Mike Flanigan [CEO, Seasats]: Accelerators, Rolling SAFEs and Corporate Rounds

Welcome to another episode of the technical founder, the show where I meet with engineering founders and we deconstruct and demystify the science and art of building technology businesses. My guest today is Mike Flanigan. Mike is the CEO of Seasats - an autonomous aquatic drone company that manufactures drones used for scientific, commercial, and military use. When we first met, Mike was in Bahrain for the Navy's Digital Horizon event. In addition to a wonderful origin story and some technical topics, in this episode we also cover some serious territory specific to fundraising. Seasats has raised money through accelerators, rolling SAFEs and a $10M corporate round with L3 Harris. I had a blast talking with Mike and cannot wait to see what the SeaSats team accomplishes in the coming years!

Mike Flanigan [CEO, SeaSats]: Accelerators, Rolling SAFEs and Corporate Rounds

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Highlights

[10:00] The beginning of autonomous boats

[35:00] Techstars

[48:00] Rolling SAFEs

[55:00] Corporate rounds

Transcript (Provided by Otter.AI)

SUMMARY KEYWORDS

people, company, accelerator, money, techstars, big, autonomous, talking, customer, boat, business, project, engineering, ocean, build, product, bit, super, investors, sensor

SPEAKERS

Announcer, Ryan Rosztoczy, Mike Flanigan

Announcer  00:12

Welcome to the technical founder

Ryan Rosztoczy  00:26

Hello again, this is your host Ryan Rosztoczy. Welcome to another episode of the technical founder, the show where I meet with tech founders to deconstruct and demystify the science and art of building technology businesses. My guest today is Mike Flanagan, Mike's the CEO of sea sets, an autonomous aquatic drone company that manufactures drones used for scientific, commercial and military use. If autonomous ocean drones aren't enough for you, in this episode, we cover some serious territory specific to fundraising. CSAT has raised money through accelerators, rolling safes, and a $10 million corporate round with L three, Harris. Without further ado, let's hop in. Here. Hey, awesome to have you on the show.

Mike Flanigan  01:16

Thanks. Thanks. Yeah. Glad glad to be on here. Yeah, kicking off.

Ryan Rosztoczy  01:21

So one thing I just wanted to mention at the beginning, we can give some context for the audience. But last time I talked to you, you you were in Bahrain.

Mike Flanigan  01:31

Yeah, that. Yeah, man. It is. It's funny that that is like a whole, like whole another roller feels like so much has happened with like Christmas and the holidays in between. But yeah, that was last when we first assumed I was in a hotel or mountain Bahrain.

Ryan Rosztoczy  01:46

Yeah. So what were you there for?

Mike Flanigan  01:50

So out there for the Navy was running an exercise? That's like, yeah, you can look it up online. It's called Digital horizon. And they were hosting an event where they're really trying to up their game and unmanned systems and robotics and AI. So they invented a whole bunch of different it was like 10, to 15, different robotics, all in the maritime space. So both companies, one or two drones, aerial vehicles, and then some AI companies ought to go out there and help them really kind of push forward, push further use of those tools. And like their main focus for that was maritime domain awareness, which, to the commercial world is very similar to like the illegal unregulated fishing kind of mission set. Hmm.

Ryan Rosztoczy  02:35

Okay. Okay. So trying to basically just track what's going on in the, in the oceans out there, essentially,

Mike Flanigan  02:43

exactly, which makes sense for robotics, if you're always trying to take up the stuff that I would say, just like the 70% time, it's the time where humans are out there waiting. And that is just as expensive as the other stuff and way more boring. And, essentially, you're cutting out all this cost. So like for coastguard ships, or for the Navy, or for a lot of stuff, you're just out there patrolling in the ocean, and you're keeping all these humans, you know, fed happy, healthy, safe. In steel boats. It's pretty expensive. It's pretty difficult, and you're keeping people away from their families. So a much better model kind of of the future is like, hey, you've got all these drones out there. They're kind of seeing what's going on what's normal. And then if something bad happens, it's like, hey, some, either someone's fishing where they shouldn't be or some boat was traveling into someone's waters, where they shouldn't be anything that yeah, there's a lot going on in the world of people getting another waterways and creating global tension. So if you can, that was their hope. It's like, Hey, can we have more patrols understand what's happening in these water waterways? Yeah, take advantage of droughts.

Ryan Rosztoczy  03:50

That is a mind blowing thing to think about this, like the 70% time yeah, what during the sort of boring, uneventful periods, you still need something terrifying. It's boring and uneventful. Yeah, I love that.

Mike Flanigan  04:06

Yeah, it's like the you know, I can like Hollywood like bank robbery movies. I'm sure there's a scene like this in Ocean's 11 or something. When like, there's a bank of 20 CCTV cameras and some security guard is like supposed to be watching them all. And then you see from the like, over the shoulder video, you see like in the top guy go through, but then it like cuts to the fake video feed. It's like, Oh, if he'd been looking there who would have known? And it's like, okay, that's the case for like, why you need you know, AI running, like on 20 different video streams all at once. Just like it doesn't get tired. It doesn't need to take a sip of coffee. It doesn't need to go to the bathroom.

Ryan Rosztoczy  04:41

I love it. Yeah, he took a bite of his doughnut right when George Clooney walks in the door. I don't want to go too deep here, but just out of curiosity, how much doubt all of the different focuses you just talked about robotics AI? What If you guys focus, do you have one or you like an integrated platform? What? What is CSAT?

Mike Flanigan  05:05

Good question. So for us, really, we focus on being a platform. So we try to carry mature sensors out into the ocean, we will love working with sensor companies that already have because that means that hit customers exist, like, and when I say sensor companies, I'm talking about, like a water quality sensor like a CTD, or ICA these multiparameter songs that measure like turbidity, or acidity pH like all these different parameters, and is basically Hey, we can go carry that out into the ocean, or like for the Navy, it's like an AI s node, something as simple as that. It's just an antenna. It's collecting traffic on who's in the area who's doing what cameras, basically any kind of mature existing sensor, we can stick those on use this as a truck to carry it out into the ocean and put it where it needs to be.

Ryan Rosztoczy  05:56

Okay, awesome. And so you have the drone, and then I assume some software that's driving it, essentially, or?

Mike Flanigan  06:03

Yeah, that's a great. So I guess the first thing I said was like, Okay, how do you give a simple answer, it's like, a truck. That's the difficult answer, the more encompassing answer that also captures the second bit of our strategy is we do do a bit of everything. The reason we do that is because customers really like particularly in our field, need vertically integrated solutions that, hey, I want something that solves my problem. They're like, Oh, I don't want another there. Because it's so easy. There's so many different sensors that they can go to and be like, Oh, I can buy this sensor. And I was like, how do you get it? They're like, Okay, now you buy some other thing. And then you need to put them together. And then it's like, who provides the data? It's like, oh, well, you know, go get an account with iridium, the satellite provider, and then great, now you've got to go into your email. Okay, cool. Now I need a data scientist or someone to create a spreadsheet, well, a spreadsheet kind of sucks, can't we have something nice. And so for us, it's really important, like, we always try to do things end to end. So we do. We do both side software, we do communications, we do. Like front end software, like database stuff, we do kind of a dizzying amount, like we do way too wide of a tech stack. But at the end of the day, when it works, like when we've finished a payload integration, when someone's something's like in our run of the mill, library, like earlier today, we had a customer that was like looking to buy some vehicles and go do a mission. And we're okay, we can't, you know, do production timelines, we can't get your new vehicle set. But you can learn this other on we've got another one near you. And you we've already run that pillar that you want to do, like, can you just plug it in? someone's like, how long is that gonna take to integrate some sort of like, man, really, it's like, maybe two hours, like, you know, it's like, screws and cables that you plug in. Like, it's pretty straightforward. We've done it before. So that is kind of like the Grail when it's like, plug and play fast. super straightforward.

Ryan Rosztoczy  07:50

Yeah. So it's like, you've got this platform you can accomplish, like, whatever objectives your clients need to. And then with everything around it, you're sort of building like the user interface, like making sure that clients can use it to accomplish what they need to.

Mike Flanigan  08:05

Yeah, that's like, our iPhones, like simple like, definitely not. That's a crazy complicated. So much engineering on iPhone. But is it simple for user? Like, yeah, totally. It's like super intuitive. And so that's, it's like, okay, which striving towards that sort of thing. I have a lot of complexity hidden away under there.

Ryan Rosztoczy  08:25

Yeah. Well, I'm looking at I'm actually looking at the picture from the one of the articles, I've seen a few that came out from that digital horizon. And you guys totally scored, because right in the front, it's the sea SATs drone, and then it's all the other drones like around it.

Mike Flanigan  08:40

Thankfully, I'm lucky with that quarter shot.

Ryan Rosztoczy  08:42

Nailed it. Sure. I'm sure it was luck. I mean, it looks extremely simple. It's like a very small, almost like a canoe with solar panels on top and a little motor. Compared to other things in there. At least. Yeah, very sleek. So love a focus on that.

Mike Flanigan  09:01

Thanks. Yeah, low. That was definitely a distinguisher. I mean, I guess, to clarify, or maybe to like to, like, take away first I don't know if that's good strategy. But there's a lot of vehicles out there that could do tons of missions, super capable platforms doing crazy stuff. But a lot of those are just like, slightly apples to oranges, where it's like, okay, you need like order a huge crane. You need a crew of like eight people to set that thing up. That thing cost many millions of dollars like ours, right? Hey, this is like, you know, orders of magnitude, maybe not orders, but one order of magnitude and a half or so cheaper than some of this. And it's like, pretty much you have one person, maybe like two is convenient, but like Man, I've gotten run loads of missions by myself. So, yeah, small and low Logistics is what we go after. Yeah, I

Ryan Rosztoczy  09:49

love it. Okay, well, we'll come back to some some interesting technical topics and we'll go deeper there. But before we do, I would like to just go back into your background and Little bit talk about how she sets came to be how you ended up there. I think it's an awesome story. So maybe you could just start from what you see as the beginning. And we could go from there.

Mike Flanigan  10:12

Thanks. Yeah. Well, thanks. Thanks for the comment of it being a core story. I agree. It's, I think I feel pretty lucky. Like, man, it's been been a cool path. I mean, if I was to go back far enough, it's really like tree houses and catapults and like having parents that are like willing to put up with that sort of mayhem. I think my dad always kind of joked where he was like, I don't, you know, they're like, normal, stiff parents and like preventing us from like, going and getting in trouble with like, drugs or drinking. But if it was like, Oh, you want to go to Home Depot, like, Oh, you want some two by fours? Or you want to like, play around in the dirt pit? They're super hands off. They're like, Yeah, go for it. Like, we know nothing about that. But have fun. Drill. Sure. Like, it was like pretty, pretty, very supporting parents on that front. But that, I mean, probably the first thing that really kicked this stuff off was a project back in for me, it was late high school and early college for some of the guys that was working with us more. Most of them are in college, the oldest guy Max was like, probably, I think just finishing college, a project that became known as scout or Scout transatlantic. And that was basically an early autonomous boat, not so different from our current ones. And the goal was to grow across the Atlantic. So it's like a robotic boat solar panels, supposed to go and drive itself across the Atlantic Ocean.

Ryan Rosztoczy  11:30

While you're in high school, and you guys did that.

Mike Flanigan  11:33

Yeah, I was. I was definitely the like, whippersnapper of the crew. Yeah. I was like, younger and was like, Hey, guys, like, you know, this is kind of like, my older brother and Max and some guys that are a little bit older than men. We all knew each other growing up, and I was like best friends, Dylan, but who is kind of the brain. his brainchild, I guess was what it was, it's like he had done first robotics. And Max's had an internship, I think in Spain or summer job in Spain, his dad was working internationally. And so they were joking in Max's garage about a message in a bottle. There's like a smart message in the bottle. Like, you know, the odds of the messenger bot are really low. And then it got turned into like an autonomous boat. And I was like, Oh, that'll be done. Don't think I could do that. Like, I think the initial thought was like, it'd be like, maybe a two month project, like a summer project. And it turned into like a two and a half year project. And like a lot of people and a lot of a lot of stuff, multiple launch attempts. An enormous amount of warning. Yeah, that that probably do it. Life changing.

Ryan Rosztoczy  12:34

Did you get the message across the water?

Mike Flanigan  12:37

It didn't make it unfortunately, they made it It made it about admitted 1300 miles, I think was the final count. And it was out there for like two and a half. Yeah. But it was cool. It stirred up a ton of excitement because it had a live tracking page that would update every 20 minutes. And so all these people were following it and cheering it on. And it was it was like a whole hype thing about this boat just venturing out there by itself in the ocean. Yeah. Oh, cool.

Ryan Rosztoczy  13:05

It's a shame that we probably won't be able to do that with any of the Navy uses.

Mike Flanigan  13:10

Well, yeah, now the navy boats, boats for ourselves and for commercial purposes, too. And we definitely have ocean crossings on our near horizon. Just because there's so much fun. It's like, yeah, we're basically gonna repeat Skyrim Okay, here's the professional take at it.

Ryan Rosztoczy  13:25

I've got this image in my mind of you're like the youngest one on the team. And really, your autonomous transatlantic boat is a canoe and you're you're under a solar panel, and you pop out once away from Cheyenne.

Mike Flanigan  13:39

We make a lot of jokes about how, yeah, about how it'd be so much easier just to have a person. And can we just do this a person is like, oh, yeah, that would really solve that problem pretty fast. Like people are so incredibly skilled.

Ryan Rosztoczy  13:54

Man, that's great. Awesome. I love it. So I mean, you get into I mean, even Wow, it's not like even gotten to robotics. It's like you actually get into autonomous ocean vehicles at that age.

Mike Flanigan  14:06

Yeah. And it was before. I mean, so that was back. I think the project started in 2007. And then launched eventually, the final launch in 2012. Maybe. And in that time, like in for a couple years after, if you Googled autonomous boat scout was like the number one search result. And that wasn't like doing SEO optimization. I was like, No, we didn't. We didn't know anything about that. But it just was like the only autonomous boat that had news coverage that kind of exists. I'm sure like, Navy was doing DARPA style projects hidden away somewhere. But kind of this field was starting around that time. Like there's this revolutionary change in technology of like, satellite communications, getting cheaper circuit boards, batteries, like everything was changing, and becoming are suddenly a lot of people realize, like, Hey, this is possible. I mean, 2010 era, I think liquid robotics. The Wave Glider was founded in 2009. They were bought Boeing in 2016, that's kind of a foundational product in this space sale drone. I forget if they're 2011 or 2010. But they were founded right around then they also are probably the biggest most public one in the space. Now. They're San Francisco company that's raised heaps and heaps of money. They make these big orange sailboats that are autonomous. Yeah, this is it's kind of an exciting, exciting that we got into it so early. And it's just the right time.

Ryan Rosztoczy  15:27

One timing. I mean, yeah, that's such an it's such an interesting thing. Have you I'm reading The Rise and Fall of American growth right now. It's a really cool book, like pretty dense, but goes through the history 1800s 1900s, and sort of makes a case for why and how American growth happened and what will happen in the future. But one thing that it just makes super clear, what you're alluding to, which I have always taken for granted, is just how big human impact the price of technology decreasing over time matters. Like the like the difference between the invention in the car and the actual adoption of the car, right, like, decades, but just just fascinating how it's actually like, do these things become usable for non mission critical one off uses, like I think the Telegraph's a great example and never got cheap enough to become widely adopted. But so for you guys to come into this era, when all this smart sensors, the technology, it's all becoming doable. Yeah, amazing.

Mike Flanigan  16:32

And it changes. I mean, you see it, the rate of change then accelerates, because then the use case like human ingenuity takes off, because now suddenly, it's not just in a couple of labs where the cost of failure is high. It's like, again, this technology democratized now into the hands of hundreds of 1000s or millions of people. And then suddenly, people are doing crazy things with it that the inventors had no idea. And yeah, things get really exciting.

Ryan Rosztoczy  16:58

Yeah, well, I mean, yeah, seriously, I even just look at just you guys like what you're doing. It's not like you're just working with the Navy on projects, right? Like, you're out there measuring ocean helping you. I mean, he tells me all the stuff. Oh, my gosh, I

Mike Flanigan  17:11

mean, we started the very way I got started with this project, besides knowing everyone, and like, having worked on a tajbakhsh before, but when CSAT was kind of spinning up in its earliest days, actually wasn't involved in the first few months. It was like, I'd worked with the guys on this like side engineering shop that was going on, but really, like I worked in federally, but wasn't by name associated with it. And the first thing I did was I started doing some customer discovery calls for them, because I was taking a class that was like, the only entrepreneurship class I've taken. And I was like, do customer discovery calls. I was like, Okay, I'm doing this. I was like, Hey, guys, I think like, how do you feel if I do this for you guys, too, for the Scout project? Sounds like no one's doing this. Yeah, sure. Okay, go for it. Like, no wonder that didn't shed their chair, spend your time, like calling people to everyone. But it was fascinating. I was calling the people that were available. The phone numbers that were available, were all the scientific groups. It was like the people who had science articles about using Wave gliders to go do science missions. And so they're the ones that email and call and then get on phone calls with. And one called just this like price of technology thing. There's a guy who's talking to who is like, yeah, this would be awesome. Like, we've tried to build these ourselves. Like we were, they had bought these other vehicles that are in the space. And here's like, you know, like, this is awesome. But frankly, like, I don't, I don't want to be discouraging, but I just don't think there's a very big market for it. But besides like us, and maybe a couple others, like there's just not that many people that need these things. And I was like, oh, yeah, okay. And he was like, but like, how much would you sell it for? Like, I don't know, retarding like 70k. And he was like, oh, oh, wow. Okay, that would be game changing. He was like, then actually, all these other smaller like these, you know, like all these, like, organizations that are slightly smarter than us. He's like, That's within all their budgets. So now, like, suddenly, there's like 10 times more users, just by dropping the price from like, 250k, which is like, kind of comparable product before the 70k. Like, cut the price in half, or, you know, yeah, more. And then like, oh, the use case, like in the span of a conversation, like from one line to the next. He was like, oh, man, that's sort of a game changing. But that's super exciting.

Ryan Rosztoczy  19:23

I love that. And that's, it's the kind of stuff you only get from customer research, like and talking to people. And it's a it's a little bit serendipitous, right, like you got to be talking to somebody and that hits their mind and they bring it up and suddenly it's a big unlock. There's an example. Shoot, I can't remember the company or product, but this company was selling their product and they were trying to sell it through wedding registries. They thought it'd be this huge unlock for them. It just made perfect sense. It was the exact right market and they get in all the channels and get it going they get nothing. Instead of give going up and being like, Oh, this wasn't the right channel for us. They just started talking with everybody. Turns out that nobody's looking to spend $400 in their wedding registry gift, I think whatever. Let's say it's 150. I don't know what they realize if they gave like a half offering at 150, then it blew up. It was that they, they were just a little bit priced out of that channel.

Mike Flanigan  20:21

Yeah, and that's in that can be the type of thing exactly. It's like, Man price does matter. And if you're like, in slightly the wrong spot, then people can totally put like your product in like, a different use case or treat it differently. It's yeah, it's pretty fascinating. Yeah.

Ryan Rosztoczy  20:37

Yeah, super cool. Okay, so. So you join in, you start doing this because I love that so much. By the way, I love that. What was the class? Do you remember that

Mike Flanigan  20:47

is I love this class is D for D, or designing for defense or hacking for defense, which is a pretty cool program that you should like, Man, I saw on a wall as in a grad program, I saw a poster on the wall. I was trying to figure out my last classes from last semester. And I was like, oh, that sounds like interesting. Like is kind of like entrepreneurship, technical, mission driven. There's all this stuff. And so I went there having like a, the head of the class, I was giving a talk on it to like do recruiting to get people to sign up in elective class. I went and listened to this guy, Lloyd thrall. And oh, man, I listened to him talk for 30 minutes. I was like, That guy is super sharp, super inspiring to listen to as like, I want to be in his class. Like, I want to take a class where I get to be around him. And I was not at all disappointed every time he would get up. I mean, he could say like, Hey, we need to sharpen our pencils. It would be the most inspiring thing in the world. Except the reality was it wasn't just you know, he was always he just was thoughtful, cared about what he was doing. He Yeah, he's, he's a great leader and a great teacher.

Ryan Rosztoczy  21:54

It sounds to me like, is this the right word for that? Like, did he have gravitas?

Mike Flanigan  21:58

Yeah. Gravatar. He made ship matter, which I actually that's like something. Yeah, that on a personal level, I really like I've got this is a total tangent. I've got a favorite movie, which is Princess Mononoke. A, it's like by this this filmmaker, Miyazaki. It's, it's a Japanese movie. Yeah.

Ryan Rosztoczy  22:18

Have you heard of it? Or heard of him? Yeah.

Mike Flanigan  22:21

It's yeah, they're great. They've got a bit of a cult following. But to make a long story short, it's a very like, almost like ancient Greek mythology. Like when stories were very simple, and like, stuff mattered. And now we've gotten into like, much more complex realm of like storytelling, like every hero is really an antihero, and everybody is much more relatable. And it's like, okay, the good guy is actually a little bad. And it's like, it's very interesting, engaging television. But I also am kind of bummed by where I'm like, Man should be like, this is the goal, right? This is, you know, try attempts to explain the world or something. So, yeah, I'm a sucker for some gravitas.

Ryan Rosztoczy  23:05

It is. Not that I'm endorsing the views in it. But I've been watching that. Ancient Apocalypse documentary Netflix, just like about in ancient humanity, pre historical humanity. And one of the things to that point that's just so interesting to think about is, when we didn't have a lot of understanding around how the world worked. The smallest things had really big impactful imprints in our mind. Like there was so much extrapolation going on, to your point of these stories being just simple and meaningful. I can see how they'd be so it's really attractive to see that because, yeah, our brains work that way for most of humanity.

Mike Flanigan  23:53

Yeah. And it's like, okay, this is yeah, appreciating some little things and, and maybe putting too much meaning as to things. Yeah, it's in stuff that we're wrong, but it's like, okay, cool. It's there's still some some emphasis behind things, just totally,

Ryan Rosztoczy  24:07

totally, maybe one that we have aI handle the minutiae of how the actual world works. We can get back to that.

Mike Flanigan  24:16

Yeah, the utopia just by being like a Yeah, technologist and like, optimist and a lot of things. I guess, I'm not like an optimist. And well, I guess I am an optimist, but I don't know. Gosh, there's the question where we're going is very tricky.

Ryan Rosztoczy  24:33

Yeah, yes.

Mike Flanigan  24:35

But to wrap up on that one class, actually, just in terms of like the beginning story, like wow, that class for me actually was quite insightful because it was all about dual use technologies, like lean entrepreneurship. I spend a lot of time kind of like dabbling entrepreneurship and little projects and working with people in the past but yeah, it was a good it was a good class and going from like technical and then being like really emphasizing like calling people One talking to customers and understanding a problem really deeply. So it just had a ton of. And not to mention, I guess the last thing was this whole, like hacking for defense or designing for defense was specifically, like, I went to Google. And after listening to that first kind of recruiting lecture, I went to Google the program's history. And it's only a couple of years old. And I was like, Oh, wow, this is really cool. It was all about the emphasis that, like American tech, like back in kind of the Vietnam era, like really, like we got pretty disillusioned with, like the government and kind of far flung wars that we shouldn't be involved in, very rightly so. But then, that a modern day bit of a revival, where it's like, hey, now we've got like, all of our best and brightest talent going to work at like Twitter, and Facebook. And like, you know, I love those platforms, too. But really, like, it's like mining, the latest metadata about, like, where you drink your coffee, like that exciting or meaningful? And it's like, maybe not like, Oh, can we get more screentime out of, you know, my younger brother, like, Ha, bomber. And so the basically, the hypothesis in forming that class, I was like, hey, like, we can probably get some people to work on more meaningful projects, if we like, you know, get them back and tied into national security and into kind of, yeah, a bigger mission. I love it. Yeah, it was, it was really good. It resonated with me and our stuff, like I was familiar, this industry, and then just is this dual use nature of pay, you're doing science work, you're doing commercial mapping work for offshore wind farms, and you're also doing, like, these products are also going to the Navy. So understanding how the government works, and how government sales works, all that stuff was really important. And that class definitely opened my eyes and like, how the government functions and how the military functions. And yeah, it was very educational.

Ryan Rosztoczy  26:46

Well, and just to say on that topic of, you know, those early customer calls. I mean, I'm at my second startup, right now, I joined after they got a seed round, they already had their initial, I would say, like customer discovery session, the first startup I joined was same thing. They had essentially raised money and decided to build a product. So in both cases, I came in after the initial idea session, only through this podcast have I started to realize how tactical that phase can be. And how a lot of people's first biggest mistake is not realizing that you need to essentially be boots on the ground talking to people. So for you to just get that experience in college right off the bat and go do that. I mean, I love it. That's awesome.

Mike Flanigan  27:34

Yeah, definitely, like, any time with customers is the best feedback possible.

Ryan Rosztoczy  27:39

Yeah. Cool. Okay. So you start. Kind of have your own initiative helping see sets out with business development.

Mike Flanigan  27:51

Yeah. Well, I was looking for something to do, I guess. I mean, like I had done, I guess there was a chapter that I skipped in between here, which is between when the Scout project ended, maybe a year or two later, I forget exactly the number. Like I was still in school, my brother had gone off and done a job, a couple of people have gone and gotten jobs. Dylan, the guy who I said was his mastermind, like when I'm like my best friends growing up. He was had graduated as a summertime. And he was doing freelance engineering, and frankly, killing it. He was loving life. We're doing a lot of different stuff. Anyways, ocean arrow, this was a company that was founding an autonomous boat project. They Googled, like I said, Scott was the first you know, searchers on Google, they Googled autonomous boat. Okay, we need to engineers Googled someone maybe told them about the project, or they Googled science, but found the scale project, when did the team page saw doing call them up? In our case, we want to fly out to San Diego, and, you know, give you a job to help us start this Thomas Boat Company. So he flew out. Basically, I was like, yep, sounds great, sunny weather, you know, like, good. Next chapter. So he was working at ocean air and he works there for like five or six years. I wouldn't work there only for a year. But yeah, that was before. I went back to grad school in computer science. And that, like in the right when I was wrapping up grad school is when I took that entrepreneurship class in when a couple years after Dylan had left oceanaire. And so there's this kind of revival where, like, yeah, I guess actually, a lot of the core Scout crew was now living in San Diego, like various jobs have brought them out here. They're working out here. They've been doing their own freelance engineering thing. That's called kuruva. They're doing composite work for people, structural engineering elements, doing some electronic designers. You know, it's just like engineering contract shop. They're doing all sorts of neat, cool projects. But there's always kind of a push for a product is like, oh, man, it's if you're, you know, if you're really good at product design, and you're doing great contracting, a lot of contract shops, if you go talk to him, they always kind of have like, a little inkling are very common to say like, oh, yeah, but we kind of want a product as your own thing. because then we can stop just spinning the wheels for everyone else and make one of our own Suite products. And so that was very much here. And that's when they started kind of scratching out there. Hey, what about we take another shot at, like, commercializing these autonomous boats, like, we did it for fun is kids, there was no people like wanted to turn into a business. And I'm like, people called up and asked us about selling scouts. At the time, the technologies are mature, we were immature, we're mature enough to talk to each other and be like, that'd be a bad idea. We kill each other, this business won't succeed. Like there's no way it's ready. You know, after five, six years doing it professionally for jobs and doing being like the leader, electronics engineer, and being a product manager oceanaire on really seeing customer use cases, a company go through boom and bust of raising money or running out of money. Lots of drama and technology hurdles. But yeah, I mean, so oceanaire was a huge foundational experience. And then post oceanarium is when, like this couva contracting shop was going on. And then sometime after that, it's kind of like, hey, like, couldn't we take another stab? Like, it seems like all the products in this market are a little too complex cost a little bit too much. Seems like there's a gap that like we know how to fill. And that's when they kind of started on the, like, technical building of a prototype. And that's the phase like they've started on the technical phase. And I was like, Hey, guys, seems like you could use some BD help, like calling some people. And they're like, Yeah, sure, go for it. Whatever happens happens. And yeah, that and I did that. Because yeah, it's getting close to graduating, I was kind of doing some contracting stuff on the side. Like when I left oceanaire, I started contracting, doing like electronics and software people freelance, similar to this career really quick,

Ryan Rosztoczy  31:48

just because I've been i I'm gonna keep going with this because I have, I do want to talk about this, but I just keep thinking my head I have never heard until you and it's like, your whole crew is doing this. I've never heard of just like freelance engineers just building cool s**t. How do you get into a work like that? Like, how do you end up as a engineering contractor?

Mike Flanigan  32:11

Um, you know, so there's a couple of places like, I guess. So one, if you're gonna Google like, are places like professional versions of what we're doing, and we're professional, but we're just like, a couple of days in a shop. But there's like, a corn engineering in Boston, DMC info or DMC engineering, like there's all these engineering design shops that, you know, this happens a lot where companies raise a bunch of money. And then they like, need to do something like, Oh, we don't have an app, or we don't have this, or we don't have that. And then they basically go to like an engineering services company, to start helping them. Yep. The way that we started, I would say, there were two different ways. Like for me, I wanted to quit my job. And I was like, I need to do something else. And it was like, started job hunting. And then I also started just doing contracting on the side through Upwork. Which, okay, yeah, doesn't make you loads of money. But like, man, it's cool. You can get programming gigs on there. I did electronics stuff through there and prototyping, they're like, cool, you're out enough. People are looking for funny things. And if you communicate well and do the job, and it's just a great experience, like doing those little jobs and doing them for money are going to change because you almost always end up like ghosting hours things go south. projects aren't profitable. You're like, Man, I'm not good money for doing really high end work. Because I didn't know how to project like budget or estimate.

Ryan Rosztoczy  33:29

Hunters that okay, cool. Okay, so

Mike Flanigan  33:34

if I actually can just stick in one other surgery, I love telling my older brother's story, the way the crew started. He was working in naval architecture company that did design and engineering. And he was kind of butting heads with management because he was like, hey, like, I don't think you guys he like, basically kind of disagreed with how the sales process was going down. And it was like, thought that the engineering side of the business was getting a little bit mishandled. They eventually laid off the whole engineering team, they just asked the engineering team like, you know, we're just gonna be a design firm, like we'll have someone else engineer. The day after he got laid off one of his old, one of the old, like, customers that had them do engineering work. I called them up and like, Hey, Dan, here, like he got some free time, like we need engineering work done. And so he was like, in the kitchen of the house that I lived in with Dylan. And he's like doing engineering work. And he was like, hey, the first job came really fast. I was like, Congrats, man. And I was like, but watch out. The second job would take a long time. And just wasn't the case. Like second job, like people refer to him. It was like those first few will refer to him. So just in he just started in engineering out of the kitchen, and then it goes out of the garage, and then he moved in with his girlfriend. So they converted his bedroom into the office until like, two of them were working out of there. Yeah, it just kind of grew. Or yeah, sometimes it just works. Yes. Sure. It's not always so easy, but sometimes it is. I love it. That's awesome. Actually, on the things not being easy sign on like talking rambling. Sounds good. So I do enjoy and things aren't easy. That first project, my brother likes to work in a much more planned and generally less stressed out environment than I do. But I really enjoyed that that first project did involve some stress, they were like to meet a deadline. It was like one of our now founders, like, flew out from the East Coast. And they were up all night and like finishing stuff, but they hit the deadline, and the customer was really happy. So wow, sometimes,

Ryan Rosztoczy  35:26

sometimes you got to push a little. Yeah, for sure. Cool. Yeah, no, I mean, maybe that's one of the beauties of when you're a freelancer or later you when you're sort of running your own company, the there's a lot of incentive to push times. Okay, cool. Dude, I love those stories. So. So what I'm curious about is, there's this epiphany of we're doing this work, we want to make our own product, this might be the right time to get into autonomous boating. And then you guys raise some capital to do that, right.

Mike Flanigan  36:04

In the beginning, some of the first stuff we did actually, like the scuba continued for the first like, maybe even six months or so, like Groover just basically kept, yeah, kept running is, you know, tuned down a little bit, it was like, we each put in some money to like, buy equipment and buy stuff. Dylan started taking, like, more or less to know, kuruva jobs. I'd finished school. And so I was kind of like, free and floating and just kind of like, am I going to get a different job? Or am I going to work on this? And so I came out here and basically started working on this. So you know, I would say like, some of us, like, definitely had the like, luxury, the financial freedom, just say like, okay, like, I can make it by for six or 12 months here, like really not making money, but also just like, try to be frugal. But then, but then the flip side of that is that like, yeah, basically Kuva kept operating for a while. And when we were applying to accelerators, they always want to hear that. So is everyone full time? Like, you basically by the end there, okay, the answer is that you're all full time. Want to get over full time then like, yeah, we're just tell them we'd be like, yeah, we're full time. That'd be like, during that interview, we're full time. Like, hey, until like, we can make some money, like how we're going to pay the rent to keep the shop open. Like, yeah, extra monthly. If we don't have any money to work on this thing, then, like, Yeah, we're gonna keep making money on the side. It's like,

Ryan Rosztoczy  37:33

yeah, we're full time, we have these two employees that do the services side of the business that bring all the revenue right now.

Mike Flanigan  37:40

Exactly. And they do whatever's necessary to bring money and exactly how it was.

Ryan Rosztoczy  37:45

So you, so you mentioned, you're talking to accelerators. And that's when this comes up. And that's because you decide to build this product, you decide to go in on autonomous aquatic vehicles, and then was the next step. Okay, we should go to an accelerator?

Mike Flanigan  38:05

Um, no, vague to tell you that, like, very vague and terrible business plan in the beginning was yeah, it was like, the thing that I think got started was like, oh, we'll make this demo. Or we'll make this thing that has these MVP capabilities, we're gonna go demo it to a couple people that we know, like, we knew, like this woman who worked for a navy company, we knew, like a couple of people in the space. And we didn't know how anyone raised money. We didn't know where I've been initial seed funding came from Frank, these other companies in this space. So it's kind of like, a we'll just, like, make this thing. We'll go do this demo, and everyone will be super impressed. And like, someone will give us a bunch of money. And we'll like, you know, make a company. Yeah. Yeah. Like, we'll figure out how to make it real. We did. We did like I remember having a sit down. We Yeah, we didn't think that we're just gonna sell it right off the bat. Because we did have a sit down like Phil Knight both having worked at Ocean Eric. Man, it's gonna take like a 15 person. Like, we're not going to lose chapters to people, we're not going to get to like a market ready product for two people. It was like, it's gonna take an engineering team of 15 to get there. So like, so what are we gonna do the meantime I was like, well, we can definitely hack really impressively. So it's like attacker, really impressive demo. Use that to raise some money or to sell something and then figure out the next steps.

Ryan Rosztoczy  39:19

Love it. Love it. It's so cool. And then and I mean, I think I remember you saying this. That's why I like in your minds. TechStars was your like, we need to learn how to scale this thing. Right.

Mike Flanigan  39:35

Tech Stars was the real deal. Tech Stars are so good for us. Yeah, we applied to a couple of different cohorts like we applied to. It was a little except accelerated even our accelerated accelerator process, but we applied to one and really got schooled we applied to the border on because I was in Boulder at so I talked to like Andreas, and some of the like his team there. And it was Great, we made it like to the final round interview, but we got roasted on a couple of different interviews and like having the wrong answers, including some like memorably horrifically failed. Answers, like in interviews were shut out. I was like, Oh, that was the wrong answer.

Ryan Rosztoczy  40:12

You gotta you gotta you gotta give me one now. That's great.

Mike Flanigan  40:17

Yeah, I think I think one that was like a bad one was just like, at one point, someone was like, well, like, the technical stuff is way ahead of our business stuff. It was like asking for some business answers, like, what's your business models? Like? Well, we don't really have that. But we got pretty good technical stuff. And I was like, it's like, it's not a good answer for like a business. Like, it's a thing. Like,

Ryan Rosztoczy  40:36

you're like, you make, like a cork core guiding company principle is if we build it, they won't go.

Mike Flanigan  40:45

There. That's not gonna work. Yeah. So by the time we got to the end, by the time we like, we then got shuttled to another one that didn't really interview us. And they spent like, no time and we like got shortcut into the finalists and then got rejected, right. That was weird. And then we properly interviewed one more time. And at this point, everyone was like, Dude, that's a waste of time. Like TechStars is just like plans on we shouldn't be interviewing. I was like, give me one more. This guy, Jonathan Penske texts, our space is like, this is the real deal this time. And sure enough, is like good interview. Also. Also, like, you can look up anyone applying decks artists can like click up basically like, oh, all the questions that yc is gonna pepper you with? Yeah, it's different ones. It's like, how are you gonna get 100 million ARR need to know the math interview, I'll say in like, one sentence for us was like 250 Boats $1,000 A day operating like 80% uptime is like, over 100 million arr. And, like, and we know that $1,000 A day like we have a competitor in the space who's selling boats for $2,500 a day services like, and like, by the time we knew that, and I could regurgitate that like on a moment's notice. I was like, okay, cool. These guys could actually make money into this.

Ryan Rosztoczy  41:56

Yeah, I love it. Yeah. Well, I think people take I mean, the tough part about any interview question like that, for an accelerator is, you know, they're limited on time and scope. But so you can't just like go back and like, hey, we thought of it, you know, but the reality is, like, you iterate on the business just as much as the tech product. So whatever you say is the answer. It's just like, that's what you're thinking about ahead of time, it has no bearing on what it will be, you know, six months later,

Mike Flanigan  42:25

a ton of the business stuff is a little frustrating to technical people, because like, basically, you could ask anyone, like a technical question and answers almost always ends. Like 30 variables like to give like a truly accurate answer. But in the business world, there's almost always just like a correct answer and ever moves on, which is like, show me your financial model slide. And it's like, okay, it should be like hockey sticking up. And then and then they're good, you know how to b******t your homework and to turn it in, and then we move on.

Ryan Rosztoczy  42:52

Now, I kind of want to I kind of want to start a bogus company apply to an accelerator now and then just show a logarithmic graph. of it. Like they're like, No, that's the wrong answer. We want the hockey stick.

Mike Flanigan  43:06

Yeah. Okay. Nice. I'm glad that you actually said that. You're gonna be like we've heard there. But yeah, like logarithmic. Just show completely, like, we've learned to plateau, like,

Ryan Rosztoczy  43:16

this thing will scale to 10 users, and then it will decrease rapidly.

Mike Flanigan  43:20

Man, you should podcast review a like a why. So you should get yourself into like a YC interview and be like, how to give all the wrong answers. And when they're going to scale to whatever be like, we plan for this to be like a four person or lifestyle company for how we're going to make our tax return. But we plan to Nobert

Ryan Rosztoczy  43:38

Yeah, yeah, I'll figure I'll do like, how to hack YC, like Princeton Review version, we're all figured out the wrong the wrong answers the questions and then everyone can do the opposite.

Mike Flanigan  43:48

Dude, I would wash that, that'd be great.

Ryan Rosztoczy  43:52

Okay, so So TechStars is amazing, that sets you off on a trajectory. Top couple of takeaways, where you come out and your perspective has changed, your thinking has changed. Yeah, just curious what the out look like.

Mike Flanigan  44:09

Um, I think one of the things that tech search does is they try to make you in this probably a good answer to like investors until a lot of business models and stuff too, which is like, you probably need something that you're awesome at, like, you need some spike that you're winning on. And then really, the other half of that is you need to not suck at anything, because investors kind of like ideally, they got emotionally hooked and excited, or even like your customers got emotionally hooked and exciting, excited. And then they're looking for, like, Oh, now they're doing doing due diligence and trying to like pre mortem, like, Okay, why is this thing gonna fail? And generally, there's a giant red flag or too many red flags. And so, Tech Stars was like, okay, cool. You guys have something that's exciting. And like, yes, like you're not going to be able to be good at all of these other things, but like you need to patch them up and just have okay answers. Like standardize have answers have an attempt at all of these different things. So it's a real whirlwind and doing just like a gazillion different things like, I mean, they also have like tons of like customer discovery, Metro madness, and like, yeah, there's a ton of good points, but I would kind of synopsis it in like, here's a whole checklist of like how to be a company, and you need to, like not get an F and any of these things,

Ryan Rosztoczy  45:22

I love it. It's almost like, here's what we're going to accelerate you, but then we're gonna do guardrails, like, we don't want you to fail is one of the biggest ways you can fail.

Mike Flanigan  45:34

And even like, if you try to get an A on, like all the criterias of how to be a company, like you're definitely going to fail, yeah, you'll just explode. Or if you can't get it done, like if you only have a couple people or one person, like there's just no chance you can keep up with like the businesses of today. And so that was just like, yeah,

Ryan Rosztoczy  45:51

so by the end of TechStars, your answer for the business model is not

Mike Flanigan  45:55

a Yeah, well, we've got a cool technical stuff. Yeah, no, it was it was like, here's our sales plan. Here's here's the Yeah, exactly. Yep. We had a business model.

Ryan Rosztoczy  46:06

Awesome. I'm Did you did you guys get funding coming out of that?

Mike Flanigan  46:10

Yeah, I'm funding going into, it's just super helpful. Like they like TechStars, NYC had like a standard like 121 30k deal. That's super helpful. We were some angel funding at the same time. And then coming out of it. Coming out of it was frankly, really hard. We did not raise money fast. But within like maybe four months, we raised a million dollar round, which is huge. But boy, we that was hard. We had to pull, like every trick in the book and try. Like, yeah, we had so many investors bail on us. And yeah, those are like, for many I would say from the beginning of Tech Stars, all the way until. Definitely for the meaning of Tech Stars for like one year, we probably never had more than like a three month runway and sometimes shorter. Whereas like, wow, things are like, yeah, it was like, Oh, this is not gonna last very long.

Ryan Rosztoczy  47:09

Wow.

Mike Flanigan  47:11

Maybe you want to think of if after that million dollar, I guess after the movie, because well, no, because even the million dollar round, like we say, and this is like an example of using every trick in the book. If you look up our stats, like online, or if like I say, right now my kid, we raised a million dollar round, really didn't raise like, you know, 150k from someone in the beginning, who's like, Yeah, I'll put in 150k. And then someone else was like, all come in for 50k. Someone else's, like, I'll come in for 100k. And some of those, like, we use a rolling close safe, because we couldn't like we had, we had multiple times we got very close to closing around with like a major lead investor, you could say, Yep, and yeah, I'm gonna close like that everyone invest at once, get all the money one time. We were right, this is not working. And we're going to be kind of screwed here. And so we went to a safe where you can just basically accept money on the fly. It brings in its own headaches. But we went to that, which meant that we were accepting money as we went, I guess when we finally got like three investors at the same time to come in and read some really critical ones that joined. Yeah, like a syndicate of some really good guys. And then also like monozukuri ventures, and they came in at once, for maybe something like, kind of makeup. Not correct, but 400k That probably gave us a couple more months than three months runway, but it was just like it was just always really tight for a long time.

Ryan Rosztoczy  48:29

I mean, yeah. Do you call it a safe? Is that what it is? We're Yeah. I need to remember that I was just talking with the founder that in a very similar space, looking to raise a seed round right now they've got I don't know the exact number. So let's say like a quarter of a million locked up, they had a big lead investor, I think they had to back out for some reason. So it's just they're in this space where like, you know, now cash is tight. I haven't actually even heard of that where you can essentially just take it in over time.

Mike Flanigan  49:02

Dude safe sir. Yeah, so safe is a publicly like we did TechStars. But you can download the safe from the YC like Google Safe yc. There'll be like a form documents. And it's basically it stands for Simple agreement for future equity. And then there are some weird math things. Like safes like lawyers don't like safes. But if you don't have a lawyer on your team, you definitely want to use the safe. Because like lawyers created the safe. So like illegally works. It's a real deal thing. But it just like leaves a bunch of the hat, like all the stuff where you would have like teams of lawyers duking things out, and it would be like an aggressive situation. It's like, it's like three lines. It's something that like you and I can understand. It's like, oh, maybe maybe you're like a lawyer or son of a lawyer, but I don't profess to be good at legal stuff. And I'm like, Cool. Here's the money. Here's kind of the upper end of the valuation. You can read this book. It's called Venture deals. How to be smarter than like you're in bed. stir and you're a lawyer or something like that. And I like skimmed probably half of venture deals like enough to, like understand safe dynamics to like, answer the questions and do the math. And yeah, so safes are sweet. It saves a lot of headaches. Yeah, awesome. And we play the tactics right? Then you can actually get money closed, which is like critical for business. It's like, Hey, you can't like oh, yeah, there's just like, so much like handshake deal. And like, oh, maybe and hype and all this stuff. It's like, yeah, raising money kind of sucks.

Ryan Rosztoczy  50:29

No, yeah. Right. I mean, I love this story. Yeah, that's actually getting the cash is what matters. And you nailed it. I mean, I yeah, just working with founders going through this right now. I understand how, just how everyone imagines it's going to be a straightforward process. And in reality, unless you've been preparing well ahead of time, and you have a deep network of connections, it's not it's gonna take a lot of time. There's gonna be hiccups. There. Yeah, I don't actually know. I've never even seen it be a straightforward process.

Mike Flanigan  51:00

Yeah, the same. The same is really cool. Man. If you've got like, I don't know. I mean, like, very simple rules is like, like, oh, you need a Delaware? Well, I don't even know that's true. But basically Delaware C Corp, you probably should work with lawyers, a lot of good law law firms like kale law, which is a boulder colorado firm. Why don't like good startup law firms? Well, you know, you're working with a good, we'll law firm, because they will know about startups. And they will, if you can convince them to work with you. They'll defer your payments for like six months or a year. So we had a legal team that helped us like incorporate the company properly. Tell us a bunch of the stuff that we've done in the beginning, that was like bogus, and they're like, oh, no, you need to do like this. I was like, Okay, we set up the company. We didn't have to pay them for a certain runtime, which helped us like get probably like, all the way to TechStars. And then it was like, okay, we can pay back our legal fees. And you safes and then like you don't, because anytime you talk to a lawyer, it's incredibly expensive.

Ryan Rosztoczy  51:56

So we in startups, the T deferring legal payments, taking in capital over time. Oh, I love it. Yeah. So cool. And then, man, and then you're operating under this constant, like, you're continually getting cash in the bank, but you're never quite at this feeling of safety.

Mike Flanigan  52:20

Do you take in I mean, so we like are very fortunate and that we just close this big round with Elfi Harris and some other investors really led by alpha hairs. And so now I can say like, just in the last couple of months is the first time that we've been like, wow, s**t, like, we can plan with like, security and like, hire people and not be making all these ifs, buts and then some, like contract negotiation, and like stuffs, like, really, like we're operating like, pretty freely right now. It's, it's pretty epic. It's incredibly fun time period. But yeah, I mean, that like a long period of operating and insecurity can also just like, people kind of nuts. Like, it's not a fun place to be operating from. I mean, I remember, like, we were just like, for an example of like a little store, and like how this can be kind of brutal. We were, like, accepting an investment from an investor or one of those investors on that million dollar round. And they had a term in there there. Oh, and you need to spend, you know, you need to buy this, like 20 grand insurance policy or something like that. And I won't go into the details there. But one of my co founders was like, Dude, this is nuts. Like, why are we spending any money on that, like this, it's like, brushing a guy's teeth, when like, his legs need tourniquets, like, you know, has no legs like this is a really, like, this is like such a bad expenditure money. And I was like, hey, like, well, we'll figure it out. Like, is it just, it's just, like, just keep patching the next problem? And then yeah, eventually we did sorted it out. But uh, but it can be, it can be a little harrowing. Yeah, I

Ryan Rosztoczy  53:47

mean, I know I've seen I've been through it a little bit myself. We've been my brother. And then I've seen him go have to go through a lot before. And it really does soak from positive sort of momentum when you have to deal with all these cabinets. On the flip side, I would be very curious. And I'll be really curious to talk with you again. After some time has passed, because my gut would say, the battle instincts that you honed, trying to keep a company running under such tight fiscal constraints will probably pay off in weird ways. Like, I'm sure.

Mike Flanigan  54:23

They definitely do. I mean, like, on one hand, like we're constantly having any kind of like predicting the last few months, it's been like, reframing like our key decision makers minds being like, Hey, make sure we're not being overly frugal on this thing. Like timelines are more important to us right now. Then, like 10% profit margin. So it's like, make sure we're not using our old ways going forward. But on the flip side, just like you just said, we definitely have like a frugal mindset as a company where, you know, some people offer us a solution like, Oh, why don't you just use like x machine? It's like, that's $150,000 machine like, no thanks. We do that with like a $2,000 machine and like we do just fine with these tolerances, like we're not trying to be a big, bloated Corporation.

Ryan Rosztoczy  55:05

Oh, love it. Oh, so great. Yeah, well, so you did just raise big rounds. That's awesome. Congratulations. Thanks. One thing I did want to ask you about x. Actually, now that I think about it, you're doing all kinds of interesting funding stuff, because I didn't know about the safe process. But this was also a corporate round, right, which I think is really interesting. Can you I mean, is it the exact same as a standard like venture capital razor? I assume not. Could you just kind of walk me through what that looks like? Yeah,

Mike Flanigan  55:43

I would say it was, it would be actually, it would probably even be hard to even like fit it, like, short and reasonably concise answer, I would say made up with like, a lot of different rounds, there's always like personal or actually use use a good way to compare it to venture capital. And this is just my understanding, which is definitely naive. But from what I went through and experienced in from talking to advisors, or mentors, like for VCs, you typically have a scout who finds you, or one person in the firm, and unless you got lucky, and the person that found you happens to be the boss of the firm like that the most senior decision maker, usually you're not found by that person who's usually the scouting job is up someone else. So usually you're found, then you need to make it through diligence, which is really them being able to regurgitate an internal sales pitch to their key people. So within, yes, like, we lost a lot of deals, like when I said, like, we probably like three different deals that had like major leads who spent, we spent hours and weeks of meetings with these people in the promise of like, multimillion dollar rounds, and then being like, this is a sure thing. And then they come back to it. And that at the end of the day, like it finally fizzles out and dies. And you're like, man, what happened. And it's like, oh, behind closed doors, they couldn't get the deal passed. They're like their decision makers. And like you weren't, you didn't get to be in there and charm them with whatever vibes you had with that one person, like, someone else who doesn't like you. He's making a pitch against your company. Yeah. And that person who's stoked on you needs to remember, like, all the details, you know, it's sort of it was a good lesson, like optimism, like if I'm having a conversation with you, and you're totally stoked on what I'm doing. And you're like, Man, I'm so stoked on and care about the details. That's actually probably bad, because you're probably not going to know enough the details to make a really concrete argument to your partners. Whereas if you've got a VC person who's, like, stoked, but asking enough to really understand your business, because everyone wants the business to be simple. If you're like, Yeah, give me 10 bucks, I'll send you a million bucks. And that's like, every single time, then it's easy. But for us, like we have a complicated business. So the people who were the champions couldn't go for whatever reason, we would, our deals would always die in closed doors, but behind like back with that circle, like three to five people. For a corporate, it's much worse, because you don't have 35 people. You have an accounting department and you have sector heads, you've got corporate presidents, you've got teams, like we, you know, like you're talking dozens of people, you're talking like a public company, they need to defend all of their stuff. Like it's, yeah, it's like working with a big company be hard.

Ryan Rosztoczy  58:36

Wow. Okay. I was not. I was not thinking you're about to say it is harder, but it makes sense. But

Mike Flanigan  58:44

I would I would not try to like, yeah, like, you know, Boeing has like Boeing's venture arm, I forget what it's called. And like, Lockheed has a venture arm and like, some of the big energy companies have like, like EIP ventures have like energy branches, and like Shell ventures, like, I think in general, those are way harder. I'm just gonna do way more diligence, like, yeah, yeah. It's yeah, it's gonna be hard to get past those.

Ryan Rosztoczy  59:12

So you said a part of that is your business is complex. And I mean, we're talking about autonomous drones. So you know, we can just take your for your word. But I do want to start to just unpack that a little bit. Because you are dealing with I mean, you guys Oh, hackers, engineers, your mechanical NCS, which is amazing. But you're still dealing with hardware software, the real world out there in terms of the elements. That is complicated. How, like, how big is your team right now? I guess and how are you like handling all that? Just software for me is enough. That's why I'm that's why.

Mike Flanigan  59:55

Yeah, so our team is about 15 Right now, in when we started I mean, we were you know, for people. And I would say that one of the ways like really to simplify it, one of the ways that we do it is men, we knew our problem in our industry super well. Like, we don't need to solve every hardware problem. We don't need to solve these different software problems. We're done. Like, there are so many things we didn't have to do, because we knew exactly what our customers needed. And there's like, only build what we need. And like, even though we're doing little bits and all these different areas, like it's made hiring hard, because sometimes we pull someone in a cruise experience from another industry, they come in, they're like, Oh, my God, this is like a flaming dumpster fire. Like, I don't want to work here. And we're like, Hey, okay, like no worries. But that same flaming dumpster fire, like customers look at it, like from our like, from a customer perspective in there. Oh, my God, you've solved the one problem that I hate in this industry, that your thing is amazing. And so, you know, it's just being super focused, like, only build what you need.

Ryan Rosztoczy  1:00:58

Yeah. So yes, I'm in Oh, yes. Perfect. I'm going back to your earlier initial comment on being able to integrate other sensors. So is it fair to say it when you you know, you said, you know, part of it is vertically integrated? Is it fair to say that when you are building something yourself, it is in the you think it's necessary to solve the problem, essentially, that you're solving? Like? So there's a little abstract, but maybe you need to build a particular sensor or a particular software that will transfer data from one place to another or whatever? Because it's in pursuit of the problem you're solving and doesn't exist yet. But outside of that, you're essentially going to be stitching together different components. Is that fair?

Mike Flanigan  1:01:48

Yeah, like we stitch, we use so many different components from different places. Yeah, we use stuff left, right and center that's already built, like we try not to reinvent the wheel because we're doing like, yeah, or just a really wide stack. Like we don't, there are some competitors who only lease their boats or do data as a service. There's some competitors who only sell their boats and do hardware sales. And we're like, hey, we do we sell it, like, you're gonna look up on our website, and you can see our price, which is actually a neat, there's no competitors out there who put their price on their website in this field. And so you're gonna look up our sales price, our lease, our leasing, one makes you quote, and then our data as a service price. And the reason we do that is because it's a complex answer. This is why it's like investors don't like this answer. But it's like, some customers only buy one of those methods, and some only buy the other. And so by offering all of them, like we expand that market, and there's some core values that allow us to, like serve both ends efficiently. But like, even our business model is complex, because there's like different costs associated with running data as a service than there are with hardware sales. And there's, there's complexity across front. And then yeah, when you actually get into the product side of things, correct? Well, yeah, we're solving like a manufacturing problem. We've got like energy efficiencies we're dealing with, like, oh, yeah, let's mix in some AI because like, some people need intelligence and robots like satellite communications, like, oh, have you heard of Starlink? Maybe we should be using that. So now suddenly, you need to be like, at least somewhat first. And like the latest in satellite communications, it's like, there's a lot of moving pieces to track.

Ryan Rosztoczy  1:03:30

Yeah, no kidding. But the idea of simplifying it by focus attention on the problem you're trying to solve it at school to me, it's so cool to hear you say that it's so cool to demystify a little bit it doesn't take away from their complexity at all but it does help me understand how you're doing it. That's awesome.

Mike Flanigan  1:03:54

Yeah, that's kinda Yeah. Focus is like I feel like everyone says that a lot was like God definitely golden rule. Yeah.

Ryan Rosztoczy  1:04:01

So I think I remember I think I asked you what your biggest struggle was and I'm pretty I remember at the time I'm curious to hear what I said at the time. The time I think it was daily I think it was manufacturing is that is that ring a bell?

Mike Flanigan  1:04:19

Yes, I would say supply chain which is like which yeah and not even supply chain Yeah, it's really manufacturing like production of these vehicles. Yeah. Which

Ryan Rosztoczy  1:04:31

I go for it is that I mean macro economic or you know like same supply chain issues have been hanging everybody or something else going on?

Mike Flanigan  1:04:41

Um, it's a little bit supply chain issues have been hitting everyone but I would say more that we build a lot in house and we like aren't you could like make some comparisons. I'm definitely not trying to make this to be grandiose because like we're just like, not in a country grandiose but parallel and some of the reality of the problems in Like, Tesla builds and got a lot of still does get a lot of grief for how much they choose to build in house. And when you build in house, you're always paying for that in time up front. And like in errors and mistakes, they make their own seats and house and like random stuff into work. Why are we making car seats, like you can just buy new seats, like their whole companies that build car seats for automotive? Like, like the actual chairs, and they had their reasons, whether it's way integration design, or whatever it was, they decided that they wanted to build them in house. And it's like, okay, so you pay for that, and learning how to be a car chair, producer, and like making some silly mistakes as you ramp up in that process. So we build a ton of stuff in house, because at the end of the day, that makes our products lightweight, energy efficient, affordable, like we, you know, we kind of have this envision and to get there. There's a lot of areas where we're like, hey, yeah, like the industry solution isn't going to cut it for us. Like, that's not good enough. And yeah, so so it just takes time. So we're learning how to build out that manufacturing process.

Ryan Rosztoczy  1:06:01

Yeah. Cool. That's so awesome. Cool to hear. Okay, yeah. So just upfront investment gonna be a slow start, but you can if you can learn fast enough. Will you'll see some major payoff over time.

Mike Flanigan  1:06:14

Definitely. Yep. And that's super exciting. Like, definitely our biggest challenges also, like our biggest exciting point, like, you know, we, it's like, oh, man, I can tell you like, we've researched hard, like the number of vehicles that like different people produce in this field, and you think this field is going to change dramatically like maritime, I think maritime robotics is like where aerial robotics were, like 10 or 15 years ago, before, like, in 15. Or today, like, aerial drones, like, the airframe is commoditized. It's like, man, you can go you can buy flying drones as stocking stuffers for crazy. Holy s**t, like then on the technology stuff from that, like $15 thing is bonkers. It's got flight control systems got remote control, it's like this is wild. So I think it'll be a similar parallel. Like, right now, there's just not that many boats out there to do the jobs. And so like we're investing and how to do that. And I think that we have like a great, a great plan, and we're making great progress on like, going a lot more vehicles than anyone else has. And so I think that's gonna be a pretty big game changer. Hopefully, if we were to talk like a year, or 18 months from now, it'd be like, a Yeah, see, SAS has like, loads of vehicles and like, like most other companies aren't keeping up.

Ryan Rosztoczy  1:07:28

Yeah, I love it. We'll do we'll do a rehash and your biggest pain point will be something else. It'll be like, Yeah, I don't know. But you'll have that taken care of. Awesome. Cool. Oh, that's this is honestly been like, so awesome for me. Tons of fun stuff. Tons of fun technical stuff.

Mike Flanigan  1:07:52

Thanks, man. Yeah, it's it's fun to chat about. I feel like I think one thing that's hard on stuff is there's like, yeah, there's stories out the wazoo. There's like tons of different stuff maybe similar to being like a big complex business. It's like, it's just like stories and stories.

Ryan Rosztoczy  1:08:08

Yeah, no, that's, that's where the gold that I'm here. Yes. I mean, anything you want to talk about anything on your mind before we wrap up?

Mike Flanigan  1:08:19

Um, no, I guess as long as this is going out and get some airtime. Hey, if anyone's excited, and like one of one thing is we're hiring, we will likely be hiring throughout the time, as long as things go. Well, anytime someone listens to this, we'll be hiring. Hey, guess what?

Ryan Rosztoczy  1:08:37

There's live on the air. What what types of roles you guys looking for right now?

Mike Flanigan  1:08:40

Yeah, some of the main ones we're looking for in our software. But also, I mean, really, like a cross over to the stack of like, like electronics engineering, like all electrical engineering, mechanical design engineers, particularly software engineers. Fear, like, rushing to the ML seem like machine learning and give us randomness. Yeah, there's, there's posts that go up on our careers page. But yeah, people are pretty sharp. I guess actually, to clarify, one area that we're not really hiring for right now is like BD stuff. Like, we'll probably be expanding our business Feldman, like, hopefully six months from now, but currently, oh, man, we need to solve this production problem. So

Ryan Rosztoczy  1:09:19

yeah, awesome. Cool. Great. One last thing. And it's okay, if you don't have anything, but I've been asking everybody. If you had one piece of advice you would give to somebody who was thinking about starting a company or who had just started, what you might say.

Mike Flanigan  1:09:40

I think accelerators are great. Like if you can do an accelerator. I think it's so worth it. And we have investors who are like, oh, like you did an accelerator if you gave up 6% of your company to go to that accelerator. That's not worth it. That shows you a bad business sense. Like I'm not gonna invest in you. It's like, okay, sure. Like, accelerators are so valuable because it seems If you always feel like your company's unique, you should feel that way because that means you have a unique differentiated thing. But it turns out that like, these accelerators really do, they're onto something like, starting a company is not unique. It's like there's tons of the same check marks that you need to solve like, check. And so they can give just great advice and really help so you can get into and it's harder, it's well worth like hair, pulling out time and applying to them and interviewing and getting rejected, like, keep going.

Ryan Rosztoczy  1:10:26

I love it free, free advertising for Tech Stars. there real quick onto that, that investors saving. It's so funny. It's like yes, 6% of what if the outcome at the get go is so binary? You're talking about a zero or a one. Like if you can up the chances you get to a one. Go for

Mike Flanigan  1:10:46

it. Exactly. It's like you can Yeah, exactly. Yeah, you're completely on it.

Ryan Rosztoczy  1:10:53

Fan Haiti, this has been so awesome. I'm so glad we were able to connect and glad to have you back in the US. I really love how Mike hammers home the value of an accelerator if you know what you're trying to get out of it. I think really clear that see SATs turned into a different company going through TechStars so that was great. Thanks for joining. I'll see you next time.