Last week, IndoorAtlas’ president Wibe Wagemans took time to sit down with us and discuss a variety of topics, primarily the indoor positioning space, his company’s current round of fundraising (which is expected to wrap up soon), and its recent $10 million investment from Chinese search giant Baidu. To briefly recap the company’s background: It was founded in 2012 by Professor Janne Haverinen as a spin-off from the University of Oulu in Finland; its technology utilizes low-power smartphone compass chips to read magnetic fields inside buildings, comparing sensory data with pre-existing heat maps/fingerprints to yield the smartphone’s location with accuracy of about six feet. It garnered some VC backing earlier this year but most recently made waves because shares of Baidu rose 4.8% after the $10 million funding. As a final note, Mr. Wagemans had just returned from Beijing, where Baidu had demonstrated an IndoorAtlas product customized for Baidu Maps.
Q: So one of the applications this proximity solution could be used for appears to be advertising, but what are some others?
A: The money could be in advertising eventually, but first and foremost it’s the moving blue dot indoors. Bluetooth tells me where I hit the fence, but it’s not a moving blue dot showing me exactly where I am. Also, it’s important to know that it’s not just one solution—magnetic is complemented like GPS is outdoors by cell tower triangulation and WiFi.
So you see it as something that’s more integrated?
It can easily work without, but Bluetooth and WiFi certainly help in some use cases. If you’re coming from a parking garage, having a Bluetooth beacon hanging there to lock in on you before you enter the building can be a huge benefit.
What are your next few steps for product development?
We’re still in beta, so #1 is to go commercial and really scale that. We’ve filed 17 patents so far; some of them are pretty essential to magnetic positioning. Also, there’s moving to the next level in the building where we can use the accelerometer, so there’s a lot of very fundamental work that needs to be done. Once our platform-as-a-service is more stable and robust, it’s infinitely scalable. First and foremost, it’s really about delivering a little blue dot on a floor plan.
Platform-as-a-service is the monetizable model you are going with right now?
It’s $199 for access for a month [a venue pays $199 for a month per 100,000 square feet of mapped space]. Compared to installing and maintaining beacons, which isn’t a really scalable solution, from total cost of ownership, there’s a huge difference. And if the WiFi or Bluetooth in a building is great, we’ll use it to help with the positioning, integrating it all into one package with the highest probability.
What about non-smartphone-based solutions?
You could think in the future of embedding sensors in moving objects or in the IoT or hospital beds, or you could use it underground, for safety purposes in mines. We, on purpose, really want to focus on the PAAS play, and then have our partners go after the verticals.
Baidu just invested $10 million in IndoorAtlas; could you walk us through your fundraising thus far?
We met Baidu last year and they were very excited. … We pretty much were on the same wavelength after one or two meetings with regard to the technology’s potential. Just providing a user’s location indoors provides a link to a lot of use cases. The Chinese have a long history in mobile, as lots of folks skipped PC online access and went straight to mobile, and that, coupled with the fact there’s lots of urban concentrations in China—I think 100+ cities with over a million people—shopping malls, retail buildings, underground subways, those environments are ideal for this technology.
What’s a potential roadmap for fingerprinting buildings?
We have partners who go out and fingerprint an office or a store—it takes about an hour to fingerprint a place, an office or a store, about an hour to fingerprint 25,000 square feet. We also have a self-service model on the website, which you can download and just go out and map. We have over 10,000 developers who have downloaded the API so far.
So with Baidu, what’s next? (Per the WSJ, Baidu already has exclusive access to IndoorAtlas’ platform in China.)
There’s a lot of education that still needs to happen. Consumers have to get used to, “Hey, I know I’m on the map on the street, but I’m not used to zooming in on the building I’m in.” Consumer innovation sometimes takes a few months, maybe a few years, to take off. But there’s a whole huge database and search play based on just users’ blue dots—think about if you could do a product search and we could tell you where you are relative to that product in the aisle.
Regarding IndoorAtlas’ previous backing, how was the fundraising climate for you?
We’ve been very fortunate. The founders came out of the university, so for many years a lot of the work was on the government’s payroll. In Finland, they’re trying to build a microclimate to help companies get off the ground, and I’d say it’s a decent ecosystem. It’s not Silicon Valley, but even Supercell was a few years old and sold for over a billion, and they had help there from the same sources that we’re tapping into. It’s not the same climate—you’re dealing with folks who are usually a lot more risk-averse in their careers, so you need more financial incentives. You don’t find the same level of startups attracting top talent in Europe.
So you are still fundraising?
We’re open to discussion with additional investment simply because we need to strengthen certain verticals and geographies. The U.S., obviously, is #1, but we’ve seen some countries in Asia take off.
Have you already partnered with other retailers?
We are testing with a top retailer in the U.S. currently. Some of the use cases in retail are beautiful: In one sample, 15% of consumers who go into a store left without finding what they were looking for. What we did was provide customers with a digital shopping list where we routed them through a shopping market. Retailers thought it wouldn’t help, but basket size went up by 9.2%. Sample sizes were small, but it appeared that consumers felt more in control, so they deviated and picked up recommendations along the way.
What’s the timeline for the rest of your Series A?
Probably the next couple of weeks. After that, it’s execution and scaling out.
Re Baidu’s stock price jump post-announcement of the financing, do you think that signals interest in the space as a whole?
I think part of it is there’s not much known about the Chinese market, and also the rate of Chinese innovation is changing rapidly. What might take awhile is not the tech, but the use case and managing that. Who controls which budgets? Who heads up which communication? Those are tough questions to answer, as it’s not retailers’ core business. Of course, we are changing consumer behavior in our trials. They’re becoming more melded with the online and offline shopping—the blue dot is the missing link there.