CEO Avianto Tiyo speaks about the challenges of running a hardware startup in Indonesia and what the company plans to do to secure the market
Running a hardware startup in Indonesia possesses its own challenges, which might explain why many startups in the country tend to focus more on app development.
“Running a hardware startup requires businesses to ‘double up’ its capital,” Avianto Tiyo, CEO of Eyro Digital Teknologi, told e27 in an interview one morning.
“The problem is that there is no venture capital firm in Indonesia that is approaching a massive number of hardware startups. Like Cubeacon for example, we have a small team, not because we don’t want to hire people, but when we are in production, we transform 40 per cent of our cash into goods, and we haven’t even talked about those who go into market traction and other things,” he further explained.
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Eyro Digital Teknologi is the industrial hardware IoT company behind Cubeacon, a range of iBeacon devices. The company’s service also includes Back-end-as-a-Service (BaaS), which allows developers to build a system for retail clients to build a scenario, tracking point, geofencing, and control every Beacon they own.
Cubeacon has three products: a transmitter-based ‘cube’ and ‘card’, and an upcoming Reader which will be sold internally via email to existing customers. The first two Cubeacon products are available exclusively through Lazada.
“Perhaps you have heard of RFID and NFC, which has been used by TransJakarta bus stations; the difference between Cubeacon and RFID/NFC is that the tech can be used massively. One reader can be used to read many devices in one go. RFID may be able to do what Cubeacon does, but it requires many environmental support mechanisms, such as big antennae (40 to 60 cm). The environment aspect becomes more expensive. Besides, Cubeacon has longer proximity, while RFID has to be in touch with the reader,” Tiyo added, further describing Cubeacon’s strength.
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Utilising Bluetooth technology, smartphones can also be used as a Cubeacon reader.
Lean as a cube
Cubeacon is based in Indonesia’s second biggest metropolitan, Surabaya, although the startup also has a pre-R&D team in Tokyo. Most of its products are being produced in its Shenzhen factory, though starting from its third product, the startup began manufacturing in Surabaya itself.
“The worst thing [about manufacturing your own hardware] is that it is exhausting,” Tiyo shared.
“Mass production requires manpower and machinery. You may be able to compile software anywhere you choose, but you can’t just compile hardware anywhere,” he added.
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Despite having no specific reason to choose Surabaya (other than the fact that Tiyo lived in the city), the startup is looking at the possibility to expand its team to Jakarta.
“We end up looking for talent in this city, and it’s really hard to persuade them to move to Jakarta. But in the future we are going to enter Jakarta, even if it is just our support and business development teams. We initially planned that for 2016, but I think we have lost it. So we’ll keep it for later,” Tiyo said.
As he had explained early on, Cubeacon is currently run by a small team of eight people, including its team in Tokyo. Tiyo admitted that the startup had laid off its employees in the past in order to push for better performance.
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“I used to work at the R&D division at Panasonic. The team was not very big in R&D, but they tend to be bigger in operations … I think this is something that works well for startups,” Tiyo said.
When asked about why he chose to quit working in the Japanese multinational electronics company and entered the startup scene, he held nothing back by answering, “This company is not going to last for long; soon it will collapse.”
“So I tried to build my own startups, although it’s not exactly a ‘startup’ as I am running it with a rather traditional mindset. Instead of becoming a big company in a short time, we try to rely on ourselves … Then I began to meet friends at the industry and one planned to transform his holdings company into many industries, one of them being a tech company. And I joined the company,” he recalled.
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Apart from its plan to expand the team to Jakarta in the the future, Cubeacon is hopeful about its next fundraising stage.
“We have been quiet from the media about our fundraisings,” Tiyo says. “But at the end of the month, if we pass the auditing process, hopefully we will enter the second round of our funding.”
The startup also plans to build a more integrated solution for the market.
“We have a better understanding of what the market wants, be it customer or enterprise. But we will focus on our friends in system integrator or developer community, though we will bridge them towards the end users, because Cubeacon has started to be known among enterprises. We always say that we don’t have the advantage to work in the field; our strength lies in building a product … But this is a more flexible approach for Indonesia. If we decide to go all the way as an end-to-end solution, we will end up exhausting ourselves,” he concluded.
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