We have interviews with founders who are decades into their career. We have interviews with founders who have launched multiple startups. But this conversation with Cyril Lutterodt was a little different — speaking with a founder in his 20s, who is now in the process of conceiving and launching his third business.

It was interesting speaking with someone who seems right in the midst of founding a new and important idea, with so much experience at such an early age. I think you really feel how Cyril learned so much as he went along, especially in market development:

It wasn’t until then that I realised construction companies are willing to pay a higher price tier to save time on a person’s full time engineering job. And that’s when I broke it down: what’s the process that we’re saving? How much time are we saving? How many dollars are we saving? What’s unit economics and return on investment?

He also speaks candidly about how he realised the purpose of VC funding:

At that point, I kept thinking the more I retain, the more money I can make. But it’s the opposite in venture capital, because the less money retained, the more money you’re worth. 

My hope is that this interview might show others some of the key lessons and pathways that will help more people consider starting B2B tech companies sooner.

Getting started

My first company was a YouTube channel that had over a million views, targeting young and upcoming artists when YouTube was paying cents per click. I got a partnership with Youtube, sold the business at 18 and used the proceeds to pay for college. I studied software engineering at University of Texas but graduated with an Interdisciplinary Degree. 

I stumbled upon a professor called Christopher McMurrough, who was building these robots and gadgets. He was running these low level code and robots and no one understood what it was. But actually I was fascinated and this is how AI changed my life. 

He introduced me to the head of his research lab and at 19 I was working for a lab sponsored by the National Science Foundation and National Institute of Health who had these robotic arms for tele-rehab and tele-medicine. 

Founding the first B2B tech business

I didn’t want to go the consumer route because I knew friends doing consumer apps and realised it’s super commoditized. The value wasn’t there for me — I saw the value in creating big, large, scalable things that could apply to multiple industries. And that’s when I started learning all these new things — the business model canvas, value proposition. 

I left the research lab to found a company called Neu Robotics — an autonomous aerial platform and drone startup for construction and real estate. So we built the hardware from 3D printed carbon fibre, partnered with Nvidia to put an edge device in the drone, and then used computer vision and stereo mapping to create real time 3D maps of buildings.

A friend from my fraternity told me: “Hey, talk to this investor. He just sold his company and would like to do this” — so he came on board and wrote me a check because he believed in me because he was a CTO of a big company tech company and “he understood the tech”. He said, “this is not possible, but I’ll give you the funding to prove it out.” So he gave me $30K and I actually built it out, hired a team and got a carbon fibre 3D printer. Which was a bad Opex.

The challenges

The first drone cost me all my savings from the research lab and I flew it and crashed it. Before I met that investor, I pitched to 100 investors and only two took meetings. Of those two, one invested. It’s a numbers game. Either you get really lucky and someone believes in you or you just keep persevering. 

It was about iteration — fall down nine times, get up 10. Continuous improvement is better than delayed perfection. That was my slogan.

One thing I realise now as a second time founder is that market timing is key. First mover advantage is key in a market that is right for the taking — and last mover advantage can be great if you can take out a whole market.

The journey to market and sales

I started thinking: What if I could find missing people in the forest? I listed a bunch of use cases for my market verticals. Then I read books on the business model canvas, value proposition, Lean Startup was a good one — and started to segment all these different industries and see how to apply my use case for that specific vertical. 

I had targeted firefighters, police departments, agriculture and construction. But without immediately saying what’s the best to go to? What’s my contact in that industry, what’s my network and what market can I acquire first?

It wasn’t until then that I realised construction companies are willing to pay a higher price tier for some value additions to save time on a person’s full time engineering job. And that’s when I broke it down: what’s the process that we’re saving? How much time are we saving? How many dollars are we saving? What’s unit economics and return on investment?

Understanding that allowed me to identify my customer profile much better. And I realised construction real estate was the main focus because you have to go through the sales cycle for the police department and the fire department — whereas the shortest one is construction/ real estate and also the one that has the biggest buying power and immediate need.

So it was a trial and error thing versus now, when I’m like: Okay, identify different verticals, then do 10 customer calls across each vertical, prioritise which has the most demand and most need, then build traction from there.

The bootstrapping/ VC paradox

At that point, I kept thinking the more I retain, the more money I can make. But it’s the opposite in venture capital, because the less money retained, the more money you’re worth. 

You have to give to get and it’s a reciprocal relationship.

I was anti “hyper growth” funding because I thought I was going to get bought out. I realised that you’re buying into a different network group and you’re buying into adding more value to a company and that’s not a bad thing to do in a controlled way.

VC money is very helpful to scale and grow fast and capture a market because things are moving fast. You can have something built here and in a month from now China will clone and duplicate it. Hence why it is better to build in house with inorganic funding to help you have an edge and be 10x better.

Fatigue and moving on

We raised 150k, we got a seed round offer but I’d been working for so long and bootstrapped for so long and we started making some revenue, and tried to break even. We had patents and we had validated the industry — but the timing wasn’t right, so a little bit too early. I had burnout previously, now the time is right, but I’d been doing it for so long that it got to a point where it was repetitive. 

So I said let me transition out and my co-founder came in and took the top seat while I took a step back to reflect and see what was going on.

I joined the EF programme in the midst of COVID-19 and lockdown and thought about what can I build? So I started talking to like minded individuals on the LD14 cohort and I came up with a COVID-19 screening tool that can screen COVID-19 based on x-rays and CT scans.

Using SMB sales as a beachhead

I kept on talking to radiologists and realised that Radiologists don’t want to lose their jobs — if the difference versus a human eye is 3% accuracy or 3% error rate, there’s no value there.

I realised I had to go more agnostic and go bigger than that.

We now have an algorithm that can take each medical metric for COVID-19 and rank them based on a scoring system from the Oxford medical handbook and screen for the probability they have the disease.

Rather than hospitals and GPs, we went for a beachhead market — specifically airports, corporates, manufacturing plants, sports venues. But the sales cycle was very long — 6 months or more. 

That’s when I transitioned my sales pipeline to 70% SMBs and 30% corporate because they are easier to sell to and the sales cycle is shorter.

If I get maybe 10 or 20 of these SMB paid pilots, I can say, “here’s my traction”, and use that as validation to target these bigger companies.

We just had a couple of corporates who reached out to say they’re interested and want to sign up for pilots, so we’re trying to build our pipeline to scale this but market time is key.

Finding the longer term play

The goal is to charge people two pence per scan, and then charge small businesses £250 a month for the installation and the subscription for the device, which is nothing. Because you just have it at the door and you can choose who to let in and out. If it goes green, let them in, if it goes red, don’t.

So the value was let’s get this out there for free, then at the end of the trial, they’ll pay X amount plus two cents per scan. 

The whole point of the data play is: the more anonymous data we have, the more anonymous data we can leverage. Once we run our AI algorithm on all this big data of thousands and thousands of people, we can use predictive analytics and inference to detect who has COVID anonymously. 

Optionally, we can share that with the government and NHS and sell it as a data play down the line and have this general AI that can detect any disease. 

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About the Author

MaxTB

Max Tatton-Brown is founder and MD of Augur, the entrepreneurial communications partner for "unsexy" tech.

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