelled activity during the fitting). As such, it is imperative for the deployment and maintenance of the network to be low-touch from a user perspective.
Being able to solve for the ease of deployment and demonstrate an immediate acceleration of speed to value, we have been able to engage people in the industry that didn’t even have this sort of technology as part of their awareness of needs.
Matt: In practical terms, because customers don’t care how it works or how complicated it was to build, I would say being able to start solving key customer problems is one of the highlights to date.
We just did a case study for a customer in the UK, Mace, and they talked about the amount of people hours that were saved every week through the deployment of the technology. The findings were that they were able to save 40 hours a week across a variety of people involved in a project while also being able to collect better quality data in real time. What also hit the mark was not just the time and cost savings that were achieved but also them having more confidence in the information and feeling like they could make good decisions in an environment or industry where that has traditionally not been the case.
But from an operational standpoint, it would be that we took on something that we knew would be challenging and are starting to come out the other side. The CSIRO has a scale which is called the Technology Readiness Level (TRL) scale used for research IP. And when we first started working with them, they had assessed the technology at about a 4 or 5 on a 9-point scale, which in layman’s terms means it was only a laboratory prototype. What we didn’t expect was that when you bring that out of the lab and insert it into a real-world environment, it probably goes to a 1 or 2 which we were not able to scale beyond a controlled lab environment.
We have since been able to rewrite the script, strip it all down, and rebuild it to where it is now, where we’ve got our own devices that are unique and can control everything from the physical device to the transportation layers. Data can be transmitted backwards and forwards, the handling of security and data encryption, and the algorithms that allow them to localise and communicate amongst themselves have embedded rules to understand their relative state compared to the rest of the network. All this has been built back up almost from first principles. There is certainly nothing really comparable that exists in many places around the world.
Matt: We felt that we were starting to establish strong foundations in Australia and had also launched in the UK as our first expansion market. Due to the fairly consolidated nature of the UK’s construction market (most of the activity happens in London by a smaller number of bigger players) we were still able to nurture existing key relationships into commercial opportunities.
The negative effect in the short term is that it has slowed us down in terms of our growth in the US. The original plan had us launching in the US earlier this year but that became impractical as a result of the virus. In comparison to the UK, the US is much more regionalised where there are probably 10 to 15 major cities that represent a significant portion of the construction activity which meant a lot more resources were required to service those markets.
However, the biggest impact on us is that our deployment processes have evolved years into the future during these unprecedented times. Prior to COVID-19, we had never deployed a project where we didn’t physically go to the sites which meant lots of travel between China, Australia, and the UK. However, with international travel becoming impractical, our deployment processes have had to become robust enough that it would allow us to effectively ship the kit of parts and allow others who aren’t proficient or experienced with the technology to be doing the deployment. To now be able to remote deploy at scale as a hardware-enabled software company will ultimately be a huge benefit to us as it’ll enable us to continue building new relationships in those markets we’d already been planning to target. Just last week we secured 2 pilot projects for deployment in Austin, Texas!
Matt: Even at EFM where we saw through the challenges of the Global Financial Crisis, the first principle I’ve always reverted to is to help our customers focus on the value that comes out of the solution.
During uncertain economic conditions, conversations will face greater resistance from reluctant, and even nervous customers. And for an industry that has only recently gone through its first wave of digitisation that largely involved moving pen and paper processes to digital forms, the idea of automation through sensors is likely to sound like science fiction. Therefore, we’ve placed greater emphasis to demystify the solution to the customers, help them ascend the learning curve, to then focus on how the technology would be deployed for them to access that value.
Matt: As we continue to define what is possible with our technology, we are coming to a realisation that while it is valuable independently, Ynomia may ultimately have its greatest success as a platform business where we can do some really powerful work at scale in a connectivity and data integration sense. We already have really strong partnerships with the likes of Microsoft. We aspire to embed ourselves further in these existing partnerships and also build out new partnerships within key ecosystems such as Procore and Autodesk. We are also starting to see a proliferation of connected tools by big tool companies such as Hilti, DeWalt and Milwaukee which we can explore for adjacent opportunities to offer a complete “digital twin” proposition.
In addition, something that we talk with the Board about quite often, and even with our key investors like Aura Group, is the current state of construction technology and the corporate activity that has been happening within this space. Big transactions have been happening such as Aconex who was acquired by Oracle for US$1.2bn after listing on the ASX, Plan Grid who was acquired by Autodesk for US$875m, and Procore who is expected to IPO sometime in 2021 with a market capitalisation around US$5bn. As such, we will want to ensure that our planning takes into consideration how we can arrive on the radars of potential acquirers.
To see the latest, visit the Ynomia website. Read more about our venture capital team.
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