Start-ups and shipping: balancing risk and reward
Nick Chubb cheerfully admits that on coming ashore he quickly realised that his skillset as a junior deck officer gave a fairly limited range of options for a job in the industry. A spell in financial services and a tech start-up led him to the Marine Society where he launched a digital education platform providing learning resources to thousands of seafarers.
He founded Thetius a year ago to enable innovation by bringing together start-ups with established maritime companies. Tracking around 650 start-ups, it provides subscription based and custom research for clients as well as consulting and advisory. Most recently Chubb has created an Innovation Lab to help corporates build, test and scale new ideas, bringing in start-ups to problem solve with the opportunity to present their solutions and get paid for those selected.
Start-up culture has been growing in visibility over the last few years as companies have got to grips with digitalisation but he agrees there is a line to be drawn between technology in a broad sense and digital, where shipping has been left behind in the last 20 years.
“Start-ups are important to shipping because they bring the opposite skill set and culture that you have when building safety critical operations. You don’t want to move fast and break things when you are building an oil tanker,” he says. Rather than try and build that culture into an organisation, corporates can engage with start-ups for a different way of working and thinking which can be detached from the process.
Shipping also faces massive existential challenges, principally decarbonization where their approach to problem-solving could be vital. “If you set 100 start-ups to solve the same problem 95 may fail but the five that breakthrough will have a greater impact than a corporate could, because their level of risk tolerance is higher,” he adds.
“They give you the capacity to take risks because it’s easier for them to take them. Start-ups need access to current marine technology and knowledge and the key is partnering to the benefit of both. I don’t see there being a great disrupter, startups will find a way to solve a problem and scale it up as a partner.”
This partnership has already fostered success stories using a model more commonly found outside shipping. Ventures like Maersk Growth and Innoport spun out of Bernard Schulte leverage the advantage of close ties to access knowledge with enough detachment to allow them to fully innovate. “The end game is to bring the revenue stream into the core business, a pattern Maersk for example has repeated successfully.”
The Coronavirus pandemic has changed much about society and business and he agrees there will be casualties in the start-up community – good companies caught in wrong place at the wrong time – though a shake-out may be no bad thing. In boom times he suggests it’s possible for shaky start ups to raise money with no exit strategy.
“We’ve seen a slowdown in March and April so some of the fat will be trimmed away. For good ideas there is still VC money out there. Start-ups with solid foundations, a good product and the ability to generate good economics at scale can raise money.”
If anything, the demand is even greater and more than ever focused on smarter fleet operations, fuel efficiency and optimisation. The start-ups that have proved themselves useful in the last quarter are the ones that embraced mobility, enabling users to work from home on phone or laptop.
“Any kind of solution that can make a dent vessel optimisation that is simple to adopt could be massively accelerated. Some companies like Geollect and PortExchange are doing well in part because they are a full intelligence suite as completely cloud-based solution, so there is optimisation but also remote access,” he adds.
Some solutions have been ‘nice to have’ over the last two years and promise marginal savings which are difficult to prove in practice, “until suddenly a fleet manger can use a system from their laptop that is better than what they have in the office.”
So where would a shipping company in need of ideas start and how do they know if they need a startup? Part of role Thetius plays is to understand their strategic challenges, though as he says “if you write down all your problems it can be difficult to prioritize; what needs an off the shelf subscriber cloud system and what is 10 years of a team of AI researchers.”
Despite all the differences in the two decades since the dotcom boom – connectivity, processing power, storage and mobility – Chubb thinks the barriers to adoption of new and radical ideas are the same as ever.
“The biggest challenge is not the tech, it’s change management and unless you offer efficiency of 10x or 100x you won’t get a change in human behaviour, especially not for a 5% efficiency improvement,” he says.
Instead it’s about finding about what you can implement and since people are going to be impacted, there needs to be a minimum of disruption. As it starts to provide benefits companies can slowly change the process rather than try to completely redesign it.
“Remember, if goes wrong, a fleet of ships might not get their agency service so it’s critical to get the process right because there is an inherent risk to change. Often it’s about making small incremental changes to processes, sometimes even looking at paper processes and replicating them in a digital format,” he adds.
So there’s a place yet for the whiteboard in the operations room and Chubb suggests that might even be the starting point for better ways of working. “If you make a digital copy of a process you have a starting point that you put on a laptop or a tablet. Then you can start to automate processes, see the benefits and get change. Go for something unrecognizable and you can forget about it.”