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SKYFChain is the company focused on the deployment of unmanned logistics on the blockchain-based Business – 2 – Robots operating platform. SKYFChain is a spin-off of SKYF project – the first industrial grade heavy cargo drone.
The company is rolling out its first operational tests in the Russian agricultural sector; it’s developing in the logistics field with an oil and gas company and is planning to expand to Asia soon as a franchise.
We recently sat down with Alexander Timofeev, the founder of SKYFChain, about the project as well as their thoughts and insights.
Alexander, thanks for joining us today. Can you tell us more about yourself and SKYFchain?
I am a serial entrepreneur; I have worked with 20 various businesses, nearly a half of them in the high-tech sector. 70% of them were successful – it’s not a bad rate. 7 years ago, I launched the FPI venture fund together with a partner. Our business model is to invest in industrial technology startups in the early stage. We are not only financial investors, we are acting as co-founders.
SKYF is our typical project. Three years ago, we met the three young entrepreneurs from Kazan (Russia). They had a new idea of vertical takeoff and a landing platform. It looked promising. Our investor partners and we decided to support their project. $5 million is already invested, I have been running this project as a CEO for a couple of years now, and we have successfully created and launched the first heavy drone with the useful load of 400 kg.
Why is it important? This is the starting point of the SKYFchain: SKYFchain is a spin-off of SKYF. When we started to communicate with real clients, offering them our drone (we have more than 100 drones ordered by now), we understood the needs of big companies. Our clients are big: they work in logistics, oil and gas, and mining industries. The drones are desired in their industries; they allow bringing the costs down by x 4-5, but it is not clear how to run these unmanned systems.
Currently, all the processes, including paperwork and financial operations, are centered around humans. When you order something, a company representative signs the paper on goods sending, then, somebody signs it after receiving the parcel. It’s clear, who has the financial responsibility. In case of emergency, the goods have an insurance. And who will sign the paper if the delivery is unmanned? Whose responsibility is this? Where is the fine line? How to make it transparent and reliable? The current system does not give any opportunity to make it clear. Just because it is tailored to be run by a human.
We have understood that the future of logistics is not only about the robots. It is about the robots and the operating platform, the way they could communicate with each other and with a client. The blockchain technology is perfect for such operating platform. It gathers all information: who does what and when; how a client and a supplier shares responsibility; who is choosing the delivery route, etc.
That’s the brief explanation of why we came up with SKYFchain.
You are on the cutting edge of two tech developments: drones and blockchain. How did you get to this place? Was it a natural path or did something else inspire you to pursue this path to development?
It was written in the starlight! The bottom line of the success of the SKYFchain project is in its openness for clients. The real client has real business needs that our drones meet. We have a strong team of IT developers who can build the SKYFchain operational part. It makes the whole thing natural and possible for us to do.
How did you come up with the idea? What was the thought process behind it?
It was a logical decision: we were brainstorming, talking about the realization of the project’s operational part, not only about drones. When we start discussing, we always ask a question: who will be responsible for the security, who verifies the data, etc. I don’t remember who exactly came up with the idea of the blockchain. We thought if the market (especially the financial institutions) worries about the security and data quality, the blockchain solution is the best. So the idea behind was providing the clients with what they need.
What is the biggest problem within the industry? Do you think there is a gap in the market for SKYFchain to fill?
The main problem of the industry is, of course, the labor costs. A human driver is expensive. We provide the technology for switching to the unmanned logistics. Today, everybody speaks a common language. It is very handy. The unmanned system that could connect clients and providers should have a common language as well. SKYFchain will be the platform, providing this language. This is our absolute market value.
What do you think is the biggest problem SKYFchain will solve and why is the problem important to solve?
Another side of the coin is the efficiency. Today, trucks do the long-distance delivery. Those have truck drivers. The drivers need to rest after every 8 hours. The unmanned trucks do not need any rest! The average speed of the delivery will increase dramatically with unmanned trucks! The efficiency will grow many times without additional infrastructure needed! Again, to do so, you need to allow those unmanned trucks to communicate in some ways. This is what SKYFchain is for.
Why did you choose to use Ethereum to become your blockchain?
We have a more complicated structure. We will build our private blockchain to support the system. As for SKYFT tokens, we are going to use smart contracts, those are issued in Ethereum ecosystem under EC20 protocol. When you execute an internal smart contract, there will be a special payment channel from the Ethereum ecosystem to our own blockchain. Why? Because the payment in our system is not quick, when you make a transaction, it is not critical for you whether it takes 1 or 2 seconds. However, before the transaction is processed, there are many internal activities and we do not want them to be related to a public system. It is a no-go in B2B. That is why we choose the two-layer security. Why Ethereum? For now, it’s the best among public systems. If there will be a better system in the future, we can switch over to it.
The Whitepaper suggests you are planning to roll out in the regulatory environment that is difficult for several reasons. Why did you choose the Russian agricultural sector as your test market? How do you think that this environment will help you overcome critics?
First of all, it is a low hanging fruit. It is not obvious for everyone, but the Russian agricultural industry is huge, it is the biggest private industry in Russia. Its revenue is higher than made in oil and gas private sector in Russia! The clients there have money; they are ready for innovations. We enter the agricultural sector for the drones and operating part testing. The technical requirements are not that high there, either. In the upcoming summer, we will already be able to test at the full blast.
Moreover, we work with the oil and gas industry as well. It is not only about Russia; we collaborate with some global players, too. These companies require various services: spare-part delivery, rescue services, food delivery to hard-to-reach areas. Now, they use helicopters for that – and spend a lot of money there. By the beginning of 2019, we are going to run our tests there.
Talking about regulation, what are the toughest challenges you will have to overcome (even in your first market)? Where will they come from?
Basically, we do not even have to deal with it. An agricultural flight is done at the very low heights, three to five meters. Officially, it is called “hovering”, not a flight. You do not need to get your equipment registered as flying equipment. We escape the regulation because we do not fly, we hover. This is an extra reason for us to start with the agricultural sector: we do not have to deal with the complicated regulations.
Talking about logistics, we will need the proper certification. We are already working on it, getting our first certificate in Russia for an unmanned aerial carrier. We expect to have an experimental certificate by the beginning of the next year. This will be the first step: in Russia, you first need the certificate to run the tests, and after that you can proceed to the next step, the final flying certificated. We are the first heavy VTOL unmanned carrier in Russia that goes through these procedures. The standards do not even exist yet! We see a lot of enthusiasm and get a lot of help from the authorities. The government also understands the critical importance of it.
One of the regulatory problems is how to control the unmanned vehicles. How to make the whole system transparent? SKYFchain is the tool for this. It will allow us to regulate literally everything, register every move of an unmanned vehicle, and check every certificate, every route. Sooner or later, the authorities will understand this too. Our task is to give them the evidence.
What are the most exciting services you plan to offer?
Literally all of it! For me, it is a full product lifecycle management. With SKYFchain, you can follow all stages of the drone lifecycle: when it is produced, its maintenance, the application opportunities, routes, operations. This opportunity to run complicated missions by unmanned vehicles right on your computer – it is brilliant, amazing!
What has been your happiest moment so far while working on SKYFchain? On the flip side, what has been the most painful or, perhaps, the most regretful decision you’ve made with SKYFchain?
The happiest moment is now. We have just started the pre-ICO, and we see that the market loves our idea; there is a lot of interest. Investors are coming; they ask interesting questions. The market is accepting our project. All the team members of SKYF are huge fans of the idea. It is very important to see that the community shares your vision. It is not only about money: we have a successful track record and know exactly how to attract funding for our project. The reason why ICO is essential for us is the perspective of system’s future promotion. Hundreds, or even thousands, of our ICO investors, will be our future ambassadors; they will help to deliver our message to the world.
The most painful moment was several weeks ago when we understood that all our marketing materials were a complete failure. We were trying to pitch people, and it became obvious that nobody was getting any idea of what we were doing.
We had to throw everything away and to start all over again. We redesigned everything from scratch. Our initial message was not clear to people, it was not explaining anything. So, for now, we have created a new way of explanation: we have redesigned all materials, including the website and our presentations, and we introduce it in a really comprehensive way. Now people understand us better. Every day we get more clients, and this is a good indicator: people do not pay for anything they do not understand.
What indicated that you have begun to achieve your mission?
I participate in a lot of conferences and meetings, so I have an idea of how people react. We measure how many people are joining our Telegram channel, for example, how many new supporters we get on a daily basis. These all are the important indicators. It shows that we are going in the right direction.
Tell us more about the SKYFT. What are its selling points and what does it do in the system?
We split the two “worlds” of the system completely. One part is how our system works with the clients. It is processed with ordinary currency. Each client, who uses drones, initiates a transaction within the system (insurance, leasing, financing), and completes them in dollars, euros, or any other fiat currency. You see a clear and understandable interface, you can choose a currency, it is totally familiar.
Depending on the transaction, the system generates an invoice based on the transaction complexity, let us say, for $100. You pay $100 in any convenient way. When the system receives the money, it automatically exchanges it into SKYFT tokens.
Then all client’s activities in the system are “transferred” into the smart contract logics. This logic does not recognize dollars or whatsoever, only the tokens. SKYFT is the internal currency of the system. Its price is stable: $100 will always be $100. It may change only if the market price of the transaction changes.
The number of SKYFT tokens is limited: we issue 1,2 billion. Then, while the number of transactions growing, the number of connected clients and drones growing, the amount of money exchanged into the SKYFT tokens increasing, the number of tokens is always fixed. Accordingly, the price per one token will grow. This is the perfect selling point for our investors, now and in the future.
Another thing is that when the tokens go through the smart contract, they are being split: a part of them goes to the nodes’ holders who support the system, and another 25% goes back to the system Development Fund to secure the future development. Any $100 that a client pays for a transaction is split between server supporters, wallet holders (the investors), and the system itself. It allows us to create a treasury pool to ensure our project development. The model is rather simple and clear. No pseudo-currency mechanisms, no extra token issues, no losing control.
Editors Pick: SKYFChain ICO
Blockchain-based platforms connecting IoT devices and vehicles are going to begin to fundamentally disrupt the logistics space. Blockchain is going to fundamentally disrupt several areas of life if not entire business verticals as it currently exists within the next five years. One of those areas is transportation. The other is
How do you think, what is the biggest challenge or obstacle SKYFchain will face? How do you plan to tackle that challenge?
I do not worry about the technical part. The deployment of the technical part is clear for our team.
The timing may be a problem. The time really needed for the development may be longer than we expect now. We work hard to launch on time. However, something may happen, so we might need more than two years to launch the project. This is the biggest risk. We are doing our best to follow the plan. As an experienced venture investor, I know that we should be ready to mitigate this risk. The team is experienced too; they know how to do it.
Let me ask a more personal question, how does your typical day look like?
It is a regular 7/11 scheme. I start at 7:00; I stop at 23:00, try not to work on weekends. We work in several time zones, you see, so I have to stay reachable for every inquiry important for the business. A lot of brainstorming, personal meetings, discussions.
My goal is to have my project (which feels like my baby) sustainable and independent. Figuratively speaking, prepare him for the school. The day we can meet the management which will take it to the goal. It is a pleasure to see your project growing. Crazy emotions. Personal motivation.
Can you express your personal opinion about the blockchain? It doesn’t matter if it’s negative or positive, we just want to hear your thoughts on it.
The blockchain is a great technology. I am absolutely sure it will develop further. Everything happening in the field, with Bitcoin, for example, resembles the dot-com boom in the 90’s. The Internet at that time was very similar to what the blockchain is now. There were thousands of companies promising huge profits. Then in 2000, the dot-com crash happened. After that, we have Google, Apple, Facebook, many other profitable and reliable companies who successfully survived on the market.
I personally expect the same happening in the blockchain sphere. Many projects will collapse, it is just the natural self-cleaning market functioning. It will not be the end of the story. What doesn’t kill you makes you stronger: the survivors of the upcoming crisis will have the possibility to develop further.
Everything we do for our product is in line with a long-term vision. We do not rely on hype; we look for sustainable technologies. I believe the blockchain is one of them. We will be a Google in our industry in the next ten years.
Is there anything that you believed to be true for a long time until you found out that you were wrong? If you don’t like that dichotomy of right versus wrong, what’s something significant that you really changed your mind about over time?
Nothing like that. Sometimes I close some projects. Not because I stop believing in what I do, but sometimes the technology just does not work. Or the team’s performance is not as promised. Or we have a situation when technology is working, but it is not clear what is a marketable product. In the early years, it happened that we had dramatically underestimated how much money a project would need. I am not scared to close a project if it cannot be successful for some reason. It is a very important skill for the venture investor. But it has nothing to do with personal beliefs.
Finally, what other personal goals (besides your career) do you have in your life? Is there anything else in life you want to achieve?
My son. I help him and train him. He says I am the best dad. This is my personal motivation and my personal goal.
That concludes our Interview with Alexander Timofeev
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