Candl Monthly Update – September 15th, 2017

Team CANDL in St. Louis.


Asks For Help

30-Second Ask: Content Ideas – We’d love it if you could hit reply to this email and give us three topics you’d like to learn more about regarding the smartphone and wireless industry. Curious about the new iPhone X? Wonder how unlimited plans work? Want to know more about network comparisons? Help us prioritize our topics for our upcoming content push!

Slightly Larger Ask: Intro to Retailers – This month we’re approaching several retailers about potential partnerships. We would love to know who in our network has connections at the higher levels of retailers such as Target, Walmart, Best Buy, CVS, Walgreens, 7-11, etc.

Successes

1. We are developing a partnership with GoGo!

We met with GoGo in Chicago last week and came away with a verbal agreement to use our platform to help international travelers get connected when they land. Travelers on international flights would see an ad on the GoGo splash page and CANDL would fulfill the connection need. Our relationship with GoGo could lead to an exclusive relationship with T-Mobile for flights in-bound to the US. We have a lot to set up before announcing this publicly but we definitely wanted to share the news with our advisors and investors!

2. Tracfone wants to work with CANDL too! 

We had a really great meeting with the senior leadership team at Tracfone where we discussed multiple ways CANDL can help Tracfone prepare and embrace the migration from physical SIM cards to virtual SIM technology – and especially eSIM. We’ll be following up with a demonstration of our technology in person in Miami in a few weeks. Tracfone is a part of American Movil, which covers the majority of the western hemisphere – making for a phenomenal growth strategy for CANDL.

We’ve also talked with several other MVNOs here in the US including Republic Wireless, and Ultra Mobile and others who have expressed strong interest in being involved in the carrier store. These are early conversations but all signs point to us being able to have some carrier partnerships straight away when we launch.

3. Our Demo app is complete!
The front-end of our carrier store demonstration is now complete, and our engineers are returning their focus towards the virtual SIM distribution technology. We’re on track to have the virtual SIM solution ready for demonstration by mid-October. If you have an Android device and would like to try out the demo app drop me an emailand I’ll send you the link.

4. We’ve begun testing our go-to-market plan
One thing Techstars drilled into our heads was “sprint towards not good enough”. We’ve been focused on the hardcore technology behind virtual distribution of SIMs to smartphones, but now we want to turn our attention towards engaging with consumers who wish choosing and changing wireless plans would suck less. Look for more updates on this over the next few weeks.

5. We will be generating revenue before the end of the year
We are crystal clear about what we want to build long-term, but only in the past month have we really dialed in our immediate go-to-market plan. We’re actively sprinting towards revenue now, and expect to be generating fantastic insight into our model – and actual revenue – before the end of 2017.

Challenges

1. A fast-changing virtual SIM global landscape
Six months ago it was unclear whether a standard would emerge that would be globally adopted for virtual SIM distribution. In the past 60 days however it’s become clear that GSMA’s eSIM will likely be rolled out globally by many or most handset manufacturers starting in 2019 and proliferating to more than 1 billion smartphones by 2021.
What’s hard to gauge is whether eSIM will be 100% dominant, or if there will be other virtual SIM solutions adopted by carriers. This makes it difficult for us to decide how much effort we put into our own virtual SIM solution (to roll out a solution now) or wait for the massive rollout of eSIM – in 24 months.

2. Solving a problem right now vs. solving a problem the way we want to 
One of the most humbling ‘aha’ moments I’ve had at CANDL came about 4 weeks ago when a friend reminded me that we can solve our customers’ problems right now even if we don’t have a virtual SIM solution ready to roll out across every device and every carrier. If our virtual SIM technology is going to take up to 24 months to roll out, why not start with a physical SIM, or some other solution, and move to the virtual solution when its ready?
This revelation led to us decoupling our launch plan from the virtual SIM technology. Instead, we’re going to solve our customers’ problems as best we can right now, and improve our solution over time. Doing so will give us far better insight into our unit economics, what consumers really need, which consumers resonate with us best, etc.
You know, all the things lean startups should be doing.


 

Key Activities

This is a new section in our investor update. We are tracking five key activities at CANDL: partnerships, proof of market, prototype development, patents, and financial runway (burn). Below is an update on each activity.

I. PARTNERSHIPS
(3) at NDA stage, working towards LOAs

As mentioned above, we’ve begun exploring partnerships with GoGo, Tracfone, Ultra Mobile and Republic Wireless. Next we will be exploring possible partnerships with retailers. We’re asking our network to help us with high-quality intros to retailers such as Target, Best Buy, CVS, Walgreens, etc.

II. PROOF OF MARKET
New website under construction, rolling out by 30 September

If we can’t roll out a virtual SIM solution immediately, we can still solve customer problems, test messaging, learn about our customers, and develop unit economics with a physical SIM solution. We’ll launch this new website in the next two weeks to begin converting customers through affiliate links and physical SIM fulfillment strategies until our virtual SIM solution is ready.

III. PROTOTYPE
Demo App Complete, working on Virtual SIM Demo

Our engineering team completed the demo app and is focused on the virtual SIM technology with a specific smartphone (the Moto G5). Engineering estimates that we’ll be able to demonstrate the virtual SIM portion by mid-October.

IV. PATENTS
Four areas identified, 3-page abstract due 9/22

Todd Merrill has taken the lead in developing our patent submission. Having filed 55 patents in his career Todd is definitely well-versed in taking big ideas to the patent office. The first 3-page abstract for our first patent is due in 7 days.

V. RUNWAY
3 months runway (December)

We are beginning our next raise in one week. We have some early commitments to this upcoming round and are confident we’ll be able to raise what we need to get our virtual SIM marketplace to revenue!


 

Monthly Highlights

CANDL On-Site in St. Louis

Team CANDL in ‘The Lou’

Once again we brought the entire team (except Nicole – the kids are in school now) together to work side-by-side for a week. This time we did it in St. Louis, where three of our team members live. In true startup fashion we shared one Airbnb (I took the couch, and Kate & Kelly shared the master bedroom). We had a great time working and playing together for a week, and again came away with a ton of insight, alignment, and to-do items.

The social highlight of the week came when we “Escaped the Room” with 18 minutes left on the clock, and were one of the fastest finishers ever in that particular room. Kelly pretty much takes over in Escape the Room, and we all work hard to keep up with her 🙂

Hurricane Irma

South Florida definitely took the brunt of the force from Hurricane Irma, but we weren’t spared her wrath here in Atlanta. I learned how to cut down a 70′ tree the hard way, and luckily found a generator to provide much-needed Wifi and TV for the family on night #2.

We were one of over a million houses without power in Georgia, and it didn’t come back on for 3 days. Ironically some of the folks we had planned to shelter from Miami and Orlando who ultimately stayed put and rode out the storm wound up faring better than us. You don’t truly appreciate electricity until you go 3 days without it.

Our thoughts are definitely with all of those affected by Hurricane Harvey in southeast Texas and by Hurricane Irma in Florida and Georgia.


 

Closing Thought: We’ve got something really big here. 

An idea big enough to change the world. Really. 

Over the past seven days we’ve met with senior leadership at GoGo and Tracfone. Both meetings went far better than we could have possibly hoped, and both have asked us ‘how fast can you get this going’. We’ve had great conversations with Ultra Mobile and Republic Wireless as well. And we’re just getting started on business development!

At the same time, more than a handful of seasoned executives have told us that our idea is crazy, unrealistic, and will never, ever happen. One industry expert with 40 years experience told me I was “wasting my time and my investors’ capital.” Another told me if he were still at his former company, he’d have his legal department write a cease and desist letter to us.

And for really big ideas – the transformative ones, the ones that really change the world – that’s exactly the kind of polarization you should expect. We are messing around with some fundamental elements of a trillion-dollar industry. Of course some folks are going to react viscerally to that. What they don’t understand though is all the dominoes have already fallen, and we’re just going to be in the right place at the right time.

Here’s another way to think about it: Name ONE virtual good that is sold through a physical store besides phone plans. As soon as the SIM card goes away, they will be sold through a virtual store. Like ours.

Every time a physical good was virtualized, the physical retail channel for that good all but disappeared. Ask Blockbuster, Hollywood Video, Sam Goody, and the Yellow Pages…

We’ve got a BIG idea. And we’ve got a GREAT team. With the right resources, the right spirit, and the right timing, there’s no telling what CANDL can accomplish over the next 24 months. We’re not perfect. We’ve made mistakes along the way and have a whole lot more to make, but we’re a driven, resourceful, and motivated team with a ton of experience and energy aimed in one direction.

The next fundraising round for CANDL will start in a week. We have early commitments already, and I’ll be reaching out to many of you very soon to set up in-person updates. In the meantime, I hope you will all continue to follow our progress and join us on the journey as we fundamentally change how people get online around the world.

Cheers,
-tom