FROM ENTREPRENEURS

04 STORY ACSL

Supporting a society affected
by population decline with advanced autonomous drones

Autonomous Control System Laboratory Co., Ltd. (ACSL) CEO

PROLOGUE

Drones are becoming increasingly commonplace in our everyday lives. However, most of the drones are meant for consumer applications. In Japan where we face a shrinking population, drones are intended to be applied to the maintenance of infrastructure, disaster prevention, and industrial applications; to compensate for the labour shortage, thereby enabling a highly efficient society. Conversely, if drones are piloted by people, then the labour deficit is not compensated for in the truest sense. The need of the hour is an autonomous control technology that allows drones to think and move as if they were living things. Autonomous Control System Laboratory Co., Ltd. (ACSL) has developed an autonomous control system that uses advanced algorithms such as model-based advanced flight control and navigation functions with an ability to recognize ambient environment by image processing (eyes); and ACSL provides drones equipped with this technology as its final product. We spoke to CEO of ACSL, Mr. Hiroaki Ohta about the future that drones behold and UTEC’s support along the journey of ACSL.

SCROLL or CLICK

SECTION01 : Not a drone company

SCROLL or CLICK

SECTION01

Not a drone company

ACSL is a drone manufacturer, but its focal point is not hardware, but software: the brain that makes the drones move. Through its autopilot flight controller, ASCL has achieved fully autonomous drone flight from take off to landing. With drones not requiring a human pilot, ACSL aims to realize the vision of Society 5.0.

Ohta:
Our strength lies in the software that controls the drone. Ultimately, we will provide a completed drone with motors and body, but ACSL is the only company in Japan that owns and performs in-house development of 100% of the core brain software. We recognized that the advanced software creates a premium in the value provided by our business.

Many drones that are said to fly autonomously make use of GPS. Our drone has the capacity to fly without using GPS. The sensors function as the eyes = image processing, and recognize the surrounding environment to fly, while making decisions regarding navigation with software. It is a drone that thinks and flies like a creature with eyes and a brain.

With fully autonomous flight using image processing, it is possible to accurately control location information and deliver cargo to the destination even in mountainous areas where GPS signals are weak. It is also possible to inspect infrastructure by flying into a tunnel that is pitch-black and has no GPS, or a plant/bridge with complex structures. There are several other applications, but in order to enable usage of drones in real-world situations, it is necessary to create a drone targeted at each specific application. In that respect, we develop the software in-house and can customize it according to the site of drone application.

If we are to just control the drone, a pilot could simply do this by watching images on a screen much like radio controlled toys. However, if there is a requirement to have a person control the drone, then it really does not solve the problem of labour shortage. Drones can showcase their true value to the society when they become fully autonomous.

To that end, I do not think of ACSL as a drone company. Our slogan is “Liberate Humanity through Technology”. If we are able to rely on machines to do simple tasks, we believe that people will be able to focus on creating innovation. It would be great to see autonomous technology proliferate and realize a society where people can spend more time on creating new things.

SECTION02 : Accepted the offer because it came from someone I trust

SCROLL or CLICK

SECTION02

Accepted the offer because it came from someone I trust

ACSL is a startup spun out of Chiba University. It was highly academic in its inception and did not have a member with strong management skills. UTEC introduced the current CEO Mr. Hiroaki Ohta to ACSL after leading ACSL’s Series A funding round. Mr. Ohta was then an academian-turned-management consultant. Mr. Ohta opines that he initially had no intention of becoming an entrepreneur. Why then, did he decide to join ASCL?

Ohta:
The investors responsible for ACSL at UTEC were board members and partners Mr. Ted Yamamoto and Mr. Noriaki Sakamoto. Series A was in March of 2016. It was before I had joined, so I am not familiar with the details. As many large corporates had started to seriously consider drone applications, UTEC must have thought that the time was right to invest in drone-tech. However, UTEC did not think any drone company would be fine. UTEC focused on ACSL, a company with fundamentally powerful and defensible core technology. I expect nothing less from a deep technology specialized VC of UTEC’s calibre.

I joined ACSL as COO shortly after the Series A round upon being introduced to the company by Mr. Sakamoto. Originally, I had been an academic in the fields of physics and material science, I was an assistant at the Kyoto University and was also a researcher at Professor Nakamura’s laboratory at University of Santa Barbara. I had written close to 100 papers but I was also interested in business and so I joined McKinsey & Co. Mr. Sakamoto was my colleague at McKinsey.

Mr. Sakamoto had switched jobs from McKinsey slightly earlier than I did and was on his way to become a successful venture capitalist at UTEC. When we were catching up for a drink one night, Mr. Sakamoto passionately spoke to me about ACSL and said “it would be a perfect company for Mr. Ohta to lead”, I immediately answered “Sure, I am onboard”. To be honest, I did not know the details of the company’s business then. However, as it was a recommendation from someone I really trusted, there was no reason to say no, don’t you think?

When I first explored ACSL’s business, I felt that the company would be the Apple, Inc of the drone industry. Apple, Inc is a hardware company that continues to possess strength in its ability to design iPhones, select parts and most importantly, develop software that determines the user interface. Hardware companies are subject to a threat of the emergence of competitors who can manufacture parts for cheaper but design and software are not easy to replicate. Software has a long development-time. However, ACSL had an accumulation of software from over ten years of research. I hypothesized that since ACSL had a proprietary autonomous control technology, it could really become a trailblazer in the drone industry.

NEXT

SCROLL or CLICK

PROBLEM

Mr. Ohta was an experienced management consultant, but this was his first experience running a business as an executive. Until ACSL’s business really took off, Mr. Ohta says there was holistic and hands-on support form UTEC.

NEXT

SCROLL or CLICK

Ohta:
Initially, ACSL was closer to a laboratory in a university than a functional company. There were several aspects of technology and business that weren’t organized. For example, the parts of the drones did exist but its IP, debugging of software and elucidation of the design information and supplier management were all unorganized. It occurred to me that if things were to continue that way, we could not assure quality nor be responsible for securing a long-term supply chain. Hence, we spent a bulk of the 700 Million Yen we raised to redesign and manufacture the ACSL drone aircraft.

Back then, Mr. Ted Yamamoto attended our meetings on a weekly basis. Mr. Yamamoto studied Physics at the University of Oxford. We got along very well because of our respective scientific backgrounds. Both of us were new to drone research, but we were able to deepen our understanding. Mr. Yamamoto was a non-executive director the first year after I joined the company, and we managed the company together. Although Mr. Yamamoto was an external member, he probably came to ACSL four times a week.
The founder and CEO of ACSL is a Professor with strong academic rigor. When we proposed an idea from business perspective, we had to outline our logic clearly. Mr. Yamamoto researched drone technologies along with me, and we even went to laboratories in other universities to interview researchers. He was a hands-on investor in the truest sense.

Of course, Mr. Sakamoto also offered proactive support. I had academic and business background, but had to improve my management skills. From ensuring good company governance to choosing the right securities company for a prospective IPO, there were several aspects in which I had no experience. Mr. Sakamoto and Mr. Yamamoto were present to not only offer advice based on their extensive experience but also put me in touch with relevant professionals through their network.

I particularly found their support in fundraising very helpful. Two years after I joined ACSL, we raised a Series B funding. It was UTEC that initiated conversations with other VC’s to invest in our Series B. With UTECs strong syndication, we were able to raise money at the optimal time and focus on research and development.

SECTION03 : Taking Decisions with a Big Picture Perspective

SCROLL or CLICK

SECTION03

Taking Decisions with a Big Picture Perspective

UTEC did not just introduce us to people or organizations that were relevant to our business, but I also benefitted immensely by interacting with other entrepreneurs at UTEC events.

Ohta:
I am originally an academic, and hence I do not have formed thoughts towards the profession of an entrepreneur. I am a CEO now, but I feel more like a carpenter who bundles craftsmen rather than a manager. I believe that increasing the corporate value of the company is the ultimate and only mission. However, I didn't even have a carpenter like experience in my previous roles. To that end, networking with other entrepreneurs became important. The things I learned by talking to other senior and successful entrepreneurs at UTEC events and other seminars have been very helpful in shaping my mindset on company building.
Speaking of mindset, I also learnt a lot from Mr. Goji, Manging Partner & President of UTEC. I had consulted Mr. Goji about a certain management decision. He asked me if the decision was virtuous. It is hard to define what ‘virtue’ is, but cutting corners and chasing short-term profits by sacrificing long-term gains are not virtuous actions. Mr. Goji always encouraged me by saying “I would like Mr. Ohta to cultivate long term perspective, aiming for a company that is growing after 10 years”. With UTEC’s support, I tried to draw a big picture when making decisions. I think that an IPO is just a starting point, and I am determined to continue growing this company.

FINAL SECTION : The present: The golden age for ventures.

SCROLL or CLICK

FINAL SECTION

FINAL SECTION

The present: The golden age for ventures.

One of the roles Mr.Ohta took upon was to scout for remarkable talent and build a strong organization. In his second year, Mr. Ohta hired the current COO, CTO and CFO.
The organization was built for an IPO. In December 2018, ACSL completed an IPO on the Tokyo Stock Exchange MOTHERS.

Ohta:
The moment the 4 CxO’s joined and we had clarity on the direction of the company, our relationship with UTEC also changed. Until then, UTEC had supported us in a hands-on manner. From the 2nd year onwards, they started to maintain a moderate distance. This was needed for the organization to grow. The concern is that if UTEC supports the company hands-on until IPO, the company may fail as soon as UTEC lets go of that support. UTEC was trying to ensure that the company becomes independent and self-reliant.

Thanks to UTEC, ACSL was able to complete a successful IPO in December of 2018. Even after the IPO, UTEC still supports us as one of our shareholders. Personally, I enjoy attending UTEC events. I also interact with Mr. Goji now and then to seek his advice.

Lastly, I believe there are many startups that have an ambition to explore the frontiers of industries, similar to the way ASCL innovated in the drone industry. I hope that UTEC continues to offer proactive support to seed stage startups, and help them explore the frontiers of technology, thereby contributing to a new world of innovation.