Sophie Howe is one of the youngest female CEOs in artificial intelligence, setting out to build a $1bn unicorn by innovating what she calls a “touchless world”. Co-founder of Xesto.io, a platform for developers to create smart applications based on our gestures, Sophie talks about the challenges of raising capital and commercializing her technology.
Melinda Wittstock: Sophie, welcome to Wings.
Sophie Howe: Hi, thank you for having me.
Melinda Wittstock: I'm always excited to talk to somebody that hails from Toronto, also my hometown. And also someone who's working an artificial intelligence, which is a real passion of mine and something that my company Verifeed is also tackling!
So, we have a lot to talk about.
So, as 2018 kicks off, what's your big intention for the year and for the growth of your company?
Sophie Howe: I definitely think that my intention for the year is expanding out the company, raising my seed round, and yeah just really getting out tech out there and getting it in the hands of people. It's really exciting what we're working on, and I'm really excited to bring it to market, and have people have these like touch less interfaces that I'm going to be talking about later on.
Melinda Wittstock: Yeah, this is really cool. A touch less interface that responds to our gestures with your company Xesto…
So, tell me a little bit how that actually works and what the commercial application of that is going to be.
Sophie Howe: Yeah so, the way that our technology works is developers or creators they go online, they click record, and they perform a gesture about seven to ten times. And when they're doing that, what they're doing is recording or training a machine-learning model to respond to that gesture.
So, it makes it really easy for a developer or creator to put in that gesture, that it's responsive across different people, because the way that we all move is slightly different so, the machine learning is able to account for that discrepancy.
Melinda Wittstock: So, you need a lot of gestures to train this thing, right?
Sophie Howe: No, you only need about 10-15 gestures.
Melinda Wittstock: That's it? No, but I mean a lot of people … ‘Cause like all of our gestures could be slightly different right?
Sophie Howe: Yes.
Yeah, but the … We have like our tech it's so great that there's like, we're able to account for that. We don't want you to have to spend hours just training a gesture. We just take 10-15 and perform something magical and then it works.
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Melinda Wittstock: Oh, that's amazing. So, humans are that much alike?
Sophie Howe: Or the tech is so great.
Melinda Wittstock: What inspired you to go create this?
Sophie Howe: So, my co founder and I met a few years ago at the University of Toronto, and he had just done a hackathon, which is this weekend project that developers do. They just get together and they code something from nothing. And he was doing something with the Microsoft Connect, and it was … I had an awful experience; there was no tooling that he could actually use. And he realized that gestures are something that people would want to do, but there's no way to do it. So, he started hacking together a solution that he's going to open source, and we met around that time and realized that there could be something greater there than just an open source project on Github. And we decided to just go all in on this and just create the go to gesture solution, and that's what we're doing.
Melinda Wittstock: So, there you were, at the University of Toronto, and what were you studying?
Sophie Howe: I was studying Finance and Economics, so Business.
Melinda Wittstock: Okay, so you're a non-technical founder with an AI startup. Yet another thing that you and I have in common!
And what's fascinating about this to me is where you're combining. It's almost like a cross disciplinary thing of combining like just our very humanity but where artificial intelligence can make us almost more efficient and maybe even more truthful, if that makes sense. It's very curious to me.
Sophie Howe: Yeah, yeah no, it is very interesting what we're doing and I'm excited to see how it's going to be used, because we've done it in a way that we're going to be giving it to people to create things, we don't want to have too much of a play in what they're doing. We want people to have this ability to do these interesting and innovative things on their own, and they're going to be able to think of things that none of us can. So, it'll be really cool.
Melinda Wittstock: … Are you saying that you're kind of opening this up a little bit? It's like a canvas with which people can paint.
Like I would think that there'd be so many different applications of how say Facebook could use this or how Slack, or even conference calls, or like so many different applications that I can immediately think of.
Sophie Howe: Yeah.
Melinda Wittstock: It might be hard to even focus on which is the one that you're going to bring to market first.
What are your thoughts on that?
Sophie Howe: Yeah, no, that was a really big challenge for us for quite a while, but we realized that we would just tackle the hardware one by one because we want to be a tool that's device agnostic, which means that it doesn't matter what hardware you're recording these gestures on and what hardware your consumers have. So, we're just going by hardware one and hardware two, we're starting with the leap motion, which is the gesture hardware that's relatively prevalent in the market. And then we're moving to the iPhone territory, because the iPhones now have depth-sensing cameras. So, we are, by doing this, we're identifying what industries and what apps generally go along with this hardware and we're working with those users, with those creators within those industries.
So, the leap motion is much more virtual reality used and also some enterprise. And then the iPhone is of course augmented reality, it's apps, games, it's Instagram, it's all of these things. So, it's one by one.
Melinda Wittstock: Oh my goodness, so you are building like a billion dollar unicorn?
Sophie Howe: I think so.
Melinda Wittstock: Yeah, I mean, you could well be.
I mean how many other people you know, are in the market working on kind of the same problems as you? Is that kind of a crowded space that the consumers not quite aware of yet? Like what's that ecosystem like?
Sophie Howe: It is not crowded at all. It's quite interesting. There are a few other companies that are operating in the space of gestures but nobody has tackled the problem that we have. The problem that exists with gestures is it's really computationally difficult to do.
So, they've created what we call gesture shops, which is like a consultancy. If I'm a development shop making a VR application and I want it to respond to gestures I would go to them, and they would just steer the solution for me and then give it to me. I wouldn't be able to test things out myself; I wouldn't be able to create it myself. I wouldn't be able to put it into new applications very quickly and easily.
So, we're tackling it from the other perspective of everyone should be able to do this. Why are there so many barriers to entry? We want people to do this.
Melinda Wittstock: This is so interesting because when we at Verifeed analyze all these millions of social conversations to try and kind of understand people from what they share in the social conversation. And then I think my god, my mind goes wild, and I think, “Wow, what if we could also analyze?” We would know so much more than we know from the text of what they share.
Then I think about chatbots and avatars and to make those really truly authentic to who we are. It's fascinating how quickly what's possible and how quickly our world is changing.
So, when you think, “Where are we going to be?”… just even like a couple of years from now, are we even going to recognize what we do right now? How fast is this changing?
Sophie Howe: I think it depends on the industries. So, I think consumer-facing tech is probably one of the quicker things that are moving. So, we won't be interacting with our, with our phones the same way, or our smart watches. I think we might be interacting with our computers the same way, and that'll take a little more time to change the way that that perception is. But I think industries like healthcare and really like big scale enterprise that's going to take a while.
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Melinda Wittstock: Right and I think I know the answer to this question already, but I want you to tell me your perspective on it. When you create really innovative technology that's kind of changing our behavior it's a pretty uphill battle to close those early deals you need to kind of show revenue and traction to have a lock down the funds you need. You get into this kind of chicken and egg where you have to go out and this is like every tech entrepreneur's dilemma, particularly for you know kind of bleeding edge tech. Is that you got to go out and educate a market and convince a market to try something that they didn't even know they needed, and to get them to pay for something that they didn't even know they needed. So, this is why entrepreneurism, this type of entrepreneurism is not for the faint hearted-
Sophie Howe: Yeah.
Melinda Wittstock: And so, how do you see that right now? What are the things you're testing right now? And are you starting to get any market traction?
Sophie Howe: So, the things that we're testing right now, definitely our revenue model. We … It's interesting what investors tell us we should do that can be very polarized, like I find that there's two schools thought.
One of them is give it out for free and just get as many users as possible. That's one strong school thought in the investors I've spoken to.
And then the other one is, no you have to test out your revenue model and you have to get some sort of revenue, like yeah people will use it for free, but that doesn't mean that they're going to pay for it. That doesn't mean that there's market there.
And while both of these I understand where they're coming from, whenever I try and explain that I have spoken to consumers that would be using this and they would pay for it, they're very much set in their ways.
So, the investors that say I should give it for free regardless of the fact that people have told me that they would pay, and they would happily pay, they still want me to give it to, out for free to prove the traction.
So, the way that we're approaching it is like a premium. This is quite common with developer tools. Premium so there's a [inaudible 00:18:52 so that hobbyists that are curious and working away at home on the weekends or looking to make that next [inaudible 00:19:01 but doesn't really have the funds to pay for tooling. And then, we're going to scale with the amounts of developers that are working on projects, it's likely that they're going to be with a company that is going to have some sort of funding to be able to pay for it.
So, yeah that's really how we're trying to prove it.
Melinda Wittstock: It's interesting that what you say about investors having polarized opinions. Often as female founders, but all founders you know, we can be sort of over coached, and we can assume that the investors are a good deal smarter than they actually are. I mean, they don't know. They know what they've done before…
Sophie Howe: Yeah
Melinda Wittstock: …and they know what's worked for them before. And they look for patterns. And so they you know, they have opinions, but at the end of the day, yeah it's tricky. How are you kind of coachable and teachable and listen but at the same time how do you keep your own vision and stay true to yourself? And this is a big problem.
I've seen a lot of female founders over the years, including myself, you know, kind of overwhelmed by contradictory advice where it can stop you in your tracks. How do you navigate that? How do you know who to listen to and who not to listen to?
Sophie Howe: Yeah so, I call that mentor whiplash-
Melinda Wittstock: Right
Sophie Howe: I think every found in this world should be very familiar with just the concept of mentor whiplash. It is, exhausting. It is very confusing and …
…because often you're going into, it's not necessarily just with the investors, but going into conversations with people who have done this before. You do put quite a bit of trust in, that what they're going to tell you is either coming from like a genuine place, that this is what they really truly believe, or a place of experience. And hopefully, they as well both of those.
But in the cases where I've been in a room with multiple mentors who have almost gone into arguments, who have gotten into arguments with each other over what they think it should be, why they think it should be this way, or even the direction that it should go.
And so it's very overwhelming, but what you have to do is, what I do is just understand the stance that I was at beforehand and why I was there, and not let somebody influence me just because they think it's right. I would consider it in both the macro and the microscope of if I were to do this, how would it impact my business decisions that have brought me to here or will take me to where I want to be? I already know that based on all the assumptions in the testing and the research that I've done, I already know that what I'm holding is not necessarily the best, like everything should always be evolving and changing and improving, but this is the right, this might be the right decision for me right now. But how can I AB test it to see what is the right decision going forward? And-
Melinda Wittstock: I think of, say how Google does this with rapid prototyping like say you look at say Google X, and driverless cars or the glass or whatever. I had this immense privilege to hang around spend a day with Tom Chi, who's founder, one of the founders of Google X. And he took my entrepreneur group, Maverick, in San Francisco, through his rapid prototyping process, which was awesome because it involved the customer at every step of the way.
Sophie Howe: Yeah.
Melinda Wittstock: Like we would be doing this with Post-It notes for say app creation or like hanger and any really cheap material. Like you didn't even have to build anything and you could figure out pretty quickly whether someone would pay for it or how they would use it.
So, that rapid prototyping wasn't just about the innovation of the tech, it was also rapid prototyping of the product-market fit. And it was fascinating, and I think just being able to do that …
He also took us through this whole process of not being attached to the outcome, which was fascinating to me because he was saying psychology shows that we get attached to the outcome within two minutes and we'll start advocating for something even if it doesn't make sense. And so, this whole process was very, very curious.
And it allows you to establish traction really quickly, it also allows you to fail fast and just kind of keep moving you know, one step in front of the other, learning, testing, measure building, all that agile stuff that I'm sure you do. But it was fascinating to me.
Sophie Howe: Yeah.
Melinda Wittstock: So Sophie, how do you test the ideas in the marketplace? Because I imagine that that you know, we were talking about themes for 2018 and I imagine that's a rather big one for you. And that also is very much attached to your ability to go out and close that seed round that you need to really bring this to market.
So, share with us a little bit what your process is about being able to pull that off.
Sophie Howe: So, it's definitely identifying where the people that I need to talk to, where they're going to be. Whether it's locally in Toronto, which has quite an advanced tech scene right now, it might not be San Francisco. But I'll go and identify who's around, where are they? Where can I go and talk to them? How can I approach them? And I'll try out different approaches, I'll try out different conversations, different kinds of demos, and then really see what excites them. Where should I focus? Where will I put my resources in next time? And how can I just maintain a presence and have people know that we exist and that I exist and that we're a friendly face and we always want to have these integrated conversations with people to excite them into trying new tech.
Melinda Wittstock: So now as you go out and close the financial backing, seed round, agile round, ultimately VC round, you're going to need some serious money. I mean, how much money do you think you need to actually bring this to where, over time … I mean, your seed round, but all told?
Sophie Howe: So, I'm thinking about 1.3 US million. So, a million, like under a million and a half.
Melinda Wittstock: Right, like for your seed round?
Sophie Howe: Yeah.
Melinda Wittstock: But beyond that, I mean you're going to need money to scale it, you're going to need all kinds of different things. And so, do you think about it in terms like that? Or do you think just really the short term, okay I'll just get through the seed round and we'll think about the rest later? Or what's your kind of psychology or your thinking around that?
Sophie Howe: I think of it more short term. I think of it in the long term as well, but more in the short term to identify … So, in our seed round, this is going to get us to this point. And that point is going to be associated with these kinds of milestones and some of those milestones are going to be enterprise clients, So, it's all dependent on how much revenue we're going to be able to bring in and the partnerships that we develop, so that we might not necessarily need to go and do that massive raise afterwards because we might just be able to self sustain for some time.
Melinda Wittstock: Nice, well that's a nice way to go because you end up keeping control of your company. You know, bottom line the minute you take VC money it's kind of like not your company anymore.
Sophie Howe: Yeah.
Melinda Wittstock: Also, the other thing that's interesting too is being able to have a really great strategic you know, partner or customer that doesn't constrain you in the market from selling to others, but at the same time allows you to really incubate and develop and you know, creating a really interesting win-win deal structure there that allows you to really motor that way. I mean, that seems like a really smart way to go that still allows you to do that big consumer facing traction thing at the same time.
Sophie Howe: Yeah, that's exactly the route that we want to go down.
Melinda Wittstock: That's-
Sophie Howe: We really want to have those big enterprise clients that bring it to the markets.
Melinda Wittstock: That's awesome. It's so inspiring to me to talk to someone at your age and hear so much of this figured out so early.
So, who were your role models, you know, growing up, do you have female role models that you look up to and you think, “Wow, you know, I learned a lot from you”, or mentors or just people that you call and talk to?
Sophie Howe: Yeah, for sure.
So, growing up, I think the most influential person was my mom. She was an engineer and she often faced all of those situations that you had just mentioned with being the only woman in the room and the only woman, person, like in the positions that she was in.
And so, for me it was never a consideration that I, like growing up it was just never a consideration that I wouldn't be able to do these things. It was just kind of a given that these opportunities were open for anyone. And so it was never necessarily like an inspiration as much as like, of course, it'll be like that. Why would it not be like that? Like of course I'm going to go into some sort of industry where things might not necessarily be entirely balanced but like why shouldn't I be able to, if I want to, I will. So, that's definitely what brought me here.
Melinda Wittstock: So, your mom is, you know, obviously an inspiration to you. What did you observe of just watching her as you were growing up where like, specifically, where you thought, “Oh, okay. That's really awesome what she's doing,” or “Wow, I don't want it to be like this for me.” Or what were some of the lessons that you learned?
Sophie Howe: So, growing up she would go to a lot of conferences and I was very lucky to be able to go with her to these conferences. And she would go to international conferences and I would tag along and I was very young. I was probably like in elementary school up until grade nine, grade ten, when I would consistently go with her.
And yeah, it would probably be her and ten men in every conversation that she would have. So, that was probably like, I was so desensitized to that being not normal, that was just something that I was, I always thought like, “Oh, yeah. My mom and just all of her colleagues.”
There was never really a red flag like why aren't there more women in there? So, that's probably what makes tech a little bit easier for me. It's just not strange for me. It's just always been the way I've seen it. And my mom's also been so great about it, never said anything about it to me. Growing up it was never a conversation that we really had; it was just normal.
Melinda Wittstock: That's funny because I always assumed that my daughter, who's fourteen now like in ninth grade, and I think she's definitely going to be an entrepreneur. And she says, “No, no, no. Mom, no, I'm not.” Right? And yet she keeps coming up, she's had like I don't know, like eight business ideas. But she sees me, she sees the, you know, over the course of time, you know, the ups and the downs, you know, sometimes within the hour. And on the other hand, she is pretty resolute that she's never going to have, why would you have a job? Like if you can control your own destiny.
So, I think it's interesting when, you know, the daughters particularly of female entrepreneurs and engineers, you know, have a totally different take on what it takes to go and succeed. So, it's fascinating to watch and inspiring to watch that kind of like baton being passed along.
What's the ecosystem like in Toronto for female tech founders, such as yourself? Are there more? Are there a lot? What does it look like when you go to conferences or hackathons or all the, you know, different events and things you have to go to? Are you still kind of a little bit like the only woman in the room? Or are there a lot of young women in this space now?
Sophie Howe: It depends on the event. So, I find that there are some events that are just female founder oriented that I'll attend and I'll find that most of those women they're relatively young, but most of them don't have financing. They're all very early stage and it's generally not in the techs play.
There are very, very few women founders in high tech. And I have quite a few friends now in the high tech space in Toronto, and I'm always trying to meet as many more people that are in my space and at the stage that I'm at. Because I think that it's really important to always be having these conversations and I find it's very hard to find women where I am in the high tech space.
Melinda Wittstock: That's a big challenge and it remains a big challenge I mean everywhere like in Washington D.C., where I am as well
So, one of the things that's really emerged with all the interviews that I've been doing on this podcast and my book on female entrepreneurship and so many things is that success really for a lot of us is really dictated by the people we have around us. You know our-
Sophie Howe: Yes.
Melinda Wittstock: Mentors, our networks, taking time to really develop those relationships.
And it can be hard you know, when your head's down and your innovating and you got to hit your milestones, hit your numbers, all of that. It can be easy to forget to reach out and really develop those relationships and also forget to take care of yourself or have time for yourself.
What are your routines around that? Like do you, are you able to get your kind of a head up and out of the tech and like out and networking? Are you able to have some time for yourself?
Sophie Howe: It all kind of comes together in the end. So, I do my very best to make sure that there is some time every day where I'm able to decompress, catch up with people, and the networking events often is part of it. It's a part of the work if I'm going to go out and attend like these, like going and just being on. Just going and just talking, talking, talking with people for a few hours. I find that those can be some of the most exhausting parts of the day. It's not, like I don't mind working with … Lately I've been working on my computer for twelve, fourteen hours a day but I find that some of the hardest parts are going out and just talking to all these people.
But yeah, I think it's important to have these people that are close to you that you're able to call at any moment and just rely on them and just talk to them and have somebody that's gone through it or is going through it with you. That's one of the most important things I think to being an entrepreneur is just having your little group that gets it.
Melinda Wittstock: Oh my goodness, it really is.
And so, it's so wonderful to talk to you, and I hope that you will come back on the podcast a little bit later this year and to like check in. I'm really curious to follow your progress, and of course when I'm in Toronto definitely-
Sophie Howe: Yeah.
Melinda Wittstock: Thank you so much Sophie for flying with us today on Wings.
Sophie Howe: And thank you for having me.