Podcast #182 Smarter Cities

TRANSCRIPT

Ken: This is Ken Forster, executive director at Momenta. Welcome to our Digital Thread podcast produced by, for, and about digital industry leaders. In this series of conversations, we capture insights from the best and brightest minds in the digital industry- their executives, entrepreneurs, advisors, and other thought leaders. What they have in common is like our team at Momenta; they are deep industry operators. We hope you find these podcasts informative, and as always, we welcome your comments and suggestions. Good day, and welcome to episode 182 of our Momenta Digital Thread podcast series. Today, I'm pleased to host Alicia Asin Perez, CEO and Co-Founder of Libelium. This Spanish IT company has created 'Waspmote,' a wireless, modular, and open-source sensor hardware platform for the Internet of Things. Libelium's technology is deployed in more than 120 countries, primarily across smart cities and precision agriculture solutions. Alicia was the first Spanish woman to receive the National Young Entrepreneurs Award in 2014. The king and queen of Spain recognized her in 2017 with Highest Distinction for scientists, researchers, and entrepreneurs. She holds a master's degree in Computer Engineering from the Polytechnic Center of the University of Zaragoza and is a graduate of the Cambridge Judge Business School and ESADE. Alicia, welcome to our Digital Thread podcast.

[00:01:37]

Alicia: I'm blessed to be here with you. Thanks for inviting me.

[00:01:40]

Ken: Oh, the pleasure is all mine. We have interacted long ago, early, and often in Libelium's background. I've long looked forward to trying to do this podcast with you. We call it the Digital Thread podcast, and we always start to understand somebody's digital thread. In other words, the one or more thematic threads that define their digital industry journey. What would you consider to be your digital thread?

[00:02:07]

Alicia: We are in the IoT business, which is blurred. We connect sensors to blend the digital and the physical world. It's a very expanding market because it's not a digital segment isolated. Today it's combining artificial intelligence with cybersecurity or blockchain technologies. It's like a spider web more than a threat.

[00:02:37]

Ken: I know you were an early pioneer in the machine-to-machine and Internet of Things space. You guys co-founded Libelium in 2006; it's hard to believe- 16 years ago. What originally attracted you to the IoT space at the time?

[00:02:51]

Alicia: I guess it was the horizontality. Because even though you talk- rule number one when you talk to investors is you need to go vertical and know those things about the people in strategy. The most attractive thing for me was that it was a core technology capable of disrupting every industry. I thought that was hugely powerful for me. And that was the most attractive thing.

[00:03:22]

Ken: It's interesting. I have had a similar experience starting with the idea of a single digital bit controlling this huge atomic machine. And the thought of that, the combination of those two, and how that could transform whole industries where you remotely control what used to be very physical assets. So very similar background and understanding, I guess. Equally pioneering was your move directly into a startup out of university, probably not a traditional path for most Europeans but much as European women engineers at the time. What is the origin of Libelium?

[00:04:01]

Alicia: Well, the story of Libelium was a story of being crazy and being a little bit naive, if you allow me to say that because we were two co-founders. My co-founder was doing his master thesis about distributed networks. So that was not IoT, not wireless sensor networks, which was the original term for describing this technology. That was a concept, a new paradigm of facing the main models of central networking against the distributed network. So, with just that idea of doing something related to that, we started the company. Then, we started the journey. And I always say, should I've known what we were doing, I would have never started. Thanks a lot to naive 24-year-old Alicia- because she said, "Yes, of course. We'll do this." And thanks to not overthinking, we are here today, so that's the origin.

[00:05:13]

Ken: Well, in hindsight, it seems like you made the right decision because you guys clearly have been successful in the space and truly a pioneer, especially. I don't think you could have talked about IoT and, more importantly, smart cities in the early days- let's call it the 2013, 2012 timeframe, without mentioning Libelium and your company's leadership. I know you set out early to focus on smart cities and agricultural space. Perhaps you can share some of your key use cases and wins from those spaces with us?

[00:05:47]

Alicia: We could talk for hours, and this is probably the most passionate thing about what we do. When I was telling you just a moment ago, the most attractive thing for me was that it was horizontal. It could also impact many different segments. This is the reflection and the result that you can improve cities' mobility give insights on their pollutions, and how to improve them. Also, you can help farmers to reduce the waste in their food production and the most efficient production as well. And you can also allow fish farmers in Vietnam to comply with European regulations on their fish farms. The whole story of Libelium use cases is always related to sustainability, from one angle or the other. Talking about specific things- in smart cities, I could outline too. For example, smart parking is one of the killer applications for IoT in smart cities because it combines all the pillars that an IoT project should have. It enhances citizens' quality of life, which is important to cities; it helps the environment because it reduces the carbon footprint of the cars by reducing the time they are circling to search for a parking spot. And it also increases the income of the municipality because you are helping to make it work perfectly. If you are the city council, would you want to rent 100% of your parking spots at the highest rate 100% of the time?

And if you help too much in offer and demand, you're winning with that. But sometimes, we have participating employers where smart parking has been used differently. A city in the north of Spain was monitoring the usage of taxi stops. And they concluded that they were allocating like 12 taxi parking spots. And analyzing the data, they realized that they didn't need more than six. They have that space, increase the number of parking spots that the city council could have for rental for citizens, increase their income, and offer the citizens six new parking spots. That was great. I like when we see not the typical use of technology but going beyond that challenge. And we see business models and use cases that go one step ahead. And in agriculture, I just came yesterday from Napoli in Italy, and I was visiting customers. I was visiting a farm producer of strawberries. He was very happy because thanks to one of our partners, EVJA, and our devices, they reduced the irrigation need by 30%. This is important not only in economic terms but also in sustainability terms because they use water more responsibly. Also, they are reducing the number of fertilizers and pesticides by sometimes 10 to 15%, sometimes even more- which is again a sustainability win and an economic win. That's a great example: we all win if we are more sustainable. It's not only the planet's future, but it's also our pockets'. And I love those examples.

[00:09:40]

Ken: Those are both great examples. That's interesting. As we've talked about Industry 4.0 and now the EU Commission has launched Industry 5.0, the biggest difference between those two- at least my qualification in an industry focused on productivity- Industry 5.0 focuses on productivity plus planet plus people. The thought is, as you've said Well, in your examples, there's a win-win in all of this. Suppose you're able to provide better productivity. In that case, you can create better sustainability and create a better life for citizens, farmers, and others participating in that. And so rarely do we see this as a zero-sum goal. When you talk about ESG, especially technology-driven, we see it raising value across all three areas. It's interesting; both of your examples do that quite well. I know one smart city. If I think about it, some might argue that we're in a second or third wave of smart city interest. Still, I know you were part of some of the first waves and some boom-and-bust cycles that went along with those. What did you learn from your early smart city work? And how are you preparing for this next wave of smart city deployments?

[00:10:54]

Alicia: Well, we learned a lot. And we suffered a lot, again. I remember that when we were doing the first big projects of Libelium. It was related to smart city deployments back in 2009 and 2010. And we learned all kinds of things. I remember that we faced and experienced this going from lab to reality effect and that's much more increased when the reality is a real city. Because you test things in a laboratory, and everything works. And then, you move the technology into a live environment, and you have several elements in a city that can interfere with technology. We are talking about the electricity line, the tram, or the metro installations, which make a lot of electromagnetic noise. So that's from a technical point of view. And then realize what it takes to install in real life and maintain for the future. I remember that when one of the very first deployments that we made before we even did an enclosure for our device- we put the devices in industrial boxes, made a hole, and put all the sensors just through that hole. Okay, fine. But then we thought that, okay, but gas sensors expire when exposed to the pollution for a certain amount of time. You need to replace them. How are we going to perform those operations? Do you need to uninstall all the devices, send them back to the factory, open the boxes, replace the sensor props, and send them back? That's not a goal. And that was the lead for the innovation in the enclosure of the Plug & Sense Waspmote device.

One of the biggest innovations with it by that time was in terms of the enclosure, how you could replace the batteries, install it fast because you cannot cut the street for a long time, and you are annoying the citizens. And you need to be very quick and fast. Also, how to make it sustainable in that time. How can you make it very easy to replace the disposable parts for the municipality? I also remember that it took us some time to understand that sometimes you uncover political or more human-centric conversations. You hide those conversations inside technical discussions. And I remember, one day, one of our technicians- one of our engineers was about to install the devices in a streetlight. And in that deployment, we took the energy from the streetlight and used that to recharge the device's batteries.

A guy appeared and said, "What are you doing?" while we were installing these devices. "You're not?" "Pardon me?" "Are we not installing these?" "Who are you?" "I'm responsible for lighting this city, and nobody has told me anything about this. You are not doing anything, not today." The following weeks were a back-and-forth technical discussion about if a device like Waspmote could provoke a blackout in the whole city because of being connected. It was not that. One day, I was reading the e-mails. My engineers were desperate; our partner was also desperate. It was like ten engineers trying to make that guy understand. And I say, you know what? I think this guy understands perfectly. We are not going to teach electricity to this guy. He's even more senior than us. What I think is that the IT department promoted this project. And they are talking about a holistic approach to having all these services controlling one network. Still, they have skipped the first level of horizontality. The IT department hasn't made part of the project to the rest of the departments in the project. They haven't asked about lighting or how they like the project. They haven't considered the mobility department in the project, and people are proud; "Well, you didn't count on me. I'm not going to support your project." And I think that was a huge problem in early deployments of smart cities because they were not considering the human factor of such a complicated administration on city councils.

[00:15:51]

Ken: That's a great insight. One of the things we've observed early is that the minute you deploy an intelligent edge device- think about- in your guy's case, a sensor on a streetlight, and tie it back into a cloud infrastructure, you've effectively digitally disintermediated every member of the value chain that in the physical world would have all been there. The classic example is a Caterpillar tractor; because they were the first to start instrumenting their tractors and think about it, they went to market via independent sales and service networks. And when the tractor cried for help, "I'm low on oil," the first message returned to Caterpillar at the end of the day. And think about how that just disrupted the value chains that are there. Your examples are very telling of that because there probably was a centralized IT group driving this. They hadn't thought about the physical, electrical devices as part of the network. But you guys effectively made them part of the network at that point. It's an interesting insight. I know you guys were very strong on the community aspect of the IoT, and you should be complemented. You did that via something called Cooking Hacks at the time, a site offering electronic products for amateur audiences. I think makers, students, etc. What did you learn from this effort?

[00:17:16]

Alicia: Many things, and I'm so glad that we did that thing. First, Cooking Hacks was the way to fund Libelium. Libelium bootstrapped till last year when we raised the very first investing ground. And because we had in 2006, we had three years ahead of product development, and we needed to find something else to fund the company. We created Cooking Hacks. We learned how to quickly take things to the market because we addressed a market of makers, enthusiasts, and universities. And that was the entry point for us- and future customers that evolved from being Cooking Hacks customers to being Libelium customers.

Secondly, we got a lot of feedback that they are very proud to share with you, "Oh, you know what, I think you should change this part of the electronic or how you wrote your API in this part. And I think it goes better. Let me think what it's like." We collected a lot of feedback for the product integrated into the development of Plug & Sense and Waspmote. Thirdly, we learn that a B2B is not a B2C business. And that was the reason why we shut down this business unit in 2019. Because there was a point where it had accomplished its mission for Libelium, and if we wanted to keep it growing and alive, it demanded a lot of resources from Libelium. It was going in a different direction. And sometimes, you need to learn that when we think about focus, we always think of vertical focus or geographical focus. The most powerful thing that I learned from Cooking Hacks is the power of community and technology to empower citizens. Because we had this initiative of Cooking Hacks so close to universities and research centers, we launched in 2011- after the Fukushima tsunami, we launched a cooperative project to create open-source Geiger sensor devices to be sent to Fukushima for technical universities and research centers. Also, specific citizens wanted to test their measurements. And it was like a smart city project done not by the usual paths. That was the first time I remembered that we were starting with smart cities. There was a panel track at every smart city convention talking about how to fund smart cities. Everyone was talking about either public investment or PPP cooperation.

After this, I said, we have experience providing city sense in Fukushima with sensor devices. They've been maintaining them, and they decided that everyone who received one of these devices would upload the data into an open data portal to share the information. They maintained an open data dashboard, monitoring the radiation levels around Fukushima, which was very cool because it was totally outside the company measurements, outside the government measurements- part of the citizens. And I have been using this example as another way to fund smart cities. Offer tax breaks to citizens, for example, to install and maintain sensor devices on their balconies. It can work because people are interested in what's going on in their cities. And it links to them the highest legacy of the IoT in smart cities I see. Call me very optimistic, but I think that if we install this 'data-crazy' or 'datatization' culture in cities, we will learn to evaluate our governments more rationally, in a better way, in a more transparent one. Also, our governments will be more accountable. Again, in a more objective way with real KPIs. After all, it could lead to better democracy or at least a more transparent one. This goes with when we stop talking IoT and start talking philosophy.

[00:22:02]

Ken: Or at least the impact of digital or IoT on life as we know it. Again, there's some wisdom, this idea that productivity plus people plus planet will create the right solutions when you consider all three elements of the solutions. You had mentioned your growth round of funding; congratulations on that, by the way. Where are you going to focus on your next stage of growth now?

[00:22:27]

Alicia: We are focusing on tidying up Libelium; Libelium is a natural platform for a build-up, and that's what we are working on. We have identified three specific sectors we want to be in: smart cities and infrastructures, Agri is the second one, and sustainability is the third one. From an ESG point of view, we think that sustainability is a cross theme in every single project we do. Still, some things can be done more specifically to help companies comply with their green objectives and sustainability goals. And, of course, because Libelium is good at developing core technology, we are very good at making the best hardware. Now we have launched after- after ten years of Waspmote, we just released the new device, which will be much more simple, sustainable, and easy to use. It's called One. And the idea is to complete the build-up with vertical acquisitions in smart cities and agri-food. We need to gain vertical expertise where we are very horizontal, which is good. And what we need to compensate for the lack of specific software applications and the lack of direct contact with the end-users. And that's part of the journey that we are doing now. We've been working on the IoT 1.0, which provides devices and technology; the 2.0 could be the mixture between AI and AIoT, which we are starting now. And we want to go to IoT 3.0 that's beyond the challenge that we claim now of saying- well, what's the result? How can we give advice and ensure the results that we say you will be able to achieve with our technology? And that's where blockchain comes into play. And that's what we will be investing in as part of the core technology development in the next two years. The final goal is- if everything goes well, we would love to file for an IPO and keep growing because we have the ambition to make a big IoT company that uses sustainability as the main inspiration and driver.

[00:25:00]

Ken: You have certainly been well-positioned again, personally- with Libelium, early and often in sustainability conversations, especially around smart cities and agriculture. It's interesting, in some sense, that you've been well-positioned. Still, the market is finally caught up to your value proposition. It seems like a very good time to be talking about IoT 3.0, which I like. Some of your peers call it- IoT 1.0 would be devices, IoT 2.0 IoT, and IoT 3.0 outcomes. And when you think ESG, it is all about the outcomes and guaranteeing those outcomes, regardless of the hardware, the software, and everything else you use. Great vision, very timely, and certainly would be a nice lead-up to an IPO. I guess one quick question as we wind down. Perhaps an interesting question from my perspective. I know you guys have probably been Spanish and European through your journey. What have you appreciated most about operating in Spain? And how do you think this compares to your peers in Silicon Valley?

[00:26:04]

Alicia: Well, I think that there's one very good thing about being in Spain or Europe, it's the fact that there was a very good moment, The Perfect Storm back in 2009, and '10, and the following years, with lots of funding in the way of H2020 programs, or federal funds for cities, or even funds for cities, where you were promoting those funds to be used by cities to innovate, that accelerated the whole ecosystem in Spain. And I used to say that Spain was the European Silicon Valley for smart cities because many companies were created back in those years to address those opportunities and start innovating. The other good thing is that because we lack- by those years of the investment ecosystem in Silicon Valley, we all need to focus on the business models to make money and make sustainable companies. Every time I hear Silicon Valley companies saying we are just in year three, monetization comes into the plan for next year- that blew my mind. And I couldn't understand that. Say what? You don't even know how you are going to monetize this technology. Why are you doing it every year? But the other thing is that they don't care because they have funding, lots of funding. And when you put all those amounts of the fund, well, you usually make something huge. Not always. And we've seen big pitfalls recently in the IoT market, where putting a lot of money into your company doesn't guarantee success. I think that's a big difference.

[00:27:51]

Ken: Yeah, it's interesting. In Silicon Valley, there's a term, PowerPoint company. And it's all concept and no execution against it, so interesting observation. In closing, I always like to ask, where do you find your inspiration?

[00:28:07]

Alicia: Well, I try to find it everywhere. Books, of course. I'm recently reading "The Innovators Dilemma" by Clayton Christensen. Great book: I understand why Steve Jobs said that was the only company book he had in his office. But also from our end users. We are a technological company, and sometimes, you don't see the final installation. And I was- this week, visiting end-users- farmers, using the devices. And that was hugely inspiring for me because I was saying, well, therefore, I wake up every morning; to do more sustainable work and do better businesses for these people. And I like to see that down to earth, especially in agri-food, the down to earth side of the technology. And finally, I see a lot of inspiration from my co-workers. When I see people believing in the project, and working with high passion, that inspires me and pushes me to be better, I cannot deceive them. I don't know if that's inspiration or need, or passion. But it's good anyway.

[00:29:21]

Ken: The inspiration behind the inspiration is Alicia Asin Perez. Alicia, thank you for sharing this time and insights with us today.

[00:29:30]

Alicia: It's been a pleasure. I enjoyed our conversation a lot.

[00:29:34]

Ken: Excellent. So have I, and I'm glad we finally took the opportunity to do it. And I do look forward- at the time we're recording this, a week out, we will all be in Barcelona at the IoT Solutions World Conference. I greatly look forward to seeing you on the stage there and seeing you live again after quite a while. This has been Alicia Asin Perez, CEO and Co-Founder of Libelium, and let's say, focused on IoT 3.0, the outcome economy. Thank you for listening, and please join us next week for the next episode of our Digital Thread podcast series. Thank you and have a great day. You've been listening to the Momenta Digital Thread podcast series. We hope you've enjoyed the discussion. And as always, we welcome your comments and suggestions. Please check our website at momenta.one for archived versions of podcasts, as well as resources to help with your digital industry journey. Thank you for listening.

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