How Drones Saved One Israeli Startup That Was Close to Crashing

'After spending tens of millions of dollars of the investors' money, the way to receivership looked shorter than ever,' recalls Amimon's CEO.

The Amimon broadcast device.
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Amimon was a failing startup company on the verge of closure when, under its new CEO Ram Ofir, it changed direction to focus on professional photography and video production, including the use of drones for footage and supervision.

The company develops and manufactures HD wireless video modules for medical, pro camera, audio-visual installations and other markets.

“We were a week away from closing. We’d just recruited a marketing deputy CEO from the United States and things were so fluid he demanded a clause in his contract that if the company closes down, I’ll pay for his ticket back,” says Ofir.

“After spending tens of millions of dollars of the investors’ money, the way to receivership looked shorter than ever. In two weeks the money would have run out,” he says.

Many may be familiar with this scenario, but only few have survived to tell the tale with fond nostalgia. About three years ago the company, which develops and manufactures HD wireless video modules, was near closing after having spent $80 million of its investors’ money. Today it is profitable and realizing one of the technological world’s visions.

“We looked for an alternative – to change the company’s direction and business model. The investors sat at a directors’ meeting after four rounds of raising money and asked ‘how much?’ I said ‘four,’” Ofir says.

“They looked at each other in silence. On the one hand, four million dollars isn’t a lot of money. On the other hand, the company had already burnt a lot of money. I said that in four to five quarters the company would stand on its own two feet and if not they can pull the plug. A year later the company was balanced and those $4 million are still in the reserves. We haven’t touched them,” he says.

A drone hovers above Amimon ground equipment.
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Correcting course

Amimon is a good example of a company that pivoted, or made a structural course correction. To understand the fundamental change it underwent requires delving into its history. Amimon develops and manufactures video modules that enable wireless broadcasting of video files in HD quality with almost zero latency, or no perceptible delay. At the heart of the product is Amimon’s chip.

Amimon was founded in 2004. By 2009 it raised $30 million from large funds like Evergreen Venture Partners, Argonaut, Stata, Walden and Motorola Ventures. That year the company won the Ernst and Young award for the most promising startup and forecast that 2010 would be its breakthrough year.

But Amimon took a wrong turn. It directed its chip at the end-users. It produced consumer products for computers that the consumer joins on one side to the HDMI and on the other side to the television screen. This enabled watching HD quality video or playing net games on the TV in the living room. The result was impressive, but the price was too high. In Israel a kit was sold for 720 shekels.

At the same time, Amimon took its communications protocol and tried to establish a new standard called WHDI designed for consumer products like televisions and computers. The standard still exists but remains experimental.

But no market is as hard as the consumer hardware market and the company crashed like many Israeli companies that directed their products at the end-user, including SmartKey, IXI, MOdu and Wisair. At the beginning of 2012 Amimon scaled back its personnel from 80 to 30 employees. That year it also hired Ofir as CEO and looked for a new direction.

“We realized that selling units for $99 dollars wasn’t the answer and looked for other fields to sell in the right market at higher prices,” Ofir says. The company decided to focus on photography and professional production and even sent its deputy marketing CEO to Hollywood to learn the field from scratch.

“In professional photography there’s still a camera cable attached to the director’s monitor. When there’s too much action in movies and the cameras move faster, that’s a limitation. In the Super Bowl, for example, they spread antennae in the whole stadium and used a wireless solution that costs $70,000 a night. Our product costs from hundreds to thousands of dollars. We commercialized this world. One of our clients is the German RTL network and in all its live broadcasts it uses our product,” he says.

The gamble succeeded and the company started to recover. Amimon sells via other producers that use its component with their brand name. The company today employs almost 60 people in its Herzliya offices.

Fired, rehired

“We also rehired five guys who were in the company in the previous round and were fired,” says Ofir.

Another Israeli semiconductor company, Wilocity, also produced a broadband communications chip enabling HD quality video broadcasts. It was sold to Qualcomm for $400 million and its technology became a world standard. The difference between Wilocity and Amimon was in capabilities and price. Wilocity enables 60 GHz- band communications around the house only and its chip is relatively cheap. Amimon, on the other hand, sells a 5-giga frequency chip with a broadband communications for relatively big distances.

“It’s like having a cable a kilometer long,” says Ofir.

The company’s next goal is the sky. Amimon found the relatively virginal but fast developing drones market.

“Imagine a drone that can inspect a structure’s condition with a few photos or reaches the top of a cellular antenna or electric pole,” says Ofir.

“In the construction of the light rail in Jerusalem they used drones to inspect the work. Today the operator has to maintain eye contact with the drone and has no idea what the camera sees. There are video solutions, but they’re analog and look like television from the ‘80s. We enable the operator to be even 1,000 meters away, you don’t even see the drone,” he says.

Unlike its professional photography products, Amimon has its own brand, Connex, which it sells to networks specializing in selling drones and micro drones. The product consists of two units – a transmitter about as big as a pack of cards, fitted on the drone, and a receiving ground unit. Amimon is wary of end users and only sells to prosumers (people who consume and produce media) who are willing to invest money in their hobby. The product accordingly costs $1,600.

In the product’s next generation the transmission box has been significantly miniaturized and is now not much bigger than a smartphone battery and suitable for a GoPro action camera.

“Today the management knows the money isn’t going down the drain and at meetings they say ‘tell us how to do something big, run fast and bring more,’” Ofir says.

Today the company’s annual income turnover is some $20 million and its gross profit is 75 percent.

Also, the company has begun to probe another field of activity – Virtual reality glasses (VR Glasses). “This field is developing. This is what some people are doing with their free time and money. We’re carefully looking around the corner to see where this field is going and how big it will be. Today people playing with VR glasses are still connecting them to the console. We’ll enable them to disconnect and roam around freely,” he says.

If you Google “wedding drone” you’ll get quite a few results. Instead of a gliding camera, the trend today is to take drone shots from above. But those offering that service may be criminals. In Israel licenses are given not to the aircraft but to its operator. If you take a drone out into the field you’re within the law as long as it doesn’t rise higher than 50 meters. Most – probably all – amateur drones don’t fulfill that requirement. Also you will be required to pay membership fees to the Aero Club of Israel, which is supposed to train you to fly safely.

But if you want to take drone shots of a wedding, the operator needs a flyer’s license, which is not that much different from a real pilot’s license. “You need an ‘eye-contact flying license,’” says David Yitzhak of Omni Horizon flying school. “The operator will have to pass three theory exams – constitution, technical knowhow and meteorology. Then he’ll have to pass a practical test and accumulate 24 flight hours. But in Israel there is no school for operating drones, so there’s an interim solution. You sign a statement that you have flight experience and knowledge.”

The process costs 350 shekels for the theory test and 2,300 shekels for the practical test.

Operating a drone without a license breaks two Civilian Aviation Authority regulations – not having a practical flying license and flying the drone less than 250 meters away from a “gathering of people.” However, the activity at this stage is hardly supervised.

A number of Israeli companies have licenses for operating drones and offer various services. The largest is Bladeworx, which sells services to media groups and news. The company was also hired to safeguard the light rail traffic in Jerusalem from stone throwers and other sabotage.