RealWear – Seeing the World
A recent ACG event in Vancouver featured the leaders of RealWear telling their growth story to business leaders from the area.
Andrew Chrostowski, Chair of RealWear’s Advisory Board and recent COO at the company introduced the panel and facilitated the Q&A session with Andy Lowery, CEO and Co-founder, Chris Parkinson CTO and Co-founder and Andrew Lee, Chief Financial Officer.
Head Mounted, Voice Activated, Computing plus Video and a Global Connection
Chris, the primary inventor of what is now RealWear’s core product, the HMT-1 – a head worn computer with video and wifi using hands free technology (see the image at the bottom of the article) – gave the audience a brief history of the product and RealWear. Chris came up with the head mounted computer concept while working for Kopin Corporation nearly a dozen years ago. The company invested $30 million in the technology resulting in 100 patents. There is a profound change moving from a handheld device to a voice activated machine and this change is what RealWear’s device is leveraging in the marketplace. Chris left Kopin in 2015 and secured the licensing rights to commercialize the technology. He met Andy and on February 4th, 2015 RealWear was started.
Chris meets Andy and the RealWear journey begins
Andy thought the product Chris invented was interesting but used his teenaged children as the litmus test to find out just how good. When they touted the head mounted computer phone as “pretty cool”, his belief in the product potential multiplied.
RealWear was able to create a prototype with little upfront cash, conserving valuable cash to find customers and commence operations. They began selling the product in 2017 and have had strong sales growth in the last two years.
Andy described reasons for RealWear’s success in a number of ways:
- RealWear has experienced the benefits that emerge when People, Product and Timing intersect. Andy referred to this as serendipitous, but most in the crowd strongly suspected their success was due to far more than that.
- RealWear has had plenty of luck, inspired by the collision of persistence and opportunity.
- An important part of the company culture is humility, “strong humility” Andy emphasized. This means listening to all giving input and believing success – product innovation - is more likely to come from listening to others than listening to oneself.
- The caring spirit displayed by local and international partners has provided RealWear with what they need time and time again. Andy noted that one of the best decisions he has made was moving the business to Vancouver, Washington.
Where is the business today?
Making a comparison to racing a mile, Andy labeled 2020 as being the third lap of the four-lap race. Setting up the company to be in great position to start the bell lap and create a breakout year in 2021. Their recent capital raise allows RealWear to focus on bringing a more comprehensive solution to customers, continue to grow with their global customers and fund research and development required to stay in the lead.
A key part of RealWear’s strategy is to expand their “ecosystem”. This includes expanding their relationship with software partners, vendors, community partners and other potential collaborators.
The scope of RealWear’s technology today:
- Certified in 55 countries
- Operates in 14 different languages
- 200 solution partners within their ecosystem
The “remote mentor” aspect of the HMT-1 is still the highest selling use of the device but as applications (and imaginations) grow the RealWear leaders expect workflow uses to expand and drive further growth.
On the morning of this ACG meeting Andy had a request to use HMT-1s as part of the solution to protect health care workers who are giving aid to patients and striving to solve the coronavirus epidemic.
Andrew Lee’s advice from RealWear’s successful USD 80 million capital raise last summer.
- Hire an investment bank that knows where to find investors willing to invest in what you have to offer. This same theme played out in other parts of the presentation. Having an independent set of eyes that understands your market and knows the boxes an investor needs to check before even speaking with you is a huge time saver and value add to the process. In fact, Andy mentioned if he did it all over again, he would invest more time in finding qualified and willing investors in their product than he did in their initial funding rounds.
- Andrew’s team took the “boring” stuff seriously. A key example he noted was making sure their data room was fully furnished before inviting investors in. He estimated 90% of the questions from potential investors were answered in the data room before they opened the doors. Andy added, he believed RealWear has some of the best processes in place for a company at the funding stage RealWear is at.
- This preparation made the due diligence process easy for RealWear to execute (Andy qualified Andrew’s comment by inserting “relatively” before “easy”) and once doors were open, helped speed up the process.
- RealWear had specific targets for the capital raise that included growth in these three areas:
- Global expansion to stay in sync with the expansion of their enterprise customers
- Bundled solution sets for the HMT-1 to make the product “plug and play” for a growing customer base
- R&D to stay at or near the front of the pack for the home stretch.
On a capital raise for a young company being like an actor on an audition.
Andy compared being an early stage company raising capital to being an actor. You have to lay it all out on the line in every audition. Teflon is required after numerous rejections with a reality check that includes the questions, “Are they not a fit for us or is there a deficiency in our product?”
Next Steps for RealWear
RealWear’s market for the HMT-1 is relatively free from competition today. Andy doesn’t think the route they took can be duplicated. However, there are many large, well capitalized companies who have an eye on this space. Positioning the company to compete with new entrants or take advantage of their presence is a key part of the company’s planning process.
Being the self-described “most mature process company in the startup world” gives RealWear many advantages related to being able to get things done quickly and effectively. The RealWear leaders plan to use these advantages to stay in the lead.
They are focused on growing their ecosystem and technology in ways that allow RealWear to launch more and more customer driven solution sets (plug and play products) in the near future.
To stay on their current growth strategy RealWear will require more capital. The three logical ways this capital will be raised are:
1. Another round of private capital
2. An Initial Public Offering
3. Investment by a strategic investor
Closing Advice from the RealWear Leaders
Focus on running the race in front of you. Nobody has ever won a race by watching what’s behind them.
Thank you Andy, Chris, Andrew L. and Andrew C. for sharing the RealWear story you have written with us. I can’t wait to read future chapters.
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