Stolen construction tools represent a 1 bn euro market. And this startup thinks he’ll eat it all.

"Long term, we want to be the winner that takes all"



Every year, ten percent of the tools on any construction site are lost or get stolen. Tracking cheapish tools (under 10k €) was too expensive, at least until today. Tim Gestels (27) is a bright eyed, extremely  young looking product developer from Antwerp who devised a custom RFID tag to track small construction tools – while still living at home with mom and dad.

So naturally, after he had finished developing the product, he rolled out a plan to tackle a huge, untapped market that he estimates at 1 billion euros. And he’s already thinking about where to go after thàt.    

Tim Gestels: “When I was in my fourth year as a product development student, I met a guy who was designing a solution to prevent theft on big construction sites. It was basically a container full of lockers. The solution didn’t strike me as very interesting, but the problem did. So I ended up making my thesis project around the subject of construction site theft.”

“In the process I discovered that it was an even bigger problem then I had imagined. The average construction company has 1000 small or medium sized tools on it. Every year, an average of ten percent of these tools are lost, stolen, or are “loaned out” by construction workers who forget to bring them back. Often, tools are not on the site where they’re supposed to be. It causes all kinds of inefficiencies, like when workers have to wait for the right tool to arrive. It’s a billion euro market, easily. And there are no providers who track and trace tools under 10 000 euro – it’s generally deemed not to be economically viable (smiles).”

 

“So I started thinking about a way to tag all the tools on a construction site, and I came up with the idea of a designated tracking device for small tools. I spent a lot of time thinking about it and refining it from a product development point of view: what should it be able to do? How would the business model work? My idea was that it should be built around a chip that sends a message everytime the tool moves, and it should be available as a SAAS-solution. We tag your tools once, and you can follow them online..”

“Eventually, I entered a Belgian entrepreneurship competition with my idea. And I met so many people who asked me “why don’t you just build it”, that I thought, what the heck, let’s just build it. The problem was: I had no electronics background. I had to find a partner who could build the hardware. I spent some time lurking on forums like circuitonline, and that’s where I found Bart (Hiddink), a specialist in wireless electronics. I resigned at the end of 2010 to develop the product with Bart.

“I thought it would take us 12 months to get a minimum viable product. It ended up taking 16 months, which was a bit of a bummer for my girlfriend (grins). We were looking at houses before I started on Viloc, but I decided to keep living with my parents for as long as it would take to develop the product.”

One million text messages

Tim Gestels, Viloc

Viloc founder Tim Gestels.

The big challenge was to develop a tracking chip that wouldn’t need any recharging. Recharging would be expensive and “a hassle”, says Gestels. The good thing is that professional construction tools have a very limited lifetime of three to five years. Gestels: “We estimated that we’d need a chip that could send a million text messages without ever needing a recharge.”

It turned out that Bart Hiddink was one of the few people left in Europe who had the practical knowledge to design such a wireless device.

Gestels: “Most wireless solutions in Europe are assembled with standard components and then programmed on a higher level by system integrators. We actually did the low level engineering ourselves, so that the chip did exactly what we wanted to do, but nothing more. That way, we can save a lot of battery life. Most current wireless standards like Bluetooth, Wi-Fi or even Zigbee are not energy efficient because they use components and firmware that isn’t developed specifically to solve this problem. And GPS/GPRS based track and trace devices are great for tracking vehicles with an internal battery, but it’s not practical to trace smaller and less expensive equipment.”

Gestels takes a small Viloc-device from his desk. It’s a small, rubber container in the shape of a chocolate with an RFID tag in it. The container is filled with resin, to make the technology 100% shock- and wheaterproof, and it comes with an anti-tampering device.

Gestels shows a small copper strip: “If you rip the Viloc off the tool, this strip breaks, and it sends an alert to the system. It also registers every time someone moves the tool and may send an alarm in certain situations – like when someone moves the tool after working hours.”

First mover advantage

The alert goes to central boxes that are installed in the vans or containers of the construction company – and also the vans of other construction companies that use Viloc: all the logging happens on a central, proprietary Viloc-server. This provides a network effect which should give Viloc a powerful advantage.

“Suppose one of your tools disappears, and a van with a Viloc-box passes by the place where it is stored by the thief. It doesn’t matter if it’s your van or the van of a competitor: the tool will send a message regardless, and it will be logged on the Viloc-server. And you will get a message saying: your tool is there. Your competitor who owns the van won’t see that message, of course, but you will.”

Gestels: “If a lot of construction companies use the system, we basically develop a wireless network that covers the entire territory where we’re active. There’s a network effect that will make our service better the more users we have. Even if every tool maker decides to add tracking chips to their tools, they can never offer the blanket coverage that we can.”

According to Viloc estimations, enterprises can earn back their Viloc investment within one or two years. That’s a powerful sales pitch in itself, but there are also legal reasons to assume that Viloc technology will gain momentum in the next years, says Gestels. “Unions have fought track and trace for years. But then they started lobbying for mileage compensation for workers. And that gave employers the leverage to make a deal: we track your mileage to compensate you, but we’ll also use it to track you during working hours. That’s one thing that’s working for the track and trace industry right now. Another is that by law workers can only be exposed to certain conditions for a limited time – like vibrations from a pneumatic hammer. So as an employer, you need to measure vibrations. Our chip can monitor how long workers were exposed to certain pneumatic vibrations. For some workers, it’s important to monitor falling hazards – we are developing that now.”

Big data

The possibilities of the system don’t end with tools, Gestels says. Viloc is also very much a big data company: the combined data of all its customers should provide a valuable trove of business intelligence. And there’s probably applications that the team hasn’t even imagined yet. “Basically, from a certain point we just have coverage of the entire territory where we’re active. It will be a subnetwork beneath the cell phone network!” Okay, but isn’t a 100 percent coverage of an area and all people in it going to raise privacy issues eventually? Gestels thinks, and points to his cell phone. “At some point, yes, somebody might raise privacy issues. But don’t fool youself: the real tracking tool that invades your privacy is your smartphone.”

In a way, it’s pretty obvious that Viloc took a good look at the Apple business model: Viloc, too, is a walled garden, with hardware and software firmly under control of the company. And once you have 1000 drills Viloc’d, you won’t move to another supplier for your 1001th drill. Basically, you’re locked in.

Winner take all

Gestels: “That’s always the case with track and trace and ERP systems: changing providers is possible, but it’s often not practical.” He smiles at the Apple remark. “Apple, Facebook: these are all businesses where the winner takes all. We feel our market might be similar, yes. And long term, we want to be that winner. At this point, there’s no one who can offer what we can offer at our prices. Our entire process is patented. That should give us an important first mover advantage.”

But that’s the future. For now, Viloc is playing it by the book. More specifically ‘Crossing the Chasm’ by Geoffrey Moore. Viloc concentrates on one market – big, European construction companies with more than 50 employees and an average of 1000 tools. “We estimate the market at 500 such companies in Belgium, 800 in the Netherlands, and 3000 each in Germany, France and the UK.”

In his book, Moore warns young upstart companies that “it’s not a market if the customers don’t talk to each other”. In that sense, the construction business is an ideal beach head for an ambitous tech company, says Gestels: it’s an huge market with few, equally huge players. And they all talk to each other, if they’re not outright buying each other. Gestels: “Once you get a contract with a large construction company, you’re going international by default, because they’re almost all international players: Besix, Jan De Nul, BAM, Colas, you name it.”

The company finished two rounds of funding, for a total of 720 000 euros. The idea is to double in size this year, and to double in size again the year after. Viloc should be profitable by beginning of 2015, and break even by the end of 2015.

Sales team wanted

Viloc currently has two paying customers and about 150 000 euros of revenue. One of them is Belgian construction company IBS which has 1300 tools spread over different construction sites. Viloc also closed a proof of concept deal with VBG, a daughter of Colas and Bouygues – which in turn is the largest construction group in the world. Gestels estimates the pipeline at roughly a million euros – a conservative estimate. “We’re talking to thirty companies at this time, and actually, I’m the one doing all the talking, because we don’t have a sales rep yet. I’m in the middle of interviews for a sales team (laughs). We’ll need it.”

TL;DR

Viloc wants to track small tools on construction sites with a custom RFID tag and SAAS-solution. The company finished two rounds of funding for a total of 720 000 euro, and expects to break even in 2015 and to be profitable by the end of 2015. The company estimates its pipeline at 1 million euro.

www.viloc.eu

Know any other companies worth profiling? Got news on RFID?

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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