John Horn, Ingenu

It was April 2017 and John Horn was in a typically rambunctious mood. Ingenu, the Internet of Things (IoT) startup he led, was running short of the funds he needed for international expansion. Horn, a former director at T-Mobile, was pressuring investors for the means to continue building a nationwide US network and a global business, providing connections for smart meters, tracking devices and similar objects transmitting small bursts of data. (See Ingenu Seeks Funding to Support Growth.)

But just a few weeks later, Horn and his buccaneering reputation were out. Financiers had balked at his plans, unconvinced by the investment returns they had seen. Ingenu was suddenly forced to backtrack. In March last year, it decided to give up building and operating its own US network. Nor, it said, would it keep making the access points that powered its technology.

Coming a few months after Horn’s departure, the shift was a clear sign of financial problems. Ingenu had raised $123.6 million since its founding as On-Ramp in 2008, according to Crunchbase. But investors seemed to have lost patience since the rebranding in 2015, when Horn took charge, as Ingenu struggled to bring in the commercial deals that would justify its escalating costs. The company’s very survival was at stake.

Buccaneer

John Horn, Ingenu’s former CEO, left the IoT startup after it ran into funding difficulties.

The responsibility for a rescue has fallen on the shoulders of two men. Ingenu Chairman Babak Razi had quickly stepped into the breach left by Horn, becoming interim CEO in July 2017. As the managing partner of Third Wave Ventures, Ingenu’s biggest investor, Razi clearly had a strong financial incentive to make the startup a success. One of his first moves was to recruit Alvaro Gazzolo, a former IoT consultant with experience at ThinkAnalytics and Digicel Group. Gazzolo was soon promoted to the position of chief commercial officer, sharing responsibility with Razi for the turnaround strategy.

Together, Razi and Gazzolo kicked off the search for a new operator of the US network. At the same time, they began looking for third-party equipment makers that would build gear for this network as well as for Ingenu partners in other countries. In his new role as chief commercial officer, Gazzolo would be the point man for these negotiations, the company revealed. But much else about Ingenu’s re-engineering remained unclear. No longer a network operator or equipment maker, Ingenu certainly appeared to be retreating to a role as a technology licensor.

Better than Sigfox?
Horn had been fond of telling anyone in earshot just how much better this technology was than either Sigfox or LoRa, its two main rivals in the market for low-power, wide-area networks (so-called LPWANs) based on unlicensed spectrum. Called RPMA (for random phase multiple access), the Ingenu technology would cover the same area as a Sigfox network with a fraction of the sites, he boasted. RPMA’s ability to support “downlink” communications — from the network to the sensors — was also far superior, Horn insisted. Testimonials from big customers helped spread the word. Oil giant Shell claimed an $87,000 investment in RPMA in Nigeria had saved it roughly $1 million in operating costs one year. (See Ingenu Revs Up IoT Rhetoric.)

The problem was not the technology but the commercial model. Now president and chief operating officer, Gazzolo says Ingenu at the time was too heavily reliant on sales of the access points it manufactured in San Diego, where it still lists headquarters. Outside the US, companies wanting to build an Ingenu network would acquire an exclusive license in return for a commitment to meet certain coverage obligations. “The business plan was very much an incentive to buy access points and there was not much emphasis on the platform and the revenues generated by end points,” says Gazzolo. “That was one of the biggest mistakes: You had a revenue spike from selling 1,000 access points and then no recurring revenues.” (See Ingenu Has New Boss in Alvaro Gazzolo.)

It was not the only mistake, however. Despite Horn’s bold claims about RPMA compared with Sigfox, Ingenu had clearly met the same problems as its French rival in the vast US market, running short of the funds needed to build a nationwide network. “They were trying to create a parallel network to AT&T and Verizon but there was not the capital behind that,” says Gazzolo. “They were hoping customers would support the implementation of the network through revenues, and that never happened.” (See Sigfox US Boss Is Out as Offices Close in Boston, San Francisco.)

Next page: Prized assets

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(Excerpt) Read more Here | 2019-02-05 18:19:12
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