‘Punching above our weight’: Aussie startup Cog Systems partners with multi-billion-dollar tech firm Qualcomm

Cog Systems

Cog Systems co-founder and chief executive Daniel Potts. Source: Supplied.

Australian cyber security Internet-of-Things startup Cog Systems is partnering with global tech giant Qualcomm, to implement its security technology into 800 million phones and smart devices annually.

Founded in 2014, Cog builds security into Internet-of-Things (IoT) devices. Its D4 Secure platform allows devices to benefit from advanced biometrics, AI and machine-learning algorithms and dual operating systems, without compromising on security or performance.

Through the partnership, D4 Secure will be built into Qualcomm’s Snapdragon chips, which power mobile phones and other smart devices.

According to Cog Systems co-founder and chief Daniel Potts, Qualcomm accounts for some 40% of global sales for the chips powering smart devices.

The tech company is listed on NASDAQ, with a market cap of $US67 billion ($94.7 billion).

It produces more than 800 million of its Snapdragon chips every year.

Potts tells StartupSmart he and the team always saw this kind of partnership as a potential “nice to have”.

He accepts that strategic partnerships “can take a lifetime to get”, however, he says Cog has pushed for what he saw as strategic and mutually beneficial initiatives.

“We like to punch above our weight,” he says.

“We want to raise the bar for security for all connected devices.”

At the end of 2017, Cog Systems secured $3.5 million in funding from VC fund Rampersand, as well as Grog Ventures, the investment firm of Atlassian co-founder Mike Cannon-Brookes.

Now, it has 35 people on board, including a sales team in the US, and it’s on track to see 400% revenue growth this financial year.

Irrespective of revenue, however, Cog is “very focused on that growth strategy,” Potts says.

“We want to take as much market share as quickly as possible.”

Security street cred

Since the funding round, Cog has focused on building its brand and demonstrating the power of its technology.

For example, the startup partnered with HTC, implementing its technology to create “what we call the world’s most secure phone”.

The project was intended to show that you could deploy Cog’s underlying technology for a low cost.

“Looking back, that’s given us this fantastic security brand, and street cred that no one really questions,” Potts says.

The team has also worked on improving the logo and figuring out how to reach their key market.

Ultimately, the interest from Qualcomm came from an uptick in demand from the tech giant’s own customers.

“The device makers we were working with started to drive demand into their chipset suppliers, basically saying we want to use Cog’s technology within our products,” Potts says.

“Big companies like Qualcomm, they respond to customer demand,” he adds.

The relationship between Cog and Qualcomm began back in 2016, when discussing how Qualcomm could support the startup in scaling to meet customer demand. And the rest is history.

“In hindsight, it’s easier said than done,” Potts admits.

“A lot of software vendors … will go door-knocking to chip providers,” he says.

“But really, all that matters is our customers wanting the product, that’s what drives it.”

Now, the relationship is inverted, he says. Cog now has a partner that “gets the technology and loves it”, Potts says.

Cog has secured a partner, but also a channel to connect it with innovative device manufacturers, he adds.

“They’re better positioned than us to see early insights into new compelling use-cases.”

“It’s ours to lose”

For a five-year-old startup from Sydney, a partnership with a global business such as Qualcom is “really exciting”, Potts says, “enabling us to reach that vision that we had for the business”.

The issue the startup is addressing is worldwide, and “the security problem, and the innovation challenge around IoT is real”, he explains.

“If we don’t raise the bar on foundational security, I think it’s going to really impact all of our lives in a negative way.”

The agreement allows Cog to reach more of the market, discover new use-cases for its technology, and work on solving security issues in tech.

Now, the startup will be looking to scale up and adapt its business model, hiring new people and making sure the team is a good fit for the future on the company.

“I’m really really in awe of how our entire team at Cog, and what we’ve achieved so far,” Potts says.

“On the flip side, it’s ours to lose.”

Potts, for one, is not about to rest on his laurels.

“Now, the next wave of hard work starts,” he says.

For other startups hoping to make similar partnerships with the big tech giants, Potts’ advice is to make sure you have a strong and compelling use-case, and “make sure you understand the end customer’s pain points”.

At the same time, however, they shouldn’t focus only on those end users.

“You have to work on the ecosystem, building that brand.”

While Cog saw payoffs for dreaming big, Potts stresses that startups shouldn’t make high-profile partnerships their only goal.

After all, it was focusing on the smaller players that helped Cog drive demand for its product, and which got it noticed by Qualcomm in the first place.

“Try to build a multi-faceted strategy that doesn’t put all the eggs in one basket,” Potts advises.

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