03 May INTERVIEW* to Ignasi Fontanals, Opticits Co-founder & CEO
During the last decade, the concept urban resilience –the capacity of a city to recover after a shock– is becoming popular. And with reason, as confirmed by the United Nations, which asserts that “Globally, 80 per cent of the largest cities are vulnerable to severe impacts from earthquakes, 60 per cent are at risk from storm surges and tsunamis, and all face new impacts caused by climate change”. In this context, the start-up Opticits proposes a web-based tool allowing cities and corporations to anticipate these challenges. That is what Ignasi Fontanals, its co-founder, has told us.
How was Opticits born? Why did you decide to make your own business in this sector?
The company was born almost as a business case in a Strategic Management course that my father Lluis Fontanals was teaching in the IQS School of Management [Barcelona]. In class, taking advantage of my experience in the urban services sectors, we presented the study case of the German company MOBA, an on-board electronic manufacturer for cities and building sectors and precursor to the smart management. Simultaneously, Lluís, who had been manager both at the oil company Repsol and at the Barcelona City Council, was starting a PhD thesis supervised by the former dean, Dr. Jesús Tricas. He was applying risk analysis methodologies from the industrial sector into cities and leading a crosscutting project called 3Ss, with the support of PEINUSA and other IQS researchers. This project aimed at developing urban resilience from the top management in the Barcelona City Council. At this moment, we foresaw that cities would need to introduce the concept of resilient management in their operations, as industries had done it in the 80s and 90s and also that technologies related to the Internet of Things (IoT) would find an application. Moreover, the fact that we aimed at helping not only modern cities but also emerging countries or with important urban challenges was encouraging.
At the same time, we noticed that Barcelona was applying the organizational changes proposed in the 3Ss project by creating a new resilience department and designing new digital tools for urban management. Regarding the urban sector, the Smart City Expo was created, UN-Habitat opened an office for a new urban resilience program and the Rockefeller decided to allocate $100 million in its program “100 Resilient Cities” to create the new position “chief resilience officer” in the city councils. So we launched our project with the initial support, almost philanthropic, from FFF (friends, family and fools), some of them related to IQS, like Frederic Abellò, la Dra. Rosa Nomen and Dr. Julià Sempere, and thanks to a spin-off agreement with IQS.
What is urban resilience and why do we talk so much about it nowadays?
The concept resilience has evolved over time. In psychology, it is the capacity to successfully cope with a crisis, even traumatic, and to bounce back and rebuild your life to keep on as usual. Afterwards, the concept has been applied to other fields. Communities need to be resilient after natural disasters; economies must be able to recover, and societies must learn after crises. When theorizing, we have always talked about “prepare for, withstand, respond to, recover and learn”. We consider that a failure in power supply, a snowfall, a migrant crisis or a huge music festival are impacts that stress the normal functioning of urban services. And these impacts usually cause the failure of a service, leading to a cascading effect, a domino effect causing a system collapse due to an incident that sometimes is not evident. A real example was the pipe bursting that had led to the traffic jam in Barcelona and to the lack of water supply for 10,000 citizens, but more importantly to shutting down the emergencies service in Hospital Vall d’Hebron, one of Barcelona most important hospitals.
The same concept is being used in operations management in corporations. These new vulnerabilities affecting cities and companies, which are complex interrelated systems, are becoming more evident because of the climate change-related risks or technological risks. These risks are turning into real impacts. When this occurs the interdependencies and cascading effects between different infrastructures or services show the evidence that it is necessary to work with methodologies and technological tools adequate to this complex systems in order to face and react more rapidly and to avoid the consequent of economic damages and losses.
Who are your clients?
We are now mostly working for cities and major urban service providers, which complement their services with our tool. We are now also starting to work with corporations concerned about the effects of climate change and short-term disruptions on their manufacturing processes, as well as with critical infrastructure managers, such as transport and logistics, willing to manage their vulnerabilities to give the best quality service.
“Urban managers cope with the complexity of managing many operators and stakeholders that must be well coordinated and need contingency plans going beyond the current protection plans.”
How can your online tool help public administrations and corporations?
HAZUR is the first web-based tool that provides a holistic solution to model and simulate cascading effects across different services and infrastructures, helping to study cities to create resilience action plans and introduce online technologies to simulate and monitoring (IoT) city and business operations at risk.
Major cities need to be prepared for any scenario if they want to attract major events or create the conditions for a good quality of life, independently from the socio-economic status of their citizens. Intermediate cities, which until now were not in the smart and resilient cities market, need and are willing to be in. Concretely, urban managers cope with the complexity of managing many operators and stakeholders that must be well coordinated and need contingency plans going beyond the current protection plans. And corporations and critical infrastructures operators with supply chains and complex interrelated services need the same. We are willing to develop affordable digital tools to complement the existing ones to help them manage complexity.
What difficulties have you encountered when launching the project?
The main difficulty as entrepreneur has been to evolve from an academic project with public and para-public local actors into a profitable business model in a slow maturing market. Additionally, it has been difficult to protect ourselves from large corporations or public organizations that are elephants learning to interact with start-ups without squeezing them. In other countries, the private sector is much more structured; in Spain, it has taken more time to learn it and sometimes we mix up open innovation with market studies, with brainstorming for R&D departments or with campaigns to communicate on innovation. Good news is that the ecosystem is learning quickly and now large corporations are already managed as startups. In Barcelona, even if the public sector seemed to feel like going for it, some administrative tools were lacking, like those allowing SMEs and start-ups to access to public tenders, traditionally reserved to major corporations. Finally, I would say that creating a start-up is not managing a SME or a large company, but, in the end, we have done many things that the good entrepreneur manual tells you not to do… And we have made mistakes. When someone asks me to share my experience with future entrepreneurs, I explain all our mistakes and they have a place where to start with!
“In the US, a new investing sector is arising: the impact investing, which is between philanthropy and capitalism. It is disruptive in the European debate on who should take care of the common good.”
You have also participated in an acceleration program in the US, “Climate Venture 2.0”, specialized in impact investing. How was this experience?
The program funded 10 start-ups worldwide to go to Philadelphia for 8 weeks to review all the issues that an emerging start-up company must keep in mind, like the value proposition or the go-to-market strategy.
In the US, a new investing sector is arising: the impact investing, which is between philanthropy and capitalism. It is disruptive in the European debate on who should take care of the common good. They have told us that we had both to be profitable and help to solve an issue with a specific impact. After the program, we noticed that public initiative could be reinforced by emerging companies that have received impact investment without demonizing the private sector that it is investing. We have worked on this social impact investing approach, but it would have been great to have this experience when we started. In some aspects, we have repeated a class, but it has been also useful to reinforce the speech that all investors demand.
How many people are in the Opticits team now?
We are a multidisciplinary team of 4 professionals and several specialized collaborators. We have an important potential of scalability, since a part of our business model is based on offering on-line training on smart cities and urban resilience to worldwide experts that we train to provide services and use the tool. We also work in partnerships with small and larger companies (BtoB). We have now 40 certified experts over the world that can offer their services with HAZUR and 10 cities, both intermediate and major, that have studied their resilience using HAZUR.
What are your future challenges?
We are focusing on the development of the product to offer our web-based tool as a complement to other big platforms, and, in some cases, as a global offer integrating the IoT platforms in cities that need it and do not have the resources of larger cites. We are also participating in a European Horizon 2020 project, with 18 partners, including the municipalities of Bristol, Barcelona and Lisbon, as well as UN-Habitat. Our offer in our sector is now much clearer and would like to take advantage of being pioneers. We are seeing how many city stakeholders and from the smart cities sector are now adopting the same speech that made us born. For example, locally, the Provincial Council of Barcelona is already offering this type of services in its catalogue and resilience is taking more place in the research calls in the European Commission. We are also validating the tool in an industrial environment and the critical infrastructures management even outside of the urban sector. Regarding the geographical market, we would like to accelerate the open opportunities in France, where we are collaborating with the Ecole des Ingénieurs de la Ville de Paris and the University Nice Sophia Antipolis, which are willing to become a reference in the smart cities sector. The US are a very large market with insufficient infrastructures, and we are talking with Engineering Departments from East Coast and Midwest universities as well as with some local governments. Finally, we would like to continue collaborating with major urban service operators and ICT consulting firms that have included or intend to include our tool in their global catalogue to offer services related to resilience and smart cities.
You are now raising funds. What are you going to do with?
We want to take up the challenges I mentioned. We have started a €1m investment round, which we consider capital seed, because we need to scale up and accelerate quicker than the European H2020 project allow us to do it. We are therefore talking with the impact investment sector in the US and in Barcelona to show that we are very close to the initiatives promoted by UN-Habitat or the Rockefeller Foundation. We have also been approached by corporate funds of large companies that, even if they usually look for more mature projects, they think that we are well positioned to help them to put together resilience and smart cities as central elements to keep on offering value-added services to their clients. To face this challenge, we propose a €200,000 bridge capital, that can help us to prepare this seed capital round beyond family and business angels –and then to be able to go for a Series A investment– in order to become a reference in managing resilience for cities and companies with a web-based tool. As we cannot imagine a corporation or organization without an ERP, we think that in the future all type of organizations will need risk and resilience management tools.
*This interview was originally published in Spanish at AIQS News 79 (Start-up section), April 2018.