EXCLUSIVE INTERVIEW

No More Napkin Plans: Q&A With Syncplicity CEO Leonard Chung

Syncplicity, a startup online data management company, announced last October the closing of its post-seed funding round for US$2.35 million. The company offers an automated, all-in-one service for online and offline file syncing, backup and sharing.

Silicon Valley-based True Ventures led a group of private investors in compiling the funding pool. Syncplicity will use the funds to accelerate enhancements and extend functionality of its on-line service to speed up the growth of its customer base.

In what Syncplicity CEO Leonard Chung describes as a more challenging investment environment, his company was one of few early-stage startups that won the endorsement of investors. He started his company in April 2007 and then recruited two cofounders.

“Syncplicity is an example of a really good entrepreneurial founder who started out attempting to raise a much larger round because of a perception that he needed to raise that much larger round to get the attention of Sand Hill Road,” Phil Black, cofounder of True Ventures, told the E-Commerce Times. “He didn’t need a $5 million round of capital at that moment, and his characteristics were a perfect fit with the True Venture model of raising a smaller round of capital to get launched and start the process of expanding its market.”

Funding Woes

Venture capitalists invested $7.1 billion in the third quarter of 2008, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters. That reflects a 7 percent decrease compared to the second quarter. Internet-specific companies received $1.1 billion in the third quarter, a 36 percent decline in dollars over the second quarter of 2008.

“The data for Q4 will be fairly telling. We had been on a $7 billion-per-quarter investment pace as an industry, and I have to assume that those numbers will be lower. The early, early stage investments are somewhat valuation insensitive, but prices will be generally lower,” explained Black.

In this harsher investment climate, Chung steered his young company through a rough course that other startups seeking funding failed in traversing. True Ventures invests in promising entrepreneurs at the earliest stages in the highest-growth segments of the technology market. The partners at True Ventures have started more than 10 companies as founders.

“We’re very focused on the team that we invest in and felt that Leonard Chung and his cofounders have what it takes to succeed in today’s entrepreneurial market. We believe Syncplicity is best positioned to emerge as the dominant player in this space,” stated Black.

The company has the ability to integrate with Web applications and mobile devices as well as adhere to open, Web-based standards and industry standard protocols, explained Black.

Niche View

Having successfully weathered a critical storm, Chung has an unusual view of the window for fundraising that has essentially frozen shut. That freeze makes the ability to secure funding today extraordinarily difficult. This is particularly true for young tech startups like his that are looking to close their Series A round, noted Black.

The E-Commerce Times discussed with Chung his timely perspective about the state of the fundraising environment and challenges he faced.

E-Commerce Times: How does your company’s vision differ from that of others in the data management services?

Leonard Chung:

The great need for businesses is having the data you need before you know you need it. Many large companies offer this for a high price. We are the only company to offer a complete turnkey and support solution for data management through the Web. We offer an open API (application programming interface), support for many platforms and accessibility. This is our Software as a Service (SaaS) delivery model.

ECT: How does your pricing structure compare?

Chung:

Most of our competition offers traditional backup with high operational expenses. We provide a cost savings to SMB and consumers through our cost-effective online service. Most businesses pay about $30,000 for a VPN (virtual private network) solution for all of this. We are 10 times less. We are still adjusting our pricing structure for services that will be added. We are growing our customer base and are adding features.

ECT: How was your quest for funding different than you expected from previous experiences in raising capital?

Chung:

We got through the very beginning of the economic downturn. Then our venture capital source renegotiated. This is an example of the golden rule of VC financing for startups. The man who’s got the money makes the rules. The typical process used to be that to get a business appraisal and use it to come to an agreement on the term sheet. Then the startup goes to due diligence and then gets the funding. Now what is happening is the VCs are renegotiating the evaluation in the due diligence stage. The startup has nothing to fall back on, so this new process leaves the company in a lurch with Series A funding for all or get nothing.

ECT: So you had trouble raising the amount of funding you needed because of the current economic downturn?

Chung:

We computed the value of our company based on a business model plus an industry multiplier. This multiplier is based on different evaluation models depending on the industry involved. A startup with no revenue yet is forced to rely on a guesstimate of future value to get new a multiplier. The lower the multiplier, the worse the money deal. The new formula leaves less money for the start-up with more ownership of the company held by the VC funding agency.

ECT: How is this situation impacting technology start-ups?

Chung:

Another factor is that the deal volume is not uniform. The so-called VC math has gone out of alignment over the last few years. As a result, VCs are not giving out money because SMBs are not taking the deal.

ECT: So you are saying that VCs are now presenting a new attitude toward technology start-ups?

Chung:

It used to be that SMBs would come with a plan written on a napkin to a meeting with a VC agency. Now VCs are demanding more preparation. For instance, VCs want more investors. As a result, entrepreneurs are increasingly going to different sources of funding, such as angel backers. Another change is that [because of the funding crunch] companies are starting without having full capacity in place. Instead, they use a pay-as-you-go model. For instance, we started Syncplicity by renting storage and servers as we go.

ECT: What is the impact in terms of dollars and cents?

Chung:

This change in the VC funding environment is leading to different economics. It used to cost $4 million to launch a company. Now you can do it on hundreds of thousands of dollars because you don’t have to buy everything. A lot of VCs do well with their first funding round, maybe $100 million. Each partner needs $33 million to bring to the table. But for the second round of funding, SMBs expand, and this forces up the amount each partner has to kick in.

ECT: You mentioned earlier that start-ups are not getting what they need from VC funding or are rejecting the funding offer due to its high stake. What other options do start-ups have?

Chung:

I am seeing a lot of people taking initial money from angels and friends and family. VCs take a huge chunk of a company. Angels require a smaller amount of money at lower equity. Angels are moving into that spot and doing more than VCs.

ECT: So you took Syncplicity in a different funding direction?

Chung:

We took money from True Ventures in the early stages. The company makes money from management fees. The difference is that VCs tend to push for more money.

ECT: Where do you see this economic downturn going in terms of the VC funding space?

Chung:

I’m seeing entrepreneurs being more savvy about from where they take money. VCs are now only one of several funding sources. I am also seeing VCs not providing money initially but instead waiting for series B and C funding rounds.

Clarifying Round

The E-Commerce Times asked True Ventures’s Black to comment on the VC funding market. Black agreed that the angel funding developments could play a key role.

“I think the more interesting data from our standpoint is the angel market. That market will be significantly impacted. Not only are individual angels feeling poorer, there is an added concern about whether or not the angel-funded company will get that next institutional round,” he said.

For instance, True Ventures continues to invest alongside angel investors over 75 percent of the time. His company removes the financing risk in the early stage for those angel investors, he explained.

As for new hurdles that technology startups might face, Black sees none in the actual process. But that process will be elongated, he said.

The assumptions about revenue generation and customer acquisition will be more detailed and thoroughly examined. Entrepreneurs may opt to bootstrap or raise lower capital to get started. This will bypass the large institutional rounds and requirements, he concluded.

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EXCLUSIVE INTERVIEW

Leapwork CEO: No-Code Platforms Democratize Testing Automation

DevOps

Using no-code technology instead of dedicated code programmers could become the future of software development in retail marketing and related software-building industries. But it is not a one-size-fits-all solution for all use cases.

No-code, an approach to creating software applications that require little in the way of programming skills, lets workers within a business create an application without formal programming knowledge or training in any particular programming language.

In a nutshell, no-code platforms enable users to create software applications such as online forms or even a fully functional website or add functionality to an existing site or app.

It is important to clarify that numerous different applications of no-code platforms exist, according to Christian Brink Frederiksen, CEO of Leapwork, a global provider of automation software.

No-code platforms are fairly new. So companies planning to adopt a no-code approach must thoroughly vet and test no-code tools on the market to make sure that the selected products live up to their claims.

“A lot of platforms out there today claim to be but are not truly no-code at all, or lack the power required to do what they say they’ll do without additional coding,” he told TechNewsWorld.

Leapwork developed a test automation product that is accessible and easy to maintain. Its secret sauce provides rapid results at a lower cost, requiring fewer specialist resources than traditional test automation approaches.

“At Leapwork, we have democratized automation with our completely visual, no-code test automation platform that makes it easy for testers and everyday business users to create, maintain, and scale automated software tests across any kind of technology,” noted Frederiksen. That enables enterprises to adopt and scale automation faster.

Security Remains Top Concern

An obvious inquiry about no-code platforms should consider how no-code technology addresses security problems that plague both proprietary and open-source programming.

If well designed, no-code platforms can be safe and secure, Frederiksen said. When manually coding from scratch, it is easy to introduce bugs and vulnerabilities that hackers can exploit.

“Because the no-code platforms are designed to automate the creation of an app or perform a function in an automated way, they are inherently much more consistent,” he explained.

Of course, the no-code platform itself needs to be secure. Before choosing a solution, organizations should conduct a thorough security audit and opt for a solution that is ISO-27001 and SOC-2 compliant, he recommended.

Coding Pros and Non-Pros Alike

No-code platforms are not primarily just for programmers or for IT coders to use in-house in lieu of outsourced software developers. Both use cases come into play successfully.

No-code platforms are certainly useful for IT coders and programmers, but the primary value of a no-code test platform is to extend the capability to create and test applications to people who are not trained as software developers, offered Frederiksen.

For example, Leapwork makes it simple for testers and everyday business users to set up and maintain test automation at scale. This empowers quality assurance teams to experience shorter test cycles and immediate return on investment.

Advantages for DevOps

Speeding up testing is a huge benefit, noted Frederiksen, because hand-coding creates a big bottleneck, even for an experienced DevOps team. While testers are extremely skilled at designing tests and understanding the underlying complexity of software, they are not traditionally trained to code.

He offered a good example.

Claus Topholt, Leapwork’s co-founder and chief product officer, worked at an investment bank before joining Frederiksen to found Leapwork in 2015. Testing was vital because the bank depended on high-volume rapid trading. If software quality was poor, it could literally cause the institution to go bankrupt.

“Claus decided to build a simplified programming language to build tests so that the testers could set them up, speeding up the process. But he quickly discovered that testing and programming are totally different domains, and, frankly, it’s not fair to force testers, who are already highly skilled, to learn the extremely complicated skill of programming,” explained Frederiksen.

During a discussion with the testing team, Claus and his colleagues started to use a whiteboard to draw a flow chart. Everyone immediately understood what it meant.

Lesson Learned

The flow chart was such a simple, clear way of expressing something complicated. So, it was obvious this model was the way forward for enabling testers to create their own sophisticated tests without coding.

“The lesson was, if you give testers something as intuitive as a flow chart to create automated tests, you’ll save a lot of time and remove bottlenecks, as you’re not relying on the time and expertise of developers,” said Frederiksen.

Claus left the investment bank to found Leapwork and created what became a no-code platform. They built a visual language that enables business users to automate testing using a flowchart model.

Leapwork co-founders Claus Topholt and Christian Brink Frederiksen

Leapwork CPO and Co-Founder Claus Topholt (L) | Leapwork CEO and Co-Founder Christian Brink Frederiksen (Image Credit: Leapwork)


“It democratizes automation because it is so easy for non-coders to use and maintain, which in turn empowers businesses to scale their automation efforts and accelerate the development process,” Frederiksen said.

No-Code Q&A

Headquartered in Copenhagen, Denmark, last year Leapwork raised $62 million in the largest-ever Series B funding round in Danish history. The round was co-led by KKR and Salesforce Ventures.

Leapwork is used by Global 2000 companies — including NASA, Mercedes-Benz, and PayPal — for robotic process automation, test automation and application monitoring.

We asked Frederiksen to reveal more details about the inner workings of the no-code solution.

TechNewsWorld: How can companies add automation into their testing processes?

Christian Brink Frederiksen: One way is to incorporate automated tests as an integral part of moving from one stage of the release process to another.

For example, when a developer checks in code to the development server, a series of automated tests should be triggered as part of the same process that generates the build.

These regression tests can identify big bugs early, so the developer can fix them quickly, while the code is still fresh in the developer’s mind.

Then, as the code moves to test and, ultimately, production, again, a series of automated tests should be triggered: extensive regression testing, verification of its visual appearance, performance, and so on.

It is critical that business users — like a business analyst or a tester in a QA department — have the ability to implement this automation. That is where no-code is so vital.

How does no-code differ from low-code solutions?

Frederiksen: No-code truly involves no code at all. If you want non-developers to use the platform, then you need it to be no-code. Low code can speed up development, but you will still need someone with developer skills to use it.

Which is more beneficial for enterprise and DevOps, no-code or low-code?

Frederiksen: No-code empowers enterprises and DevOps teams to implement automation at scale, ultimately increasing software delivery performance. Low-code solutions still require you to know how to code in order to maintain software.

No-code allows anyone to automate workflows. Using no-code, developers and technically skilled workers can focus on high-value tasks, and QA professionals such as testers can automate and maintain testing quickly and easily.

Surveys have shown that testing is what slows down the development process the most. If you want to have a serious impact on DevOps, you should really consider using a no-code platform.

Does no-code pose a threat to software and website developers?

Frederiksen: I would argue quite the opposite. No-code has the potential to open up new opportunities for developers. More software is being built and customized than ever before, and yet we are in the midst of an acute developer shortage with 64% of companies experiencing a shortage of software engineers.

Rather than relying on code-based approaches and forcing businesses to search for talent externally, no-code allows companies to harness their existing resources to build and test software. Technical resources are then free to focus on more fulfilling, high-value work, such as accelerating innovation and digital transformation.

Where do you see no-code technology going?

Frederiksen: AI is a powerful technology, but its short-term impacts are slightly overhyped. We believe the challenge limiting the capabilities of artificial intelligence today is human-to-AI communication.

It should be possible to tell a computer what it is you want it to do without having to explain in any technical detail how to do it. Essentially, we need to be able to give an AI the requirements for a task, and then the AI can handle the rest.

We have made a lot of progress on this problem at Leapwork. There is a lot more work to be done.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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EXCLUSIVE INTERVIEW

Unresolved Conflicts Slow eSIM Upgrade Path to Better IoT Security

IoT internet of things

Misconceptions about embedded SIM cards (eSIMs) for IoT are keeping companies from adopting this new technology. That is detrimental, as eSIMs are crucial for patching and successful secure IoT deployment.

eSIMs are slowly replacing standard SIMs in IoT devices and products such as smartwatches. They are also making their way into the machine-to-machine world.

The rollout, however, is slowed by unresolved conflicts between competing technical standards and tightened restrictions on data management regulations globally. Despite the need for better IoT device security, clearing the adoption roadblocks is less than likely anytime soon.

Machine-to-machine, or M2M, is a broad label that can be used to describe any technology that enables networked devices to exchange information and perform actions without the manual assistance of humans.

Controversial Technology

Led mostly by the automotive and transportation industries, eSIMS also contribute to tracking functions in health care, smart mobility, utilities, and other sectors. But eSIM technology so far remains controversial, noted Noam Lando, CEO and co-founder of global connectivity provider Webbing.

Webbing provides an enterprise-grade solution for Fortune 500 and IoT/M2M companies, as well as an embedded solution for various manufacturers across the globe. The deployment is part of a phasing process to ensure a secured and continuous internet connection for all devices, no matter where they are in the world.

Lando said that “eSIM technology is a game-changer in telecom. It completely digitizes the cellular subscription provisioning process. As with any technology that is disruptive, there are a lot of debates and discussions around it to better understand its benefits, dispel misconceptions, and its impact on accelerating IoT use cases.”

Why all the Fuss?

We asked Lando to go below the circuit boards to reveal why eSIM technology is creating such an industry-wide furor.

TechNewsWorld: Is the technology upgrade to eSIMS worth the ongoing unrest?

Noam Lando: eSIM technology promises the establishment and maintenance of cost-effective connectivity that is accessible anywhere in the world regardless of where the device is manufactured or deployed as well as ultimate control. With the promise of eSIM technology, enterprises can scale their IoT deployments globally, reduce total ownership and business process management costs, and reduce time to market.

This creates great hype, especially when you have device makers such as Apple, Microsoft, and Google including eSIM as a standard feature in their new devices.

I sense a “BUT” here. Always there seems to be a BUT in the works. So what is the big BUT surrounding eSIM development?

Lando: However, when companies look deeper into implementing eSIM technology, they realize there are two standards: consumer and machine-to-machine (M2M). They are not sure which standard to use and often realize the implementation of eSIM technology is not as simple for their IoT devices as it is for smartphones, laptops, and tablets.

So, there are a lot of discussions around the two standards and their pros and cons, especially around M2M.

What are the drawbacks to standard SIMs?

Lando: For traditional SIM cards, carrier provisioning is done at the manufacturing level. They can host only one profile and are not reprogrammable. That is why you need a new SIM when switching cellular providers. This is not ideal for IoT deployments. Especially global ones.

Noam Lando, CEO and co-founder Webbing
Noam Lando, CEO at Webbing

Once the SIM has been implemented, you have vendor lock-in. With thousands and even millions of devices in an IoT deployment, it is impractical to change SIM cards when you want to change wireless carriers. It requires a site visit, and the card may be physically difficult to access.

In addition, issues surround complying with the global trend to enforce regulatory requirements on communication services and data management. These include restrictions on data leaving the country and global enterprises needing localized deployments with local wireless carriers.

This requires warehousing, managing, and deploying a number of wireless carrier-specific product SKUs which drive up production and logistics costs.

The attraction to eSIMs seems obvious. What are the main benefits?

Lando: eSIM technology offers a robust, scalable solution to the limitations of the traditional SIM. What makes an eSIM unique is the technological advancements made to the UICC, the software of the SIM, which is now called the eUICC.

That new technology follows a new standard developed by the GSMA. It is remotely programmable and reprogrammable, can host multiple cellular carrier subscriptions, and makes the selection, contracting, and onboarding of cellular providers easier with over-the-air (OTA) provisioning.

I sense another BUT in the works here. What are the unresolved issues with eSIM replacements?

Lando: Consumer and M2M are implemented differently. The consumer standard targets consumer devices like mobile phones, tablets and laptops, wearables, and other IoT devices with an end-user interactive environment. It is secure by design, can host multiple wireless carrier profiles, and facilitates carrier swaps. However, it is designed for private consumer use.

How suitable for other uses are eSIMs?

Lando: The M2M standard targets industrial M2M and IoT devices such as cars, water meters, trackers, smart factories, and other components used in an industrial, non-end-user interactive environment.

The M2M eSIM standard is also secure by design. It facilitates carrier migration and, in theory, offers remote centralized management and provisioning of carrier profiles. However, it isn’t as cut and dry as it seems.

That said, why is upgrading not so promising yet?

Lando: M2M eSIM implementation is cumbersome, time-intensive, and has long capital investment cycles. It requires collaboration between the enterprise, eSIM manufacturers, and the wireless carrier throughout the manufacturing process for implementation.

What are the biggest misconceptions about eSIMs for IoT?

Lando: The biggest misconception about eSIM for IoT is that the benefits it provides to consumer devices can be applied to IoT. Enterprises quickly realize they must implement a different standard for IoT/M2M, which requires an SM-DP (Subscription Manager – Data Preparation) and SM-SR (Subscription Manager – Secure Routing) to provision and remotely manage carrier subscriptions. The M2M standard is cumbersome, requiring a substantial investment of funds and time to orchestrate the implementation of wireless carriers.

Where do you see the battle between competing standards headed?

Lando: When looking at mobile data connectivity, there is no major difference between M2M and IoT device needs when it comes to Remote SIM Provisioning. If anything, the benefits of eSIM (eUICC) technology are greater for M2M devices since they usually have a longer life cycle, and the demand for changing a carrier at some point is high.

This could be for commercial or technical reasons. Therefore, M2M devices are also likely to get eSIMs instead of standard SIMs.

Developers favor eSIMs to solve IoT and embedded firmware patch issues. eSIM hardware and eUICC components are certified according to the GSMA’s Security Accreditation Scheme (SAS). This guarantees a very high level of security. Furthermore, cellular connectivity is secure by design: data is encrypted, and users are securely identified.

What are the most critical problems facing IoT and embedded technologies?

Lando: The most critical problem facing IoT deployments is carrier lock-in and dealing with different global regulatory requirements. In such cases, enterprises need local deployments and local wireless carriers. Enterprises with global deployment need the flexibility to change carriers easily and efficiently to meet local regulations.

Why are companies not proactively adopting eSIM technology?

Lando: From our experience, companies want the promise of eSIM technology, but the current ecosystem fails to provide it. The two eSIM standards disregard enterprises’ need to manage their fleet of devices.

On one hand, enterprise-based devices such as mobile phones, laptops, tablets, scanners, and the like fall under the consumer standard. So companies don’t have full control over the installation and management of carrier profiles with centralized eSIM management. The consumer standard requires the end-user with the device in their hand to consent to install carrier profiles.

Meanwhile, the M2M standard for IoT deployments are cumbersome. They require a substantial investment of funds and time to orchestrate the implementation of wireless carriers.

It also limits customer choice due to a complicated implementation to switch between carriers.

This is part of the reason we developed WebbingCTRL, an eSIM, with a management platform, that can easily and remotely be configured as any wireless carrier’s profile, paving the way for the adoption of eSIM technology in the IoT space.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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