I wanted to comment about my past visit to Intelleflex, the developer of extended capability RFID solutions.
We met with Richard Bravman, CEO, who had previously spent 26 years at Symbol Technologies (the leaders in barcode readers). In 2007, Symbol was acquired for Motorola for $4B . Richard is also on the board of Cognio (acquired by Cisco in 2007), Nomadix (acquired by Docomo) and Fiberlink.
He stressed how important is to understand the sale cycle in different industries and the impact in your business. For example, they only have one product which it took only 3 weeks to sell in the aviation industry (e.g., Boeing) versus 2 years in the utility industry. On average, it takes them 200 days. He also commented on how important is to go to the customers and not talk about RFID but about their business problem and added value.
He also mentioned that a typical P&L of a hardware platform startup should look like:
- Revenues: 100%
- Gross Margin: 60%
- SG&A: 22%
- R&D: 12%
- Operating Income: 26%
He also talked about the RFID industry and more specifically about Intelleflex. To make clear Intelleflex's competitive advantage, he explained the difference among the different types of RFID and its evolution:
- Bar codes (non RFID): Everybody knows them from the supermarkets. The problem is that they are too prone to human errors (e.g., a person forgets to scan one product out of 20).
- Passive (cheap): They started as a replacement of barcodes. They reflect the energy and they do not require line of sight (vs. bar codes). Additionally, it is possible to read multiple tags simultaneously. The main benefits are that they are cheap and work with non-LOS.
- Active (expensive): Both the reader and tag have 2 way radios (e.g., based on Wifi, like Aeroscout).
- BATTERY ASSISTED PASSIVE (Intelleflex solution). It is a passive tag that amplifies the reflected energy (+30dB). Some of the benefits are: a) Longer range (50meters for read/write) and more sensitivity; b) Price point close to passive; c) Battery only costs 10 cents and lasts 5 years in normal operations. Interestingly, at the end of the battery life, the information remains stored in the tag and it becomes a passive tag; d) Robust performance under difficult RF conditions (e.g., around metals&liquids); e) it can store up to 64Kbits of information; f) the information can be encrypted.
He also pointed out that the first wave of RFID failed because of 2 reasons (and the hype became a deceive):
- It commoditized and froze the market before there was a market. Customers did not want to pay 75 cents for a tag when everybody said that tags were going to cost 5 cents in the short term. It never happened
- Low cost contradicts reliability (e.g., in a supermarket). Only 97% of the time passive RFID works.
So far Intelleflex has received over $40M in funding used mainly to put all the functionalities in one chip with low power consumption (tag) and to develop readers.
Right now their main customers are in enterprise asset management, manufacturing work-in-progress, supply chains, parts maintenance or even casinos (chip tracking).
Interestinlgy, during my last semester I have done a project with the founders of Oat System, (including Venkat K. and Sanjay Sarma, the inventor of RFID ) which operate in the same industry, and have been recently acquired by Checkpoint.