From our Archives: Our 2017 Story - End of a Construction Startup, then Re-Emergence

If you look at our newsfeed, you'll notice that our blog posts and newsfeed began to dwindle from the beginning of 2017. In hindsight, it was because at the time, we didn't want to share bad news publicly and try to inspire confidence externally.

Since we're on a different now path, some people have asked us to share our roller coaster of a ride because they said it's a human story and one that reflected the entrepreneurial struggle.

This newsletter post was really hard to write at the time. I didn't even proof-read it because it was pretty painful so there are several typos and grammatical errors. In fact, I wrote it only after I could conclude with a happy story about shifting Shapetrace to a service business.

Anyway, here's an edited cut of the final internal newsletter we sent. 

Enjoy!

Ernest

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(Republished publicly from an internal newsletter sent on January 16, 2018 with some data removed for NDA reasons.)

Message from the CEO:

Friends, family, customers, and investors,

We haven’t sent a email about Shapetrace since the beginning of last year. As you can imagine, a lot of has changed and in hindsight, my emails should have come out much sooner. So, I’d like to tell you our story of the past year. I’ve always thought I was a good storyteller until my wife told me my stories are too technical, have no buildup, and stir no emotions. I guess telling jokes and stories are some of my biggest weaknesses.

I’m going to address a few things:

  • Why we’ve ceased Shapetrace’s business side
  • What we’re doing with the IP and technology
  • Why we’ve started a new service business with a new initiative called “Covarian”

Why we’ve ceased Shapetrace’s business side

In November 2017, we essentially stopped working on Shapetrace’s business side and notified our investors that we’d be returning their investments fully. But in reality, we had pretty much stopped in the summer. While we were gaining paid pilots, we didn’t see an easy way to transition our customers to regular-paying revenue. That’s because our augmented reality technology depended on technologies from Google and Apple, and it simply wasn’t advanced enough to do what our customers wanted. Thus, it was hard to sell.

I didn’t want to write a novel, so here’s the journey (in point-form, of course. I’m still learning how to tell stories):

  1. Started 2017 with a bang! Won a pilot demonstration with Schneider Electric in Grenoble, France in January 2017. We will be forever grateful to you David, Suhas, and Rik for taking a chance. WIN!
  2. Lenovo releases the first commercially-available Google Tango AR phone. We have a platform to sell on! WIN!
  3. Moved our offices from York University to the DMZ incubator in downtown Toronto in March 2017. Wanted closer access to the investment community. In hindsight, York University’s BEST Lab probably has the best advisors in the region and out of all university incubators in Dr. Andrew Maxwell and Dr. Terry Sachlos. It’s a hidden gem. We feel compelled to help grow their community there to this day.
  4. Began fundraising to raise an angel investment round.
  5. Began working with NetEase in April 2017, a massive Chinese ISP company on their new construction initiative. They wanted to licence our augmented reality engine. WIN!
  6. Kicked off with a trip to Boston to begin work with Synchro, a leader in 4D scheduling to link Tango augmented reality to their platform. WIN!
  7. Tried to sell a second pilot with Schneider Electric. They said our software needed to work under more rugged conditions first. LOSS.
  8. It became clearer at this point that AR tech in whole wasn’t mature enough for our kind of field application. We couldn't move beyond pilots and expectations were high.
  9. Somewhere in here, we were finalists for TieQuest and CEMEX Ventures pitch competitions, and were paid to go to Silicon Valley and Madrid. mini WINs.
  10. Stopped fundraising: Got to due diligence with some investors, but we didn’t show enough traction over a few months. Stopped fundraising to focus on sales. LOSS.
  11. Applied to TechStar IoT in NYC. We made in to the shortlist and was flown to New York City to pitch. We didn’t make it as the investment committee didn’t feel augmented reality was the right time for investment. LOSS.
  12. Co-founder Julien becomes Dr. Julien Li-Chee-Ming and defends his PhD. WIN.
  13. Google announces they will kill Google Tango tablets and development. Massive blow. LOSS.
  14. Apple and Google release ARKit and ARCore development kits to our expected disappointment. Double blow. In hindsight, we expected them to release simpler technologies that worked really well as opposed to more ambitious platforms like Google Tango. DOUBLE LOSS.
  15. Decided it was time to stop after almost 4 years. Laid off our team. At one point, we were six people. Sad day.
  16. Notified investors.
  17. Four stages of grief. Most of our team went to freelance. I did a minimum wage job at a startup to learn what it was like to work on a field team and scale.
  18. Started a new business, Dec 2017. WIN.
  19. Re-assembled most of old Shapetrace team, Jan 2018. WIN.

Biggest accomplishment: Being able to work with an amazing team that believed in the vision. While patents have little value if the firm has no money to defend them, teams that can create patentable technologies are statistically proven to be ones that execute well. Thank you Julien, Sonal, Adil, Alvin, Praise, and Dennis for being this kind of team.

  • Thank you Adrian S. for being our industry advisor and opening up doors for us. You put your neck on the line. I hope we didn’t disappoint.
  • Thank you Dom B for being so interested in our company and providing opportunities to think beyond construction. We spoke often.  
  • Thank you to Kevin and Paul our angel investors for believing in us.  
  • Thank you to our family and friends for putting up time and time again with our emotional rollercoaster.
  • My wife Shawni and our daughter Aleia tolerated my distractions, absences, and lack of salary. To Annie, Julien’s wife, and his daughter Elaina, for putting up with Julien’s late nights, prolonged PhD defence, and out-of-the-blue phone calls. Our daughters were born after Shapetrace was started.

What we’re doing with the Intellectual Property and Technology

Shapetrace is submitting our patent application. We’ve decided to put our tech on the shelf as we feel there’s value in it for when indoor navigation are ready for it. While it was built for construction, it could be a method applied to refine any indoor AR or robotic navigation method. Actually, we’ve already been approached to sell our IP, but the condition is that we need to work as an R&D department for construction and industrial applications.

Dr. Julien once warned me that our academic tech was 5-10 years ahead of it’s time. Our hypothesis was that we could commercialize it in two years, but we made an assumption that the base platforms from Google and Apple would advance fast enough to account for many of the functions we couldn’t build ourselves. In hindsight, waiting was a mistake, and boy did we learn that lesson. Anyhow, he’s continuing to work on navigation technologies in a post-doc, but simplifying it, and adding elements of object recognition and AI to it. We know how to build a full technology roadmap, but now we truly understand what it means to release simpler products that can be sold immediately along the way.

What We’re Doing Next: Game Studio and Service Business

In the fall of 2017, (...)

(we had the opportunity to) create a game studio that also offered professional design, web, and mobile development services. Naturally, our speciality would be augmented reality and gaming. At the time, I was debating applying for jobs, working as a sales agent for another AR company, and working for near minimum wage for a startup that was scaling. As I was now obsessed with generating cashflow, (I took the opportunity).

In December 2017, I called up members of the Shapetrace team who were mostly freelancing and looking for jobs. This was really cool to be able to get everyone back together again, as I felt like like I let them down before. Almost immediately, we were fortunate enough to get a few projects, and we’ve got about $100K+ of projects on order so I hope this trend continues. One of the projects is a (Pokemon Go type all for location based AR Experiences... see Portfolio section)...

The nice thing is that we’re learning how to design and build games and apps really quickly, usually within a two month time frame from scratch. At this point, we’re about 10 people. We're actually making money, and (we can pay ourselves). 

Codename "Covarian"
However, long term, we feel that our calling will be to return to creating products of our own. So the Shapetrace team has an internal initiative we’re calling “Covarian”, which is a massive multiplayer platform for augmented reality applications. You can call it the AR cloud, the industrial digital twin, the IoT cloud, etc. (...) We’ll probably try to make a game first to test the concept. You can think of this having uses in gaming and social, all the way to industrial applications. You can think of it as creating different layers of virtual real estate and digital data that sit on top of the real world.
The idea of a massive collaboration cloud was always in Shapetrace’s product roadmap, but now, we get to build it using some of our clients as early-adopters for much simpler uses. We’re starting with outdoor applications, but eventually, it will go indoor, and that’s when our existing tech can be applied to it. 

(...)

Anyhow, this could be the last of Shapetrace newsletter for a while, but this email address will continue to work. I’d be happy to meet up or entertain questions.


As for Covarian, let me know if you’re interested in learning more as we move forward with it.

Thank you for believing in us.

Onward.

Ernest Yap