Teslasuit' co-founder and CRO Dimitri Mikhalchuk spoke about the intense IT youth, lunch with Zuckerberg’s father, cooperation with NASA and the application of Teslasuit in various fields live on ItStarts! podcast.
Who is CRO?
CRO stands for Chief Revenue Officer. Now it is a popular position in Silicon Valley. CRO is a person headed over marketing, business development, and sales departments. This post was invented to make decisions quickly, but the most important thing is the integration between these decisions. The correlation exists why certain things should be done. Information is transferred from one department to another accurately and quickly. In fact, I am in charge of the business in the company.
How to lose a contract from Intel
I moved to London in 2001, long before Teslasuit was established. I had been working for a French company, and as an employee of this company, I was invited to participate in a huge 37 billion project to upgrade equipment in Intel factories as we were one of the key suppliers of robotic equipment for them. The company asked to send a consultant to make everything go smoothly and to make a contract for three years. But the September 11 attacks mixed all my cards, so I had to stay in London as the flight was planned through New York.
For Intel, the fine for a 1-day delay is $ 500 thousand.
Since my absenteeism was perceived as force majeure, I was given a week to get there. But the Belarusian passport at that time played a cruel joke as they decided to hold and check me. So I did not get there even for the second week, my contract was canceled, and I was replaced by a Frenchman who was able to fly out quickly.
Education in Europe and Belarus
My story is atypical as I had been working at a French company since I was 15. I had been raising as the manager of the engineering department as the company needed that kind of a specialist.
Before I went to BSUIR for the microelectronics department, I had already understood what was going on and entered the university to confirm my qualifications.
The fundamental sciences at BSUIR were very strong. Then I had the opportunity to study in Germany, Belgium, France, and Britain, so I have something to compare. In foreign universities, I could sit staring at the ceiling and solve some higher mathematics tasks in my head. The teaching technique in BSUIR was higher. What Britain students decide in three actions it our reference formula, which must be remembered. Projecting this situation onto a British engineer, it turns out that I solve three times faster than him. All programming is reduced to mathematics, to the normal description of the process. If I see all this on the fly, then I don’t have to sit down, think over all this, and solve a math problem through 8 actions.
Moreover, at BSUIR I was taught not to afraid of unclear tasks.
On the other hand, I have a bachelor’s degree from Britain MPEG 7 and MPEG 21. I brought my coursework to Belarus, met with my classmates, some of them even work at the Academy of Sciences.
I showed them the coursework, and they told me: “You know, we will be engaged in such a task in seven years, probably.”
So much for the pressing challenge that is needed today.
Universities and corporations collaboration
My coursework in Britain was part of a real study that my uni was paid for. It was necessary to invent a new compression algorithm that would allow you to enter labels for the search. I had access to the most high-end laboratories, but most importantly, the customer company will become your future place of work as you had already been working on this project and know it inside and out.
In Belarus, we have no such feature. Here laboratories are needed to raise engineers for companies, not to solve fundamental problems for them. Now I am trying to make such a system work in Belarus.
We registered an international association called “Gamers and creators” and helped to create a game dev magistracy at BSUIR.
The essence of my thought is that students need to be taught. Now there are no paid researches at BSUIR because there is not even a clear legal base, so it can not be done.
My university in Britain earned 10% on students but generated $ 20 billion each year.
It works quite simply and interestingly. At the university, all professors are hired for projects and grants. A grant is approved by corporations or the Ministry of Digital Economy of the EU. Grants come in completely different scales. A company can spend $6K and get something really useful for them as a result of an undergraduate’s research.
I’ve been engaged in a lot of things. Since 2002 I’ve been constantly in some ideas. These were not global startups, but at that time there was no broad startup movement. But some projects were really able to make a splash.
Once I arrived in Minsk and went to speak at the Probusiness conference. For example, OneSoil startup did a spectrum analysis of the field using drones.
I smiled when I recognized this was similar to my startup as I had made my drone four years before.
But then I was already solving another problem. I was building a drone that can fly autonomously for 2 hours, and a user just selects key points on the map and enter data. I have already received the first orders, one of them was from Greece. There, the essence was in the development of swarm drones. This is a flock of interchangeable and communicating drones, providing 24-hour video coverage of the territory. This was necessary for the early warning of forest fires. But Teslasuit came, and with various buns and jams, I was involved in this project. So I ended up with drones.
I had my own laboratory in the garage at my house. I lived in two of the eight rooms in the house. The rest of the house was a garage, incorporated into the living area. It’s hard for me to say how much it all cost.
I’ve been collecting all this for 10 years.
I worked with the latest hardware, with all sorts of clever things. I used to spend thousands, thousands, and thousands on equipment. It wasn’t fake. I think I spent more than a million.
The story of how the guys from Teslasuit knocked on the door at 9 pm
I had never heard about Teslasuit before. I was introduced to them by my sister, who told the guys where I lived.
At that time, I was engaged in a bunch of projects and lived according to the principle “I could live anywhere, where it would be impossible to reach me”.
I just had enough: the delivery worked fine, there were Internet and an unmanned vehicle. I tried to live in silence. And then at 9 pm, someone knocks on my outskirts. These were the guys from Teslasuit — Dzmitry Marozau and Siarhei Khurs. Dzmitry and Siarhei came to Britain at the invitation of the BBC, which wanted to include a Teslasuit review in their documentary. After filming, the guys stayed and decided to try their luck in finding investors. They did not contact me in advance, did not write anything. In short, we met on the doorstep of the house. The dinner was on the stove.
Long story short, our acquaintance was like if we met in Belarus.
The guys came to show their project, exchange experiences, ask me a couple of questions as a person who has been living in Britain for a long time and was engaged in business to get some kind of mentoring. We looked at the product and I was not involved in any way either in VR or in game development.
I praised their project, we had dinner, talked and said goodbye.
Two weeks later, the guys returned with a list of questions. They returned approximately the same way. Their first request was to go meet investors who offer incredibly big money at an incredibly small percentage.
If your MVP is not made of platinum and it does not weigh like my house, and for it you are immediately offered $ 10 million, this is a scam.
I like questions like how to evaluate your MVP. I always answer like this: “If you had $ 200 thousand, would you give them to this MVP, put them in this idea?” We went with the guys for several meetings, but all were unsuccessful.
After that, the guys told me that they had been preparing for crowdfunding. Previously, I had not known anything about it as I somehow managed to finance my projects myself or with the help of people that I was acquainted with through a single handshake.
I began to study the issue. In the first review, I read that the lowest sums were usually collected in November, December, and January. The highest begin in March. And the guys came to me on October 31st. I offered them to check the statistics and explained why we should meet in March.
You’d better make decisions according to reliable data than play it by ear.
But they urgently needed money. Well, that’s how we started preparing for crowdfunding. I have my own digital agency in London where we are engaged in design and marketing.
My strong point was to translate from an IT language to an understandable one.
Then it turned out that it was necessary to redo the site, which looked like a white screen 30% of the time, then I saw that there were a lot of Russianisms in English. We began to rewrite it, then watched the script, saw that there were many promises that would be understood only by local people so the script was also rewritten.
At some point, we had to promote the MVP, and I provided an early loan for this. That is, at first I was as an adviser and mentor with a lot of involvement, and then I credited the company.
You can not perform successfully without money, any extra sum is always helpful for a startup.
We successfully recorded a video message on Kickstarter, gathered the campaign as it was, and used my passport for the launch.
It seemed the biggest con in my life.
I look at this retrospectively and understand that anything could happen as we did not sign any contracts. I don’t know how I ended up on a knife’s edge. As an engineer, I thought that you should dedicate all your time to the project for many years. But at the same time, I was impressed with how inspired and enthusiastic Siarhey Khurs was about the project.
We launched the project in January although I tried to delay the launch as much as it was possible. The campaign was focused not only on Britain, but it was also global, targeting western markets. We checked the statistics and found out that at that time 80% of VR hype was in the USA.
An IT gut in Vegas and lunch with Zuckerberg’s father
By launching the campaign, you must constantly support it. Serious PR was needed, it was necessary to raise hype around us.
We didn’t have a brand in VR, we were neither Masks nor Jobs.
Nobody heard us so there was no point stupidly yelling on the Internet. Fortunately, the Consumer Electronics Show (CES) in Vegas was just beginning in early January. It was the event that should be visited to speak loud on ourselves. No sooner said than done. I really wanted to go with Siarhey and Dzmitry, but the issuance of a visa to Sergey was postponed, and he was delayed. As a result, I had to fly only with Dzmitry Marozau.
And then he says: “You know, our company’s accounts have been frozen, I have $ 2 in my pocket, take them and do what you want.”
We were in Vegas for 4 days, then we went to LA through the network and started somehow making our way a little.
The online campaign was successful, local media started contacting us. We did a good job, went to the Discovery channel, showed the costume. At the same time, lunch with Zuckerberg’s father happened. We managed to call him and meet. We even tried to meet Mark, but it didn’t work out. Mark’s daughter was born in those days, and he was in Hawaii. He flew in the same day when we were supposed to fly out. Dzmitry asked me to stay, convinced that this would solve all our problems, but, unfortunately, for the month of my life in Silicon Valley, I completely ran out of money.
I think we spent at least $15-20K.
That month was spent well, we met interesting people who still help us to promote Teslasuit. But the campaign failed.
Results of the crowdfunding
The campaign collected only 20% of the amount needed. We wanted $ 250K but raised only $ 50K. On Kickstarter, if you did not collect the hard cap, you have to return all the money to users. At the exit of the campaign, we got zero. But it was for the best. It was better to lose the money invested in promotion.
At that time, the product was not yet fully understood, the guys miscalculated a little that it was a consumer product, that the bet should be on VR.
Today, the costume is being sold in the b2b segment at a much higher price than originally announced. But this price is considered acceptable in the field we work in.
Crowdfunding was needed more for public relations and to hold out. Everything else is based on angel investors. In principle, this is how all happened. We managed to attract as much traffic to the site as we are now attracting being a company with a good promotional budget. People really learned about us then. When we exhibited at CES the following year, the top 10 US media interviewed us.
Becoming a co-founder
Initially, the guys suggested that I help them organize somehow, help with business analytics, figure out how to pack the product, identify the targeted audience. I helped to solve all these issues.
A little later, the question of management arose, it was not clear how all this was done. Crowdfunding made it clear that some decisions were a little spontaneous and did not correspond to the logic of the business. Dzmitry Marozau was then registered as CEO, but somehow it was not clear. I gathered the whole team and suggested Dzmitry stay at his position and role in the company, but let the team switch into the making mode, create some kind of management board that would make decisions together.
Dzmitry replied that he was the one and only CEO and that his decision would always prevail.
Then we said goodbye. At that time, we had potential Belarusian investors with whom he was going to raise the first million with Sergey. They left. After some time, we accidentally met in Moscow. I came there with Dzianis Dubsky to speak on Teslasuit at the first VR&AR exhibition, the team supported me, they even gave me a suit.
I stood there, promoting a product that wasn’t even mine, but Dzmitry came to me and said that we all should go for nothing, that he was the CEO and the organizer.
I regretted that I kindly entered the whole team and we were given tickets for all. At some point, the shareholders and the team decided to hold a joint meeting and find out from Dzmitry where the company was going. There was a long debate. Dima was offered a cashout since he did not want to stay.
Shareholders at that time were very dissatisfied with the way the company was managed, the case could even go to court.
Dzmitry agreed to the cashout. By that time, he had already had such a reputation: he says a lot of things but does little. After that, the shareholders gathered without us, because the situation was difficult as officially Dzmitry was the only CEO and the only financial director. They decided to change this situation because no one could achieve either an audit or normal information, and the shareholders removed him from this position.
They put me in so that I could help with the audit and understand what was happening. This all became the starting point for me. We threw ourselves in details. It turned out that there was always no money left and intellectual property was registered in some strange way. In general, we found a bunch of operational problems.
Thank God, I had partners who became angelic investors with me. We poured more money so that everything would not be lost.
Dzmitry Marozau always broadcasted to the team that “these are investors who owe us because we have an idea, not we owe something to the whole world.”
This concept is interesting enough, but it doesn’t work in the business.
After that, he began to pull away and at some point decided that he was scammed, although he was offered good cashout. There was a split inside the team. He deleted himself, then he tried to illegally rewrite himself in the registers, although he was not related to the company. But we left all of that behind. We broke up with Dzmitry Marozau.
Litigation in Scotland
To resolve the situation, the company had to sue the former director. At the trial, we proved that there was acting for personal reasons using the company’s resources, there was no accounting for three years, taxes were not paid, finances flowed off to nowhere. Since the company was registered in Scotland, we sued there. Never register a company there! Scottish law is different from English, and all documents are kept in Scottish. Lawyers will take you for everything you have for every hour of work.
There was no transparency in our company so the shareholders did not know how much intellectual property there was, which domains, sites, and servers should belong to the company.
It all was paid with the money of the company, but for some reason, everything was registered on Dzmitry Marozau. I had to conduct three trials to return all intellectual property to the company. We warranted all three trials with a bang. But to be recognized in Belarus, we had to use international law. So far we have decided not to bother because we are good with that.
The main idea was to restore the intellectual property and to collect it together. But, unfortunately, for our debts, IP went to a company that did not have debts.
In fact, we satisfied all claims from all shareholders, potential investors, tax, clients without Dzmitry Marozau. He considered that he was not needed there. After his departure, claims began to appear against Siarhei Khurs that Dzmitry was indebted everywhere. For some reason, all this came to me, I compiled a list of debtor creditors, and we slowly returned all the money, although we had nothing to do with it.
Collaboration with NASA
NASA became our customer. Today we are working with a laboratory called Advanced Human Performance.
Our suit allows you to train a person’s performance both mental and physical.
Teslasuit works directly with the impulses transmitted through the skin by the brain. Accordingly, we can create impulses in the opposite direction, which stimulate the brain to work on our muscles, on our body and our neuro system. This helps bring the body to a state of maximum training. Our body understands that there is an external stimulus that is very clearly programmed to irritate only in the right places, in the right proportion and at the right time. Through VR or AR, we can deliver a new world, a picture for which we need to train a person.
On the space field, we are introducing the concept that the brain must forget that the feather is the feather because if you hit it in zero gravity, you can fly away yourself.
The question of mass is differently solved in space, so the trainee’s mind must be changed.
We have already made the first successful launch under the program with the European Space Agency and conducted a test in zero gravity in a special plane. Together with a Canadian-French company, we are doing a VR project for this training.
With NASA, we are preparing an interesting concept where we first rotate a person, the world moves around him, he plunges, and we monitor how he reacts to certain pictures.
The goal here is to make him forget that we fastened him to the simulator.
And then we give him a feather, ask him to reach it, and his hand weighs 20 kg. And behind the feather, an oxygen cylinder lights up which will soon explode. Therefore, you immediately urgently need to reach the feather out and take some action. You try to reach, but you can’t. The issue is to train your brain to react correctly and to produce a certain dose of adrenaline.
We teach people to respond to non-standard situations in a non-standard position because the floor and the ceiling have no meaning here, from which the brain comes into dissonance.
Thus, the body and muscles must be fully prepared for the fact that in zero gravity everything will be different, and work must be done together with the brain.
If a person dies in a simulation, this is a very unpleasant feeling. This does not necessarily hurt, just unpleasant. The brain responds very vividly to this. A failed mission in space is the biggest failure as tens of billions of dollars may be wasted.
Here we are trying to make sure that during the mission a person does not think about anything: neither about the family nor about the land or the grass in the window. He should just focus on the task. Sometimes you can do more reflexively than by processing information and assessing risks.
In short, we completely rebuild the neuron network, plus we give it a signal that it can act going beyond its standard parameters.
Use of Teslasuit in sports and medicine
This costume can be used in various fields, but we cannot cover everything at once. We are now starting to work on sports, we already have the first experimental hockey team for which we are creating an interesting project where we will just take some aspects of the player and help develop them.
Our costume is completely wireless and bi-directional, we can both give sensations and collect biometric or biomechanical data.
Another area of interest to us is medicine. There is such a thing as insurance medicine and rehabilitation. There the cost of everything is high.
So, our suit, which can measure heart rate, harmonic resistance of the skin, stress level, ECG in real-time, sending it all over Wi-Fi, is several times cheaper than classical rehabilitation. We are already conducting a deep study with universities in several countries around the world simultaneously.
If an individual now wants to buy our costume, then he can do it. But it is not very interesting for our company. We will provide everyone with the same level of support, and an individual who does not have an interesting project, which will later become a mass market, also requires some of our resources. We prefer to work with a future b2c or b2b2c project.
When we did crowdfunding, we just had the idea that we were going into entertainment like the film industry and game development. From there, we began acquaintance and friendship with some game dev companies. Some are already wondering when will we enter the consumer market.
This is a burning question and a huge market, we cannot ignore it.
Today in the world there are about 400 million paying gamers. But we must go out with virtual reality on game dev. This is how we see the environment right now. Although in other industries, our suit can work without virtual reality and without augmented one either with them or with a regular phone.
But the VR market itself is now not ready as gamers can not yet but our costume in a store for an affordable price.
The first step in this direction is Oculus Quest, which costs $ 400 and works without a computer. But it does not have much content, also there are nuances in its performance. That is, we need to wait for 1-2 production cycles until Oculus is updated, and then game manufacturers will release their games for it. We are friends with them and are discussing all this. The development cycle is about 4 years, so we still have time.
Is it better and easier to look for investors in Silicon Valley or in London?
Those startups who eager for foreign investment often make a mistake. They go to the valley, nothing comes of it and they just spend their money there. Now you don’t have to go anywhere as everyone comes to us. Here you need to attend events and communicate with people. Everything is pretty transparent now.
Shares of hardware and software
It is always very difficult to sell hardware as it has a limited lifespan. Users get tired of hardware, they need frequent changes. It is better to make software prevail rather than chase constant updates. We deal neither with smartphones nor watches, our hardware is very complex and expensive in terms of R&D.
We started with hardware, now we are finishing to improve the platform, and then with the software, we will finish all the interesting jams.
The only thing I have to prove to our potential customers is that our body does not change every year so it does not need to be updated. But we can offer the collection of various data in the form of telemedicine, telerehabilitation, preparation for sports.
The components in our suit are understandable enough for serious engineers, so we have already put on the agenda the question of what kind of protection we have.
Protection lies in algorithms. We made hardware fast enough and began to write software and algorithms. Further, each department develops algorithms for its tasks. It is impossible to just go and copy.
The company’s state for today
The startup was born with problems, not everything went smoothly. But since then we became a serious company. We did our best for the project to develop and grow by almost 200% per year. The team becomes bigger and stronger every year. We started with 10 people, then there were 50, now there are 150 teammates and our factory, mass production, awards. Soon we will open an office in Houston, USA.
Houston, we had problems but we have already resolved all of them, we are strong and we can handle anything.
Now our team consists of professionals, each in their own field. We have a dream team. But the guys who started the project in the garage are still in business. The same Siarhey Khurs is our CTO now, he is maintaining all the R&D. We annually pay the compulsory courses for the employees so that they improve their skills.
We don’t talk much about our evaluation, but I can definitely say that we are among the five most expensive projects in Belarus. The British government has already informed us that we are no longer a startup if to consider the company’s size and R&D investment.
My office is here in Minsk. I rarely go to London now. It is really cool here in Belarus. We find cool guys who quickly fit our team.
I like how it all works here. The guys here are kept by the project itself, they are absolutely 100% motivated by it.
Here we are conceptually changing the approach to rehabilitation, training, and computing. Fundamentally we break several patterns at once. Therefore, our project may be a long shot, profit may not come tomorrow. But that is the point! It is impossible to change the world in one day or even in three years in our case. But our plans are clarified, we know what we want and where we need to move.
? I have already passed the report and I know what we will do in 2024.
We showed everyone that directly from Minsk you can create world-class products with international recognition. There is no problem with the fact that we speak Russian or Belarusian, that we are Slavs, that we are from Eastern Europe.
When you make a cool product, present it appropriately, your location does not play any role. Winners don’t make excuses.
Guys, create products but do it properly. Then you will not have to make excuses.