Starting a startup from Okinawa:: from discovering problems in the field to Product-Market Fit
Note: This is a revised translation of the original article published in December 2022.
Hello This is Onishi, CEO of LiLz Inc. It has been six years since I founded LiLz on July 28, 2017. Based in Okinawa, our mission is to address challenges that occur in fieldwork and provide solutions by harnessing the power of machine learning and IoT technology. We aim towards establishing ourselves as a solution provider from Okinawa for industrial clients.
Currently, our company offers a service named "LiLz Gauge", which seamlessly combines IoT and AI into an innovative SaaS (Software as a Service) solution. This service specifically optimizes visual inspections, revolutionizing the way they are conducted at present. In 2021, we secured 250 million yen (approximately 1.73 million USD as of 2023 ) in Series A funding, marking a significant milestone in our journey. As a result, our business has now embarked upon an expansion phase. Lately, with our company progressing to the next stage of growth, I would like to reflect upon the remarkable progress we have made since our origin.
This article serves as a comprehensive reflection on our company's journey from its inception to the successful launch of our pioneering service. It aims to summarize the key milestones and significant events that occurred during this transformative period, providing a clear account of how we progressed towards the launch of our service.
Table of Contents:
Founding and Origin of Company Name
Markets, Customers and Founding Team
From concept verification phase to service-in (CPF to SPF)
Founding and Origin of Company Name
Back in July 2017, LiLz emerged as a carve-out from an IT venture based in Okinawa. Born out of the IoT and machine learning R&D sphere, the purpose of our team was to expedite the creation of new businesses. The name LiLz, short for "Lifelong innovation Laboratory, a to z," embodies the commitment to continually develop products with a high degree of completion.
Coming from a software engineering background, I was involved in the development of products for factories in the manufacturing industry and consumer products for a long time. I have witnessed the challenges firsthand, where the only common point of discussion for hardware and software departments in sites was through API specification. Due to this lack of coordination and mutual understanding between departments, the communication would cost a huge amount of time and the user experience was not good as a result. This led me to have a profound sense of discordance.
Derived from these experiences, the name of our company reflects the concept of creating an environment where there can be open discussions, transcending the barriers between hardware and software departments. Consequently, delivering products with a high level of perfection by focusing on user experience.
However, it is important to acknowledge that the early days of our founding were far distant from this ideal. During that period, I dedicated myself to exploring new technologies that would serve as the foundation for our future products, all while sustaining the company through contract development and consulting work. It was my inaugural experience in running a company, and upon reflection, I must admit that there were numerous embarrassing moments along the way, even there were times when the account balance was dangerously close to zero. There were days filled with anxiety about financial stability leading to sleepless nights. Nevertheless, I persisted with my commitment to research and development, relentlessly driving forward for an uninterrupted year.
Markets, Customers and Founding Team:
Finding the perfect challenge for our team. One of the central themes during the early stages of our journey was finding a challenge that aligned with our team's capabilities. As the founder of the company, I believed that achieving Team Market Fit held more significance than the traditional Founder Market Fit. Each day, I met with businesses introduced to me, seeking opportunities that would resonate with our mission. However, the search proved to be quite challenging.
During this period, I was fortunate to get introduced to Ms. Sugihara (pictured on the right), who was actively involved in an accelerator program called LEAP OVER.
Through Ms. Sugihara's network, I was offered an opportunity to participate in Takasago Thermal Engineering's acceleration program, which was supported by her. This moment led us to the successful launch of our current service, LiLz Gauge. It's worth noting that during this program, we made the decision to change our initial product idea, ultimately securing Founder Market Fit (Team Market Fit) and achieving Product-Market Fit (PMF). On a side note, I would like to extend my heartfelt congratulations to Ms. Sugihara, who appears to have ventured on a new entrepreneurial journey of her own.
Service in from concept verification phase (CPF to SPF)
During that time, in our quest to solve the problem at hand, we conducted numerous user interviews and extensively researched similar services already on the market. It became evident that leveraging our team's expertise in machine learning alongside creating our own camera (hardware) would bring our vision to life. To validate Customer Problem Fit (CPF), we embarked on three parallel paths:
Through a meticulous process of combining prototype development and hypothesis testing, we discovered that our solution resonated strongly with customers. With this validation, we made the decision to proceed from Problem Solution Fit (PSF) to Solution Product Fit (SPF), commencing full-scale development.
However, before the full-scale start of camera development, everyone on the team, except me, strongly opposed the camera development. Despite the clear problem-solving potential of the camera, concerns arose such as the existence of similar cameras in the market and the perceived risk of hardware production, given our team's strength in machine learning. These contrary viewpoints were expressed by various team members.
This incident served as a crucial opportunity for me, as the founder, to reaffirm my beliefs. I was determined to bridge the gap between hardware and software, and if necessary, I was willing to develop the hardware myself. I wanted to prove that it was possible. Based on this unwavering conviction, I casually told the team, "It's still in the prototype phase, so don't worry," and secretly captured photos of the instruments every night using a single-lens reflex camera, a smartphone, and the prototype camera. After taking more than 1,000 shots, we were able to finalize the product specifications and complete the development of a camera for mass production.
This endeavor served as a testament to the effectiveness of combining cameras, AI, and the cloud in solving customer issues. Presently, team members often reflect with laughter, saying, "Mr. Onishi actually built the camera himself. We were mistaken to oppose it back then. We now understand." Consequently, I was able to earn the team's trust as the founder, further strengthening our unity.
After two years of dedicated development, our service was successfully launched in June 2020! As of 2023, approximately 3,500 cameras are in operation at various sites, with 20~30 new businesses trying LiLz Gauge every month. Just as I believed we had achieved Product-Market Fit (PMF), a new PMF opportunity emerged, and we embarked on a fresh cycle of development. I look forward to sharing more about the pre and post-PMF journey on another occasion.
From the very inception of our company until the achievement of Product-Market Fit (PMF), the humble sauna has been our steadfast companion throughout our hectic five-year journey. In the early days, when we were conscious of minimizing travel expenses, we began our journey by staying in capsule hotels because they were budget-friendly. Capsule hotels usually come with saunas, so saunas became a routine part of our trip. And as time went on, these saunas became more than just a means of cost-saving; it turned into something we grew to enjoy. I owe a deep debt of gratitude to Mr. Ohashi and Mr. Yamamoto, from the company called Class Method, who not only imparted basic knowledge about the nuances of saunas but also introduced me to the Ueno Hokuou and Kinshicho New Wing saunas. I look forward to visiting these saunas again in the near future!
Growing up I have seen my father, a professional electrician, now 75 years old, to continue to work even after retirement. His proficiency in his trade allows him to find jobs effortlessly. From childhood, I have always seen my father donning his work clothes, and this has instilled a deep attachment to work uniforms in me rather than suits. This fills me with excitement whenever I visit a worksite, and curiously, it brings a sense of calm to my heart. Interestingly, even though my parents had little understanding of my work since I started my career, they understood the concept of the LiLz Gauge service. Witnessing their understanding made me really happy, and I hope to one day see our cameras be installed at my father's work site.
With the goal of expanding its presence overseas in 2023, in 2022 LiLz Gauge has exhibited at trade show events such as CES (Las Vegas) in January, MWC (Barcelona) in March, and Automatica (Munich) in June. Currently, we are engaged in business negotiations across various countries. Our innovative solution has been successfully implemented in a diverse range of facilities at chemical plants, industrial gas, medical gas, water and sewage plants, office buildings, hotels, hospitals, bridges, and rivers. We remain committed to continuously enhancing the quality of our services to ensure they can be readily employed at sites around the world.
As we embark on this exciting journey, we are actively seeking talented individuals to join our team and contribute to our business expansion. We have openings for Engineers, Customer Success Managers, Sales professionals, Project Managers, and more. If you have experience in cloud-based development and aspire to utilize that expertise to create tangible products, or if you are eager to take on the challenge of expanding our presence internationally, we would love to hear from you. We also have members contributing through contractual work. Since our operations are fully remote, you don't need to reside in Okinawa at all. However, if you find tropical nature with no pollen alluring, you are most welcome to Okinawa!
Thank you for reading it till the very end.