SXSW Startups: Steamchain
The Forrest Four-Cast: February 5, 2019
Fifty diverse startups will aim to impress a panel of judges and a live audience with their skills, creativity and innovation at SXSW Pitch Presented by Cyndx. Winners in 10 categories will be announced at the Pitch Award Ceremony at 6:30 pm Sunday, March 10, at the Hilton Austin.
A finalist in the Blockchain category, which will pitch at 9:30 am Sunday, March 10, Steamchain is unlike any other Industrial IoT company in the market today. They don’t just create dashboards that need to be monitored. They enable new business models that bring purpose to clients’ IIoT investments by connecting financial transactions to machinery performance.
We checked in with CEO Michael Cromheecke to learn more about what they do.
Steamchain develops smart contracts for clients. Do you foresee a future with institutional buy in? What challenges would have to be overcome?
Using IoT and blockchain technology to connect industrial machinery to back-office financial transactions creates the opportunity to deploy a range of Machine-as-a-Service business models that add value to both the OEM and the end users. Beyond security, which is really table stakes, the most pressing challenge is working with OEMs to develop compelling commercial offerings that present a clear value proposition to their end user customers.
Steamchain values key information over big data. How did your team decide what key areas of information to focus on?
I spent the first 18 years of my career in Industrial Automation. I was very involved in the evolution of what is now referred to as the “Industrial Internet of Things” on the plant floor.
Although I am very optimistic of long term potential for solving machine optimization and preventative maintenance by running advanced pattern recognition and artificial intelligence algorithms on big data sets, I do not see these being broadly deployed in the near term due to the cost and complexity of configuring the algorithms for the myriad different applications and environmental conditions across the manufacturing industry.
This got me to thinking. If gathering and processing the “big data” isn’t the killer app for the Industrial Internet of Things, what is?
Steamchain’s answer is that it boils down to the fundamentals of machinery performance. In our industry this is often referred to as the overall equipment efficiency (OEE) and it is directly related to the financial performance of the enterprise. The OEE is a universal assessment of machinery performance and, by extension, its financial performance. Our realization is that by using these key data points we could develop contracts that enable a shared accountability between all the parties that are in the best position to ensure the optimization and uptime of the equipment.
What is your competitive advantage?
The background, network and experience that our team has in the manufacturing sector. We have assembled a team that understands the machinery, technology and commercial considerations in our target markets.
What are your goals for SteamChain in 2019?
2019 looks to be a breakout year for SteamChain. We look forward to announcing some major corporate clients as well as gaining significant penetration in the small to medium sized machinery manufactures that make up our target market. We project to have multiple instances of our solution executing financial transactions in production environments across multiple OEMs and end user organizations.
SteamChain is based in Milwaukee, Wisc. Tell us about the startup ecosystem there.
We love Milwaukee! We feel very fortunate for the support we received from the entire community. We were encouraged to take the leap of faith and exit our comfortable corporate jobs by Gener8tor, the leading startup accelerator not located on a coast. We have received amazing support from Northwestern Mutual Insurance, a leading insurance company headquartered in the Midwest. I can’t think of a community that has more enthusiasm for building great companies.
Blockchain has been described as less of a disruptive technology and more of a foundational technology that can reframe the basis of businesses. What do you think of this new blockchain infrastructure and how it interacts with the current economic and social infrastructure?
That’s a huge question. Let me answer it in a very small way: It is about secure and efficient sharing of information. Seems simple and basic but the implications are enormous. For us, it means separate organizations can collaborate in ways that previously were prevented due to the administrative complexities of sharing this information. This is a huge deal for our customers and it has industry changing ramifications.
Talk about the benefits of bringing blockchain technology to machine learning.
We feel like there are a lot of great companies doing R&D in big data applications. Steamchain’s transaction engine will be a great utility for them to charge their customers for the usage of these algorithms.
How and when did your team come together and please fill us in on any relevant startup experience?
My cofounder Tom Tichy and I worked together at our former employer to conceive of and launch their first cloud-based software application. It was a sophisticated engineering tool for sizing and selection of advanced servo-robotic equipment. We were joined on that project by Jared Swarts, who is now our head of development and also a founding member, and Christopher Zei, a former Vice President of OEM and Industry Sales at Rockwell Automation.
Looking at the entire tech industry, what trend is your team most excited about?
We are very enthusiastic about any non-cryptocurrency applications of blockchain technology. We keep a close eye on the impact of this technology in the supply chain, we think it has a lot of parallels to our industry.
What technology would you call the Myspace of 2019…in other worlds, something we won’t be thinking so much about in 2020 and beyond?
The market seems flooded by food/convenience item delivery services these days. I think there will be some big names that make it over the top, but I also think a number of the brands that are currently competing in this segment will go the way of Myspace.
What has the startup experience taught you about life?
A very smart person told me “it is human nature to overestimate short-term risk and underestimate long-term risk.” It was this straightforward observation that was the push I needed to leave a very promising corporate career and start Steamchain. It has proven to be absolutely true in every context of life.
Name three people, in any field, alive or dead, you’d like to meet and tell us why.
Elon Musk: I’d like to ask him about his experience ramping up production on the Model 3. I’d like his thoughts on the role Steamchain might play if he had to do it all over again.
Franklin Delano Roosevelt: He saw a path forward in a very difficult period of American history and had the ability to articulate in a way that inspired people to act for the greater good. I’d ask him about leadership in an uncertain world.
Michael Bloomberg: He has built an impressive business based on at the crossroads of software, finance and media. I’d like his thoughts on the value that would be created if Steamchain is able to achieve enough scale to produce meaningful statistics on the rate of production across industrial segments and machine types.
What’s one piece of advice you wish you’d had that you’d give to others wanting to join the startup journey?
First, come up with a great idea. This is the easy part.
Next find like-minded people that share your vision and can help you achieve it. This is harder.
Finally, do whatever is necessary to build it. This is the hardest part.
Look for more interviews with other SXSW Pitch finalists in this space between now and March.
Click here to see all 50 finalists for SXSW Pitch 2019, along with the links to their interviews on Medium.
Also, if you are an entrepreneur, check out all the cool panels and presentations in the Entrepreneurship and Startups Track, which runs March 8–12 at SXSW.
Hugh Forrest serves as Chief Programming Officer at SXSW, the world’s most unique gathering of creative professionals. He also tries to write at least four paragraphs per day on Medium. These posts often cover tech-related trends; other times they focus on books, pop culture, sports and other current events.
