Entrepreneur Dr. Jad Jarroush of Nazareth waited many years for this moment. It was a wintry day in the suburbs of Berlin when Dr. Jarroush arrived at the worksite of state-owned railway company Deutsche Bahn (DB), equipped with a drone and a tablet computer, to start a trial aimed at setting off a revolution in the way complex infrastructure sites are managed.
Alongside Dr. Jarroush stood Tal Meirzon, CEO of Datumate, which Dr. Jarroush founded. They gave the drone the signal to take off, and after 35 minutes it returned to its base, having comprehensively photographed the construction site. It downloaded to the tablet 3,500 pictures documenting half of the huge site, stretching over 3.2 square kilometers. The drone recorded in detail, to an accuracy of just five centimeters, the mounds of earth, the track sleepers, and all the materials required for building four tracks, six bridges, and acoustic supporting walls.
The system developed by Datumate transfers the processed pictures to the work manager's office computer, not only showing him, in detail, the precise quantities of materials at the site and the rate at which they are being depleted, but also enabling him to monitor daily progress and compare it with the work plan.
"Within 48 hours, the site managers received a report showing progress with each of the pillars supporting a wall every fifteen meters. The report showed percentage completion for everything - how much had been done, how much had yet to be done - from which they realized that there was no chance that the sub-contractor would finish by the end of December as he had promised. Without our system, they would have had to send out human surveyors over several days, and then spend two weeks processing the results," Dr. Jarroush said.
About three months later, Meirzon and Dr. Jarroush presented the trial results at an event that was the climax of the program of startup accelerator Mindbox, part of DB's innovation unit. Following the trial, which took place at in late 2017, Jarroush and Meirzon went on to two other projects - one for the construction of a bypass road in northern Germany, and another for demolishing railway stations and rebuilding them and electrifying them.
The event was exciting, but for Meirzon and Jarroush the capabilities that the Datumate system had demonstrated were just the opening shot in a much broader and more ambitious move in which they were trying to do something that they say has never been done anywhere else in the world, namely to bring about digital transformation of one of the biggest construction sectors, infrastructures - or in more professional language, to provide a digital solution for BIM (building information modelling) in infrastructures.
But unlike startups in areas such as cybersecurity or cloud computing, which raise tens of millions of dollars and conquer what may be new markets within two, three of four years, Datumate's road to success was far from swift or easy.
"I didn't even know how to build an investment plan"
Datumate, founded in 2011, was not Dr. Jarroush's first venture. Alongside a teaching post at the Technion - Israel Institute of Technology, in 2010 he set up GeoPoint. The initial investment came from his own pocket. Just before the money ran out, he managed to recruit a team of programmers from Belgium and present a prototype of the technology. "When I started, I knew nothing. Not even how to build an investment plan. They brought me a mentor who eventually became the CEO, and together we raised $3 million, that time from Battery Ventures," Jarroush says.
Skeptical investors tuned up all along the way. "All the experts in Israel told me 'you're dreaming'. There isn't anything like this today - that with a simple camera you can pinpoint a pixel and calculate its exact coordinates," he says. "Someone told me that it was a dream and a wonderful idea, but that implementing it would require $80-100 million.
"We could have been ten times more successful if we hadn't made a strategic mistake in 2013-2014," Jarroush says. The most significant obstacle was actually internal. "Even before drones had cameras like they do today, I built my first drone and installed a camera with radio waves on it. I thought that this was the future, but the company's board of directors said, 'Listen, the drones market will be closed. If you continue talking about drones, we won't invest in you'. The result was that companies similar to ours, which started after me, achieved a working drone before us."
In 2016, after the money invested in the company ran out, Jarroush asked the Al-Bawader fund, one of the funds that had invested in the company, to help him choose a new CEO. Jarroush doesn't remember whether Meirzon was the sixth or seventh interviewee, but he says it was a match made in heaven. For Meirzon, who came to the company at age 50 after a career at Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT) and after having been CEO at two companies, it was an opportunity to be part of "a small company producing something original."
The pair bought the shares in the company from Al-Bawader and set out. The fund could not continue supporting the company because it had reached the maximum it could invest, $10 million.
"I have only warm words for Chemi Peres and Rami Kalish from Al-Bawader. They gave support even without the money, and without them we wouldn't have existed," says Jarroush. Two years ago, another $5 million were invested in the company, $4 million by investors from Germany, who hold 30%, and $1 million from five private angel investors, who, together with the employees, own the remaining shares. In addition, in July 2020 the company received a $750,000 grant from the BIRD Foundation, the bi-national foundation for Israeli-US research and development.
Now, with their first paying customers, they are embarking on an A financing round. Meirzon says that the company's annual revenue is already measured in millions of dollars, and that it expects to become profitable by 2023. Datumate seeks to raise $10 million: $3 million from existing investors, and $7 million more form Israeli, US and European funds. The aim of the funding round is to expand the company's customer base and to hire more people in marketing, sales and development.
The change that Meirzon wrought in the company, thanks to which it found its way to working with Deutsche Bahn, was first and foremost in the target market. Instead of producing a tool for a particular profession - surveyors - it aimed at the industry as a whole. Instead of selling to surveyors, Datumate sells to their clients, major infrastructure companies.
Meirzon and Jarroush identified a huge market that was complex and inefficient. "The inefficiency stems from the fact that the players don't share the same information. Each comes to the site at a different time, each collects his own data, and there is no coherent database available to everybody," Meirzon explains.
Whereas buildings are easy to model, because all that they consist of boils down to walls and openings, infrastructure is built up in layers, which is why it has not had a solution up to now. With infrastructure, it can be a matter of eight or nine layers and cross sections underground, over several kilometers, sometimes tens of kilometers.
Having drones with sensitive and accurate cameras, together with huge processing power on the cloud, enabled Datumate to overcome the market's obstacles. Its system is now in use or in business partnership with entities such as the Israel Land Authority, the Ministry of Construction and Housing, Autodesk, Electra Infrastructure, Netivei Israel, Mekorot - Israel National Water Company, and Ayalon Highways.
"The combination of a civil engineering expert like Jad, who understands the problems, with a company with experience in technology from different angles - one person from cloud computing, another from computerized vision, and me, from the world of products and business - has created a company capable of creating technological innovation in construction. There aren't many combinations like this," Meirzon says.
Besides the change in business focus, Meirzon introduced another change, when he and Jarroush had to move from offices in Nazareth to Yokne'am. "It was a dramatic move for people used to going to their mother or grandmother for lunch. Fortunately, no-one left," Meirzon says.
The reason for the move was actually difficulties in recruiting manpower. "I wanted all my businesses to remain in Nazareth," says Jarroush, "but even Arabs who were outstanding in computer science saw Datumate as an unregarded startup in comparison with Intel or Amdocs. They would come along and say, 'Listen, it's a nice story, but I've been accepted by Apple. Apple! What's Datumate?' And so I realized that in order to get hold of good people, I had to shift from Nazareth."
The company now employs about 20 people, half of them Arabs and half Jews. "Multiculturalism isn't in the foreground, but it's broad based," says Meirzon. He himself immigrated to Israel as a boy, from Czernowitz. "We speak Hebrew, Arabic, and Russian. There are Christians, Jews, and Muslims. The company works six days a week. We celebrate all the holidays, we sit together at three o'clock and drink Arab coffee. That's the DNA of the company, and it's fun."
Following the successful pilot, the company is now waiting for Deutsche Bahn to formulate a tender for a BIM management system for infrastructures, in the hope of winning it and making Deutsche Bahn an official customer. In Israel too, Meirzon and Jarroush say, openness to introducing the new technology has started to emerge, despite the industry's conservatism.
"Contractors approached us after receiving a signal from the government, which started asking for the technology in tenders. The government's role is important here," says Meirzon. "It's true that the process is long because of the bureaucracy of the Restrictive Trade Practices Law, but as soon as the state introduces into tenders a requirement for documentation using our method, the dam will break, and even those who don't understand it will open their eyes and realize why the government is asking for it. But it will probably take another year or two."
Meanwhile, Meirzon and Jarroush are thinking not just about Europe and Israel, but also about the Middle East. "One of the funds that invested in us is a private equity fund that began to invest in startups as well," Meirzon relates. "They also have a company that is close to our business and that is headquartered in Dubai. Before the agreements, they said that they would prefer us not to tell that they had invested in us. Now, we are already talking directly with the other company - an engineering company - and we are due to fly there after they expressed interest in starting to sell our technology. So yes, it opens up opportunities."
Published by Globes, Israel business news - en.globes.co.il - on February 14, 2021
© Copyright of Globes Publisher Itonut (1983) Ltd. 2021