We embarked on a bold & ambitious journey back in late 2013 / early 2014 when we started Aero Glass. It was only two of us, Jeffrey Johnson & Ákos Maróy, on two different continents, but sharing the same vision: given the rise of smart glasses, what does it take to show a true AR visualization of airspaces, airways, flight plans, other aircraft, terrain & the like for pilots. Features we’ve seen in numerous sci-fi movies & animes, from Blade Runner, through Ghost in the Shell, Iron Man to Oblivion and beyond.
How hard can it be? – there is only one way to find out, we figured.
And thus, taking a lean start-up approach, we started to build such a solution step by step. What we thought initially would be a 1 year software-only project, took us about 3.5 years, and the final result involved technological areas we didn’t anticipate at all and was way beyond just coding. It was an extremely challenging & fun sprint, where we’ve had to pick up & learn totally new things every month, expand our team with experts in areas we weren’t familiar with at all. Such expansion of knowledge & mind is what drove us through the project with great energy & speed.
And it worked! Seeing our technology work for the first time was truly exhilarating. It was all we’ve been striving for, and was the biggest reward we could ever get.
Our energy also came from the vast amount of support that we’ve received. Support & encouragement from friends & family. Recognition from the start-up and AR professional fields, through numerous short-listings and awards, like a Top 16 featured position at Pioneers Festival 2014, featured among top 100 start-ups at Bits & Pretzels, Slush and WebSummit or as a featured AR/VR start-up at TechCrunch Disrupt SF and at a few dozen other start-up events. AR industry recognition came through the Best Application Auggie Award at the Augmented World Expo in Santa Clara or being featured on the AR Landscape by Super Ventures, among others. We could easily get in touch & collaborate with smart glass manufacturers, both large and small, as they saw the potential of our vision. We’ve been selected into and participated in the Airbus BizLab acceleration program. Press recognition was very good through Fast Company, Engaget, ARtillry, EAA Sport Aviation, the UK Pilot Magazine, Venture Beat and Forbes, or being listed among the Top 100 Most Disruptive Startups by Disruptor Daily, alongside Tesla & the like.
Aero Glass was started when the most recent start-up craze was in full swing. Having just exited a previous start-up, Scarab Research, We followed a ‘by-the-book’ start-up funding roadmap: first funding through FFF (Friends, Family & Fools – the ‘Fool’ being ourselves), and always looking to fund ‘the next step’ through investment rounds or other means. On the typical roadmap of 1. Idea validation / 2. Proof of concept / 3. R&D / 4. Product development / 5. Market entry – we got until end of product development, funded through a combination of an EU Horizon 2020 R&D grant and two investment rounds. We failed to raise funds for the next step in the process: Market entry. As our funds dried up, we’ve reached the end of our runway without taking off. It felt more like a re-land after being briefly airborne.
As with any aviation related incident or accident, it makes sense to review what happened, if for nothing else so what we can learn from it and how similar mistakes can be possibly avoided in the future.
So, how did we fail?
Despite all the 3rd party validation from industry players, press, start-up actors, despite the truly innovative nature of our concept & significant R&D results, how did we fail? If all these are not enough for a start-up to continue and proceed to the next step, what would be sufficient?
One area where we have clearly underperformed was subcontractor management. Running a lean start-up meant that our management resource base was very limited, as we’ve concentrated resources towards our R&D effort. We’ve worked off an assumption that generally speaking we’re operating in a friendly and supportive business climate and subcontractors would want us to succeed. This would imply they would do all the work agreed on in time with a high degree of professionalism. While we’ve had teams that we’ve worked with that met our expectations, we’ve also encountered teams that didn’t. The constant underperformance and delays by our subcontractors created significant issues for us. While one can accept delays & shortcomings if they are a result of hard work and the need to tackle previously unforeseen obstacles, the performance some of the teams we’ve encountered were significantly below our expectations. Others have engaged in practices that my personal subjective morality-meter puts into the highly unethical category. All these challenges meant that we’ve had to face delays, and also divert our resources from making actual progress to do damage control. In fact, some of these failed processes are dragging on to this day, and the fallout is significant.
Then again, delays & issues in a technology-heavy R&D project are not uncommon. One could overcome some extent of such issues with additional funding. In our case, this was not an option. We’ve been running on a very tight budget with a very ambitious goal, where other teams with similar goals had one or two orders of magnitude (e.g. 10 to 100 times) more funding. Our inability to raise more funds throughout the past 4 years is naturally linked to our inability to pitch our start-up better to potential VCs. While one can certainly improve their pitching skills, some obstacles we’ve faced are not so easy to overcome. One was very simply geographical: a star up with a founder from and also based in Eastern Europe, simply has a lower valuation in the eyes of a Silicon Valley VC, and thus cannot raise as much funding. At the same time, regional VCs have less of everything – less money, less ambition and less ‘smarts’ along their money.
Another difficulty regarding fundraising was that we’re operating in ‘unusual’ areas: transportation industries like aviation, automotive or maritime, which are very different from say online / web service or mobile app based B2C start-ups. Moreover, Augmented Reality as a field is still considered too new and too novel by VCs – yes, even in 2018. Even though we’ve been contacted by some high profile VCs such as Y Combinator, Founders Fund or Innovation Endeavors, we’ve had little traction, as the actual partners we’ve had a chance to talk to couldn’t relate to what we’re into. In some cases, there would be a pilot among the partners at a VC who’d immediately understand what we’re all about – but they would not be involved in our evaluation. It’s a strange experience to receive a rejection letter starting with a statement saying “We checked with […], who is [the president of our VC] and an avid pilot, and he agreed that the vision was compelling.” – but still being rejected.
Our vision covers all outdoor navigation in any kind of vehicle – be that an aircraft, a car, a boat or even a tank. From these, we’ve selected aviation as a first target market as aviators are early adopters of technology by definition and the utility of our solution is profound in this area. With Akos being an enthusiastic pilot, this also adds a personal level of motivation. But this initial focus on a single area later meant that we were only looked at as an aviation-related start-up by investors not as a start-up that targets all transportation domains, with the notion that aviation is a ‘small niche market’. That’s an interesting opinion in itself, esp. when expressed at an international start-up conference to which everyone flew in from across the globe using the supposedly niche-market service called air travel, and given that the EU Air Transport Industry Report of 2016 puts aviation’s global economic impact at $2.7 trillion. Nevertheless, our inability to get across our real target market areas to VCs, which is all transportation domains, limited the perception of our business potential.
We’ve validated the private aviation market successfully already in 2014, by offering, selling & shipping 200 early access demo units within a 2 week period through our Pioneer Beta program. We’ve limited the program at 200 ourselves, as we couldn’t handle more volume. We’ve generated interest from private pilots to commercial pilots who’ve tried our demo in commercial airliners & sent pictures from their cockpits, to military pilots actively flying U-2s. We’ve had exciting discussions with aviation luminaries like round-the-globe flight record holder Dick Rutan. We’ve been covered in Fast Company, by AOPA and numerous media outlets. Initial traction and getting your first revenue in the door is a big test for any start-up, and we covered this with flying colors.
As our technology was fully developed, it became obvious that the complete solution is too difficult to install & costly to be successful as a consumer (B2C) product sold to end users like private pilots. Thus we had to pivot and change our strategy, and adopt a B2B (Business-to-Business) market entry approach. Unfortunately the aircraft and car manufacturing sector has a set of business practices that doesn’t favour or openly disqualifies start-ups, and is thus a difficult area to operate in. Despite a large number of such organizations having initiated programs specifically to interface with start-ups (Airbus BizLab, Boeing Horizon X, BMW StartUp Garage, Daimler Startup Autobahn, etc.), with the notion of fast-tracking their innovation by incorporating faster moving start-up-originated results, these programs tend to appear like bubbles or silos within their larger organization. The ‘rest of the company’ is not adopted to accommodate start-ups at all, with procurement rules & guidelines at a minimum not favouring to administratively disqualifying start-ups from becoming direct suppliers or solution providers. “When can I fly with this in my [aircraft]?” – was the question filled with excitement we got from the CEO of an aircraft manufacturer, only to be confronted later with rejection on the departmental level, citing reasons of us being a too young company with very little track record – disqualified for fitting the very definition of a start-up.
Ultimately our inability to raise funds to execute a market entry process revolved around a Möbius strip: as VCs don’t understand what we do and seemingly we’re unable to sufficiently educate them, they want us to show revenue as proof of market validation to invest. But to get revenue in the door, a B2B business development process has to be executed, which is expensive and is the very process we’re raising the funds for. As we can’t execute this process for lack of funds, we can’t generate revenue. But we can’t raise the funds without showing revenue. And thus, the loop is closed and starts all over again.
We started Aero Glass not just as an ambitious endeavor to realize our vision in Augmented Reality, we also started it as a test of the start-up ecosystem. To see if we could realize a grand vision through an initial bootstrap investment, following up with a multi-stage investment process, always pulling in funding for the next logical step in the process. Our experience has been that this supposed ecosystem has serious issues, as we’re unable to progress to the next logical step in our process, which step interestingly carries considerably lower risk than any of the previous steps we’ve taken. We find it also controversial that the biggest amount of funding we got was not from supposedly risk-taking VCs, but from public servants & bureaucrats through the EU Horizon 2020 R&D grant process. Even more controversially, our grant process from proposal submission to contract signing and first financial support received, took less time than closing a funding round with VCs. In the VC scene, we found it really hard to encounter bold risk takers and fast movers similar to us at all, let alone people with a compelling vision.
The difference in ‘speed’ between us and other parties we’ve encountered was profound. For us, a month or two was eternity – we’ve made tremendous progress in such timeframes, learned completely new areas and had to adapt to new situations. For others, it’s just how much time it takes to schedule a conference call. For us, 6-12 months is how much funding roadmap we’d have, after which we’d reach the end of our lifespan. For others, their current fiscal year already fully allocated, that would be the first time they could consider doing anything new. Such differences in the perception of time, or speed, are a great source of friction. This can be bridged, but is quite difficult. To provide an aviation related analogy, even supersonic aircraft have jet engines that operate on subsonic airflow, and thus have to slow down the air before it enters the engine air intake. Can be done, but requires careful design and execution which revolves around what are called shockwaves.
The biggest obstacle for a solution like ours to enter the market is that we’re too early. The underlying technologies we rely on, for example smart glasses, precise positioning & attitude determination, at their current state are a still too big, bulky, heavy, expensive and ugly. The latter is especially important for smart glasses, as the user’s face is his identity, and he wouldn’t wear anything that contradicts his personality. Then again, the trends are obvious. Smart glass prices, weight, size are all progressing in the right direction, with consumer grade products to hit the market in 2020. In the meantime we’re focusing on professional use cases, where these constraints are less limiting. One could argue that being ahead of time is an asset in itself, but only if we can sustain until the market around us matures. Being too fast or having too much energy is not always good. Aviators know this quite well, being ‘too hot’ when coming in for an approach too fast or too high that might cause them to overshoot and thus triggering a go-around to try again.
The past 4 years have been a constant sprint for us, day after day. We’ve worked 12-15 hours a day and on the weekends, without salary and actually burning through our own money in the process. We’ve traveled so much we have been upgraded to ever higher tiers in airlines frequent flyer programs. We encountered serious challenges every once in a while, sometimes preventing us from sleeping at night. On a number of such occasions we faced the question: is it worth continuing? Is this really what we want to do with our lives? On these occasions, we would look at what we’d do if we simply quit Aero Glass. After thoughtful consideration, the answer was: we would just do the same. And thus carried on, knowing from such a reflective process that indeed we are doing what we want to be doing.
We felt this way until very recently. When revisiting the question now: what would we do if we weren’t doing Aero Glass – the answer is now different. The focus, dedication and humility that previously allowed us to do the most unpleasant of tasks with utmost determination is gone. And thus the boring, repetitive, non-creative, un-imaginative nature of day-to-day activities at our current stage drag us down. Our health and personal life has suffered and it shows. Long gone are times of expansive learning, adoption of new areas or solving challenging technological or conceptual problems. Also gone is the aura of creation. Instead we are involved in damage control and managing fallout. We are repeating the same pitch to yet another potential VC that won’t understand what we’re doing. We are showcasing our concept video from 3.5 years ago or footage of our tech which is over a year old to people who tell us this is still too early.
In a few years time we will have mixed feelings when we climb into the pilot seat of an aircraft and put on a Head Worn Display, and navigate via a see-through AR overlay on the scenery around us. We will be glad to see that our vision was right, but we will be be sad, as the product we will use will be made by someone else.
In a few years time, the VCs who doubted our vision, when they’ll sit into a car or climb into an Uber Elevate-style flying mobility solution and see an AR overlay on the scenery around them, might remember the moment they turned us down. They might have mixed feelings as well, realizing they could have been part of creating this experience with us.
Our freedom to act and change the world is limited by our abilities. This is painfully obvious when bumping into obstacles time and again that prevent us from reaching our goals. Those who succeed find a way to overcome the challenges they face by adopting and changing themselves that allows them to move forward the next time around. Those of us who fail were not able to do so, even when trying their best. For failure is when your best is not good enough. And ours wasn’t.