How Smart Founders Find Smart Money: eTEU’s Kristian Volohhonski
My name is Kris. I’m one of the Co-Founders of eTEU technologies. We automate the process of document drafting in shipping logistics, and we digitize the process of document transfer using blockchain technology to keep it simple, keep it smart and keep it secure.
Can you tell me about what problem you’re solving at eTEU?
eTEU is using technology to disrupt the shipping industry. We are essentially solving two main problems in the shipping sector – one is digitizing important logistic documents, the other is transferring them safely and securely.
Today a lot of shipping companies still draft their important documents manually – many of them in Word and Excel templates! It’s very repetitive work and there’s loads of room for human error.
After these documents are manually drafted, they have to be transferred across the world. The current system relies heavily on physical document packages and is incredibly paper reliant. The bill of lading, for example, is created digitally, then printed out and sent by post. Just receiving this one document can cost anything from $50-$100. Throughout the pandemic, we saw delays in the post which showed how fragile the system is. If you’ve got a container moving from China to say, Estonia, it can take up to 30 to 40 days for this document to be sent via post, which is crazy!
So you’re focusing on the digitizing, and digital transfer of shipping documents. Why are these documents so important?
The documents are like a passport for the cargo itself. They show where the cargo is loaded, who owns it, who sent it and who is receiving it. There’s the container packaging lists which shows the contents of the containers themselves. If you’re moving something like food then you have all of the certificates that come along with that too. So there’s a huge amount of documentation that has to be transferred constantly, and it’s currently all done manually.
Which seems crazy! Why do you think that the shipping industry has taken so long to digitize its manual systems?
The industry is well-established and dominated by a few, powerful players who set the standards, so up until now there hasn’t been an immediate need for them to digitize. We speak to a lot of companies who say, ‘it’s worked for us so far, why would we change?’. There’s a lot of hesitance because a lot of the small-medium enterprises have had the same management for the last decade or more, so the management are older, less tech-savvy and don’t see the need to innovate.
Another hurdle is that the shipping industry is global. For example, not every country accepts digital signatures and digital documents as the original. We’re using blockchain technology to solve this. Thanks to the immutable nature of the technology we’re able to verify the integrity of the documents, proving that they’re not fraudulent or have been tampered with.
It sounds like there have been three big challenges for eTEU. You’re competing against tradition systems, traditional ways of thinking, whilst juggling global regulations that vary from country to country. So the question is, who are your clients?
Ha, it’s a good question, and one we’ve been asking ourselves for a long time. Essentially our two clients are shipping companies or lines who are transporting the cargo, and the freight forwarding companies who organize the supply chain.
How do you get into the room with these hard-to-reach decision makers? And what advice would you give to founders who are pitching in a similar situation?
A few of us come from families that have a background in logistics, so we have been able to pull in some contacts through warm introductions. These were SMEs who realized that they would be pushed out by competitors if they didn’t adopt digital transformation soon.
When it comes to big corporations, it’s tough. Especially in this industry because there is a huge amount of bureaucracy. We quite often get lost in the hierarchy. What has worked well for us is being part of programs, such as Techstars Smart Mobility Accelerator. Techstars has been very helpful in providing us with introductions straight to the Head of Innovation, Innovation Departments, Heads of Trade Finance etc. When you are associated with a program, such as Techstars, you get to bypass a lot of hurdles at the bottom of the communication chain.
It’s also so much about finding the right decision-maker and going to them prepared. Understanding what they do, what systems they are using and clearly demonstrating how your product can benefit them. So it’s all about having a very strong value proposition and going in prepared.
That’s really good advice. I want to talk about your technology, because you mentioned blockchain. Did you build your MVP in house or did you outsource it?
We built our very first MVP during an accelerator program called StateZero Labs. We were a small team so our CTO designed the architecture in house and we outsourced the main development. It was easier and faster to move like that.
How did you find the right company to outsource to?
You have to look for credibility. A phone call is not enough to validate a good digital partner. We spoke to developers and were given access to their GitHub. Then we had meetings about technical architecture and made sure that we would approach the product build in the same way.
What did you learn in the process of building the first iteration of your product? And how much has it changed since then?
Back then it was our first experience of building technical architecture. We quickly realized the importance of technical specifications. If you’re outsourcing, you don’t want to be spending money on something that eventually won’t be used, especially if you’re at MVP stage. At that early stage you want to build something lean which is heavily based on user feedback. So it’s about keeping it simple and having a lean infrastructure, whilst being very specific in your tech specs so you’re never wasting resources.
You mention user feedback. How often are you getting feedback from your clients and what’s your process of implementing it?
Our work weeks are totally structured around this. Monday we have a standup at 10:00am. During this meeting we take our time to go through our clients feedback, which then helps define what our goals are for the week and the work that we have to distribute. Then we check in every day to see how far along everyone is but of course, if we need to change something urgently we can shift our tasks and priorities around.
How did you manage to establish such a tight feedback loop with your customers?
The feedback is coming from our customers who are using our pilot technology, but also from the Techstars program. Mentors, for example, have been hugely helpful. The most difficult part is sorting the feedback into what’s a priority. Constantly asking – what do we need to do today? What can be done in two weeks time? As for keeping the feedback loop strong, it’s all about building relationships, whether that’s with mentors or clients.
Let’s talk about your funding journey for a minute. So far you’ve funded eTEU with a mixture of grants from programs and governments, as well as VC funding. No one gets money for free. How have you made sure that eTEU stays yours, and you’re not giving too much away in return?
That’s a tough one. We’ve shifted our strategy in terms of fundraising to target VCs, Angels and programs that are industry-specific. We’re now looking for smart money. If you’re willing to give away equity, you want to be smart about it. You want to give it to people who will bring continual benefits to your company.
Great advice. Before we go, what has been the biggest lesson that you’ve learnt in the process of building your product?
I would say, keeping your product lean and prioritizing what you need to build right now, based on your customer feedback. Also, getting the balance right between a structured framework that will guide your product build, whilst also remaining agile and flexible when changes need to be made.
- If you’re outsourcing your tech, make sure you speak to lots of developers or agencies
- Check out their portfolio to make sure they are a good fit for your product
- Keep your MVP lean, and your technical specifications tight. Focus on responding to feedback and providing genuine value rather than building extensively
- ‘Smart money’ from grants and programs can provide introductions to difficult-to-reach decision-makers. Keep your eye out for opportunities here and go for them
- Want more founder insights? Check out our report – Building a Successful Digital Product: 11 Founders Share Their Secrets for Success