AMA: Ask Me Anything Session with Smart Containers (21.05.2018)

The Zurich based Smart Containers is doing a Token Sale at the moment. Smart Containers develops, builds and rents out airfreight containers for medicine & food transports. The company combines cutting-edge technology and IoT sensors in a logistics ecosystem on Blockchain.

At Monday the 21 of May the Co-Founder and CEO of the project Richard Ettl and Carla Bünger (Business Development) have been in our Telegram channel to answer all questions from the community regarding this interesting project (Names of community members are anonymous / Disclaimer: I act as Strategic Advisor for Smart Containers):

Marc Bettinger, [21.05.18 21:00]

Good Evening Ladies and Gentlemen! Today we have an Ask me Anything session (AMA). This time with the Zürich based ICO Smart Containers! We will have Mr. and Mrs here, CEO & Co-Founder Richard Ettl and the Carla Bünger Ettl Business Developent Management! More information here: https://smartcontainers.ch/ (Disclaimer: I work as Strategic Advisor for this company. Because of my involvement I will remain silent with questions and just moderate) Feuer frei!

Richard Ettl, [21.05.18 21:01]

maybe to kick it off: 2min about Smart Containers

Carla Bünger, [21.05.18 21:01]

Hello everyone: glad to be here!

Marc Bettinger, [21.05.18 21:01]

Welcome on board Carla and Richard!

Richard Ettl, [21.05.18 21:02]

We are a little bit unusual as an ICO - we are a security token and we are a running company :)

Richard Ettl, [21.05.18 21:03]

Smart Containers started out as a tech project 7 years ago, we designed an insulation for buildings. My co-founder Nico developed it together with myself and about 10 ETH / EMPA guys. When we pitched for a building of Novartis - we got the request to design a container to transport temperature sensitive pharma products -> SkyCell our first application was born

Richard Ettl, [21.05.18 21:04]

2 years later first product to market, and 5 years later no 4 provider in the field.

Richard Ettl, [21.05.18 21:05]

we stuffed the containers full with sensors - so we collected around 1.5bn data points about the pharma supplychain. Starting next year we can turn that into a service as we know more than airlines, freight forwarders and pharma about their supply chains.

Richard Ettl, [21.05.18 21:06]

Our business: we rent containers usually for 7-9 days to a pharma company. they contract a logistics company that flies it to a country and they return the container to use. So we operate a pool of containers.

Richard Ettl, [21.05.18 21:07]

Now we are launching our 2nd application - Food distribution solution. a box that keeps food stable for overnight delivery. so that a super market chain does not have to invest in a fleet of cool trucks, they rent a box for less than 1 CHF per day.

Mr. A, [21.05.18 21:07]

Hi \@RichardEttl \@carlabuenger, glad to have you here

Mr. B, [21.05.18 21:08]

Hi Richard, good evening. Quick one:in which way SC is similar (or different) to the likes of Modum?

Richard Ettl, [21.05.18 21:08]

Modum does data loggers that could go into our containers.

Richard Ettl, [21.05.18 21:08]

we do the containers.

Richard Ettl, [21.05.18 21:10]

Modum uses blockchain to secure the data. We use blockchain to automate payment of our container rentals. Something if we do it well, we can offer it to other logistics companies for other services as well.

Yannick Zehnder, [21.05.18 21:10]

Great to have you guys here!

Yannick Zehnder, [21.05.18 21:10]

Disclaimer: I am involved with the project.

Richard Ettl, [21.05.18 21:11]

Any questions or should i continue with an overview?

Mr. B, [21.05.18 21:11]

Thank you.

Mr. A, [21.05.18 21:11]

[In reply to Richard Ettl]

you automate the payment? or you also pay in crypto?

Yannick Zehnder, [21.05.18 21:12]

[In reply to Richard Ettl]

Can you maybe elaborate on pilot cases you are developing for

FoodGuardians and how big a market you tackle with the business application?

Richard Ettl, [21.05.18 21:13]

[In reply to Mr. A]

we devided our move to blockchain into phases: 1) automate payment (customers can pay in crypto - which has advantages when you get paid from a BRIC country - where banking fees can be USD 150 2) Smart Contract - containers are rented on the blockchain and invoiced and settled 3) offer to others

Mr. A, [21.05.18 21:14]

[In reply to Richard Ettl]

sounds good. and that's the reason about SMARC? (Token)

Mr. A, [21.05.18 21:15]

SMARC is an' ERC20? isnt it? or are you going to build your own chain?

Richard Ettl, [21.05.18 21:15]

[In reply to Yannick Zehnder]

Food - we are going to make a big annoucement soon. We are teaming up with the largest makers of food crates (they invented the beer crate). We are bringing to market a box so that brick and mortar retailers can easily move into the ecommerce - food over night delivery market. They are committing to sell 1M in 3 years.

Richard Ettl, [21.05.18 21:15]

[In reply to Mr. A]

SMARC is ERC20

Richard Ettl, [21.05.18 21:16]

LOGI - the ecosystem to move our containers and later logistics will be based on another chain. Right now it is on a combination of Ethereum and Hyperledger Fabric

Mr. A, [21.05.18 21:17]

ah sorrry!

Mr. A, [21.05.18 21:17]

i meant LOGI of course!

Richard Ettl, [21.05.18 21:17]

[In reply to Mr. A]

no SMARC is raising capital and giving dividends (incl exit proceeds)

Mr. A, [21.05.18 21:17]

[In reply to Richard Ettl]

got it

Richard Ettl, [21.05.18 21:18]

LOGI is a payment token for the LOGI Chain.

Mr. B, [21.05.18 21:18]

[In reply to Richard Ettl]

So a security token.

Richard Ettl, [21.05.18 21:18]

[In reply to Mr. B]

correct. we got inspired by MODUM's token design.

Mr. A, [21.05.18 21:18]

[In reply to Richard Ettl]

and "another cahin" means, your own?

Mr. B, [21.05.18 21:18]

LOGI the utility token

Richard Ettl, [21.05.18 21:19]

[In reply to Mr. A]

our own chain based on an existing protocol

Mr. A, [21.05.18 21:20]

[In reply to Richard Ettl]

and these "boxes" works without electricity? Or with battery operation?

Yannick Zehnder, [21.05.18 21:20]

I think (and this is me being involved with the company talking) that your approach to be chain-agnostic is a much underestimated quality of the project (LOGI CHAIN). Can you maybe elaborate on the reasoning behind it and what options you are looking at?

Richard Ettl, [21.05.18 21:21]

[In reply to Mr. A]

yes our technology is 3 components - our own insulation (reflection of radiation = sun is reflected), cooling technology (we developed a chemical (non-dangerous etc) which stores 6x more energy than a battery) and we use sensors to track the containers and their performance

Richard Ettl, [21.05.18 21:22]

What is the advantage: runtime 160h, recharges in a coldroom - which exists in every airport or every cool truck recharges it (no need to open it or do something) and the sensor allows us to take action in case the trip goes bad

Carla Bünger, [21.05.18 21:22]

[In reply to Yannick Zehnder]

Well, the development of the technology is so fast that we are not sure to choose today the right infrastructure on which to build the LOGI CHAIN ecosystem. Therefore we aim to create a system that can evolve into another protocol, if there should be a better one, more relevant to our system in the future.

We are evaluating and considering Ethereum, NEM, NEO, Tezos and EOS at this point of time.

Richard Ettl, [21.05.18 21:24]

[In reply to Richard Ettl]

my co-founder's goal: monkey proof. you do not need to be trained to use the container.

Yannick Zehnder, [21.05.18 21:24]

[In reply to Richard Ettl]

👍👍👍

Mr. A, [21.05.18 21:24]

[In reply to Richard Ettl]

these sensors are tracking live?

Mr. A, [21.05.18 21:24]

[In reply to Yannick Zehnder]

+1

Richard Ettl, [21.05.18 21:25]

[In reply to Mr. A]

no there is a 15min delay today. We are moving to a new sensor in October which is than 30s delayed.

Mr. B, [21.05.18 21:26]

[In reply to Richard Ettl]

Is that 15 min delay impractical in standard logistic cold-chain ops?

Mr. A, [21.05.18 21:26]

[In reply to Richard Ettl]

okay, but more or less "live". so you use the network connection of any mobile subscriber? Or how works it?

Mr. D, [21.05.18 21:26]

Really cool. Well done Carla and Richard.

Richard Ettl, [21.05.18 21:27]

[In reply to Mr. B]

no our sensor is 5 years old and has limited other functionality. Our new sensor has light, vibration, door opening.

Richard Ettl, [21.05.18 21:27]

[In reply to Mr. D]

thx Mr. D!

Mr. B, [21.05.18 21:27]

[In reply to Richard Ettl]

Ah, right.

Mr. A, [21.05.18 21:27]

[In reply to Richard Ettl]

above I read something about MODUM. These Sensors inside your boxes, are MOD ?

Richard Ettl, [21.05.18 21:28]

[In reply to Mr. A]

No. Modum sensors are not yet approved in aircraft.

Richard Ettl, [21.05.18 21:28]

[In reply to Richard Ettl]

but we are in contact, as they are working on something interesting.

Mr. A, [21.05.18 21:28]

[In reply to Richard Ettl]

but that's the plan for SC?

Mr. A, [21.05.18 21:28]

if these are going to approving?

Yannick Zehnder, [21.05.18 21:29]

[In reply to David H]

Welcome!

Mr. A, [21.05.18 21:29]

[In reply to Richard Ettl]

👍🏻

Richard Ettl, [21.05.18 21:31]

The nice part about Pharma is the high value of products we transport - CHF 250k per pallet is normal. they want to reduce the risk and product loss. and they are super sticky. we are replacing solutions that are sometimes 17 years old... a lot has happened since then, but pharma only switches if it is really a lot better... and you need the data to prove it

Mr. B, [21.05.18 21:32]

[In reply to Richard Ettl]

Pharma or anyone else for that matter.

Richard Ettl, [21.05.18 21:32]

Food is going to be about catering to the new trend of over night delivery. if we are cheaper because our box performs better and lives longer, then the per use costs are the lowest.

Mr. A, [21.05.18 21:32]

so, what about ICO?

whats your hope, what's your goal?

I just talk about -> there was for example valid, a very good project in my opinion. They raised not so much money (I thought then it was more deposited.)

Yannick Zehnder, [21.05.18 21:32]

[In reply to Richard Ettl]

Huge potential there. I like the specificity of the use case. It was one of the most important reasons for me to be instantly passionate about the project.

Mr. A, [21.05.18 21:33]

Why so you decided to fund with an ICO? Why not the "general investor market"

Mr. B, [21.05.18 21:33]

[In reply to Richard Ettl]

So the big thing is the box itself (the hardware) rather than whether it's supported or not on the Blockchain.

Richard Ettl, [21.05.18 21:34]

[In reply to Mr. B]

on the pharma side the blockchain is nice to have. on the food side it will enable a business model, where the admin of a box is done by the blockchain and thus much cheaper.

Richard Ettl, [21.05.18 21:34]

[In reply to Mr. A]

We are raising funds for 2 projects - SMARC (dividnd token) and LOGI (eco system token). I have to admit it is a challenge with 2 tokens. :)

Richard Ettl, [21.05.18 21:35]

[In reply to Richard Ettl]

The demand in SMARC is strong, but we need to answer a lot of questions from potential investors as all other projects are doing everything not be a security.

Mr. B, [21.05.18 21:35]

LOGI is the clear case of a utility token/currency as depicted on our own WP.

Mr. B, [21.05.18 21:37]

[In reply to Richard Ettl]

You would expect it being a security would make it more attractive from an investor's POV, as it's linked to a tangible P&L/operation.

Richard Ettl, [21.05.18 21:37]

[In reply to Mr. A]

Agreed. Fundraising in 2018 is different. It is becoming very similar to traditional fundraising. However with a token, investors can exit the investment earlier. in a normal small cap non listed company to sell your stake before exit or IPO is very tough or has a high discount. so i think tokenization of equity will create liquidity for a secondary market.

Mr. B, [21.05.18 21:39]

[In reply to Richard Ettl]

Today it was suggested here tokenisation of equity is not an option under the Swiss code of obligations, unless I missed something.

Richard Ettl, [21.05.18 21:39]

[In reply to Mr. A]

Another aspect is country restrictions: we are not accepting US investors as we are afraid of SEC ruling changes. 20% of our webtraffic (no marketing) is US money.

Richard Ettl, [21.05.18 21:39]

[In reply to Mr. B]

well full equity tokenization is a challenge due to transfer of ownership. But something we are doing future dividend and exit proceeds

Richard Ettl, [21.05.18 21:39]

that is possible

Richard Ettl, [21.05.18 21:40]

BTW check out LYKKE - full equity token to my understanding.

Mr. B, [21.05.18 21:41]

[In reply to Richard Ettl]

But how are the property rights in the token mirrored in the company Statutes, as you pay e.g. dividends?

Mr. A, [21.05.18 21:41]

You explicitly mention the exit option for SMARC. Is that a plan?

Mr. B, [21.05.18 21:41]

Unless you create an intermediary vehicle... 🤔

Mr. B, [21.05.18 21:41]

[In reply to Richard Ettl]

Will ask somebody regarding this

Richard Ettl, [21.05.18 21:42]

The company has an obligation to the token holders of 20% of the dividends. So when the AGM votes on the dividends, that amount is set and then paid to the ERC20 wallet.

Richard Ettl, [21.05.18 21:42]

[In reply to Richard Ettl]

we also built in the option to have the token holders vote, that we repurchase also tokens in the same amount - which is more favorable tax wise

Mr. B, [21.05.18 21:42]

Is that possible under the Swiss code of obligations?

Richard Ettl, [21.05.18 21:44]

[In reply to Mr. B]

yes - i can connect you with our lawyer Gabriela Hauser, ex MME (co-lead on Ethereum ICO) - she drafted it. but we got inspired by MODUM's way of doing it

Mr. B, [21.05.18 21:44]

Dividends can be paid only to stock owners, and the tokens are not that. Asking b'cause I'm interested in this particularly.

Mr. B, [21.05.18 21:45]

[In reply to Richard Ettl]

I'll ask Marc directly then if it follows Modum's template. Maybe I'm missing something here

Richard Ettl, [21.05.18 21:45]

[In reply to Mr. B]

👍

Mr. A, [21.05.18 21:47]

What's your competition like? So from what I read, you're number four in the world?

You know them well? Are there similar plans/boxes/patents/blockchain-ideas?

Mr. A, [21.05.18 21:49]

[In reply to Richard Ettl]

What is the goal? The financial?

Mr. A, [21.05.18 21:49]

(min. cap. max cap. / current situation)

Richard Ettl, [21.05.18 21:50]

[In reply to Mr. A]

Pharma: market leader Envirotainer - currently for sale for roughly EUR 1bn. They only do pallet size containers. As they were PE owneder almost no RnD. no2. is a copycat from Envirotainer (as they do not have patents) - Csafe (strong in US, weak in EU). no. 3 Vaqtec - similar to use, however they do too many things at the same time - they do insulation for fridges (majority of their revenue), cars. a lot of good guys switched from them to us. if we continue with the current growth of revenue of will be no.3 in 1year

Mr. A, [21.05.18 21:51]

[In reply to Richard Ettl]

👍🏻 congrat!

Richard Ettl, [21.05.18 21:51]

[In reply to Mr. A]

the traditional companies are not yet on blockchain. Also the big logistics companies have some guys in IT doing a pilot - always with IBM with the conclusion its not ready yet and let's wait. Hence our LOGI chain initiative. We wouldnt be doing it, if a big guy would do it

Mr. A, [21.05.18 21:51]

how big's your team?

Richard Ettl, [21.05.18 21:52]

45 people - production and service centers outsourced so roughly another 40

Richard Ettl, [21.05.18 21:52]

we do sales, Rnd, IT and parts of operation inhouse. these are our core activities.

Mr. B, [21.05.18 21:53]

[In reply to Richard Ettl]

👍

Mr. A, [21.05.18 21:53]

[In reply to Mr. B]

+1

Richard Ettl, [21.05.18 21:53]

I would consider the team in Europe complete. we are now strengthening the North Americas team.

Richard Ettl, [21.05.18 21:54]

next year 2 asian markets.

Richard Ettl, [21.05.18 21:55]

on the food side we are partnering in Europe - faster to market, no investment in production. that's the announcement that's coming soon.

Mr. A, [21.05.18 21:55]

[In reply to Richard Ettl]

i'm very excited

Mr. B, [21.05.18 21:56]

[In reply to Richard Ettl]

Continent or UK also in the mix?

Mr. A, [21.05.18 21:56]

how long has your company been, again?

Richard Ettl, [21.05.18 21:56]

EU 26, excl. Switzerland will be handled through them.

Richard Ettl, [21.05.18 21:56]

they forgot about Switzerland when we negotiated :)

Mr. B, [21.05.18 21:57]

Big multiple grocers the target?

Richard Ettl, [21.05.18 21:58]

[In reply to Mr. B]

yep. with the plan start in a region - ex. Bavaria in Germany and then go nationwide

Mr. B, [21.05.18 21:59]

The likes of OCADO in the UK could be a big one, and all big multiples as lots of purchases there are done online.

Mr. B, [21.05.18 22:00]

They then take charge of deliveries. On the other end, they have a lot of sway over suppliers.

Richard Ettl, [21.05.18 22:00]

the other application we identified was hotel / restaurant logistics. The majority of these are not supplied every day as the cool truck costs too much to make a stop. so the fish is not very day fresh, with such a solution daily supply is affordable

Richard Ettl, [21.05.18 22:00]

[In reply to Mr. B]

correct. Hence we partner to start.

Mr. B, [21.05.18 22:01]

A big player e.g. Lidl or ALDI would be a big boost.

Richard Ettl, [21.05.18 22:02]

[In reply to Mr. B]

Definetely

Richard Ettl, [21.05.18 22:03]

Also here - boxes have sensors, so we can collect data and learn from it. the funny thing about data - when we started on the pharma side we did not expect to learn so much about these supply chain players. so maybe we find here also a surprise we didnt expect

Mr. B, [21.05.18 22:03]

It's a tough sector. Some have been my clients in a past life.

Mr. A, [21.05.18 22:04]

[In reply to Richard Ettl]

definitely true

Mr. A, [21.05.18 22:05]

you can make predictions, and that's another use case.

Richard Ettl, [21.05.18 22:05]

[In reply to Mr. B]

i can imagine. But in general we are in trend - home delivery is growing like crazy. The alternative of these players is to invest heavily in new cool trucks (BTW Coop did that).

Richard Ettl, [21.05.18 22:07]

[In reply to Richard Ettl]

some example how we can also earn a good margin in food: box costs 30 EUR to make. it lives for 2 years. a year has 220 business days. let's say it is used 2x per week =110 uses, 1 EUR per use = 110 EUR rental income per year.

Richard Ettl, [21.05.18 22:07]

[In reply to Richard Ettl]

so we have enough margin to work with, when they try and squeeze us for volume.

Mr. B, [21.05.18 22:08]

If the economics work, they'll jump in like crazy.

Marc Bettinger, [21.05.18 22:11]

Ok many thanks.

Mr. B, [21.05.18 22:11]

Tipp topp. Thanks Richard.

Marc Bettinger, [21.05.18 22:11]

Any additional questions? Otherwise Feierabend for Carla and Richard!

Marc Bettinger, [21.05.18 22:11]

Many thanks!

Yannick Zehnder, [21.05.18 22:11]

Well cost effectiveness is a HUGE thing in logistics/cargo. Forst time it struck me is when I learned about a PE/VC fund buying up logistics companies in Switzerland like crazy 2 years ago. They run on super thin margins but they operate ceaseless and companies are looking for places to put their cash at.

Mr. A, [21.05.18 22:12]

Thanks a lot to you guys. Was an exciting AMA. Really a very exciting project! As I have already mentioned several times. I wish you continued success! Keep up the good work!

Richard Ettl, [21.05.18 22:12]

Please reach out to me, if you have other questions! Mark and Ineff are part of our team, so they are also very knowledgable about our project.

Richard Ettl, [21.05.18 22:12]

Thank you for having me!