Quantela Blog

How to Build a Smart City Business

I always wanted to build one product of global scale from India that would have a huge social, economic and environmental impact on societies and cities. That is how the journey of Quantela started.

Sridhar Gadhi, Founder and Executive Chairman, Quantela Inc.

Taking part in the 75th episode of “The Indian Dream” podcast hosted by Sahil Khandwala and Siddharth Betala, our Founder and Executive Chairman – Sridhar Gadhi in a freewheeling chat with them, answers questions on his entrepreneurial journey, the genesis of Quantela, how the smart cities initiative works, the value chain, the opportunities that exist for new entrepreneurs entering the IoT and Smart Cities space, as well as Quantela’s Go To Market (GTM) strategy.

Click to listen to the podcast

In this blog, we provide a synopsis of what was shared by Sridhar, as well as offer our insight into the future of smart cities.

The Opportunity

Urban infrastructure digitization is a US$ 1 trillion global opportunity. At the same time, one must also bear in mind that it is a tough problem to solve, as it impacts the day to day lives of citizens. Working with city governments requires a mindset to understand and assimilate the needs of every persona – starting from elected officials such as Mayors, City Council members, City managers, CTOs, Department heads etc. On the other hand, there is a need for understanding the pain points of citizens and using technology as an enabler to deliver outcomes that help improve livability and their quality of life.

It is this customer and citizen centricity which has made Quantela leaders in the urban infrastructure digitization space since 2015.

Partnerships as a GTM Strategy

Startups entering this space would find it to be a challenge to tap into city governments directly. This is where symbiotic partnerships with enterprises that find your product offering complementary to theirs would hold you in better stead.

Quantela started its journey by creating an urban infrastructure decision making platform – Quantela Platform for powering Integrated Command and Control Centres (ICCCs) in cities. We entered into an OEM partnership with Cisco and leveraged opportunities of selling our platform along with Cisco’s Smart City platform together.

We also partnered with system integrators to jointly bid for smart city projects. Another GTM strategy is to tap into urban operators who manage a cluster of cities and have technology requirements which need to be fulfilled.

It is all about having the right technology which can deliver the desired outcomes and which can help city governments and partners in quantifying the impact. But startups need to do the spadework to understand the requirements from OEMs and System integrators and use innovation centers set up under Smart Cities Mission (in India) to test and hone the technology with pilot projects. Some partners would also run accelerator programs which startups can benefit from.

The Need for Innovative Business Models

While the conventional approach has been to bid for projects and get paid for the finalized bid price, post COVID-19, there is an emphasis on making evidence backed technology investments which demonstrate ROI in monetary as well as socio-economic and environmental impact terms, due to budget constraints.

Variants of pay-as-you go subscription driven and PPP models are now in place. At Quantela, we have adopted an ‘Outcomes-as-a-Service’ (OaaS) business model which underscores our value of being results-driven and having the confidence in our technology to deliver tangible and measurable outcomes for cities and societies as a whole. Read: Quantela’s Outcome-based financing for city digitization

Bottomline, it is only when the city government saves cost [by switching to smart lighting, optimizing waste collection] or sees an increase in revenue collection [user charges, advertisement fees, tickets for traffic violations, and monetization of data] would we get paid.

This is reflective of smart city initiatives globally orienting themselves to become more outcomes, value and SLA driven.

Opportunities for New Age Tech

From the current hardware to software ratio skewed at 75:25 with network connectivity, sensors, data centres, cameras and edge devices needed among other hardware requirements. But things are changing thanks to AI/ML. After all, a smart city is one which uses real-time data driven insights to enable decision making and operational efficiency for cities, which makes a difference to lives of citizens through seamless, enhanced and equitable access to public services.

Things which are not possible today, there will be opportunities created tomorrow. At Quantela, we are focusing on the opportunities around:

Public Safety – [Reducing road fatalities and urban crime in addition to crisis management]

Traffic Management – [Ensuring smoother traffic by reducing congestion]

Cleaner Environment – [Monitoring environmental data and optimizing waste collection for healthier societies]

Enhanced and more inclusive public services – [Setting up free public Wi-Fi to bridge the digital divide, Digital signages for cities to enhance revenues along with citizen mobile applications for making city governance participative]

Public health which earlier was not part of the smart cities program pre-pandemic, now makes urban resilience to fight crises such as pandemics an essential characteristic for a city to be called smart.

The Next Inflection Point

Having an interoperability policy both at a global and country level is essential to make integration of smart elements easier. Having a data privacy policy will help create value out of the data more efficiently for cities and citizens. Finally, there is a need to have an outcomes focused financial model to enable the digitization.

Word of Advice

Do startups focus on opportunities in the domestic market or focus on international markets? Sridhar advises to take the ‘Glocal’ approach especially for those startups in India. Have a global mindset but prove the effectiveness of the product first in the local market.

The fact that there is an organized Government-backed Smart Cities Mission in India along with an opportunity to make an impact in the lives of over a billion people. With a proven product, it will be much easier to tap into global markets.

Resources for Entrepreneurs to read:

Smart Cities Mission – India

World Economic Forum

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