#StartupsEverywhere Profile: Emil Tremblay, Co-Founder and CEO, SGNT
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Securing Supply Chains
SGNT is working to address a critical global concern from their homebase in Tucson, Arizona. The tech startup, founded in 2017, has developed an exciting new hardware and software suite to ensure the secure transport of goods and pharmaceuticals around the world. Emil Tremblay, SGNT’s co-founder and CEO, recently took the time to give us some insights into the company and how it got started.
Tell us about SGNT and the work you do.
Every day in sub-Saharan Africa, 197 kids die of bacterial pneumonia. They have access to treatment, the correct diagnosis, and the appropriate treatment. The problem is, the drugs are fake, and those kids die anyway. That makes 72,000 kids a year who die from pneumonia because of counterfeit pharmaceuticals. More broadly, more than one million people die each year from fake drugs.
Worldwide, pharmaceutical counterfeits are a $200 billion problem. With a million lives each year at stake, this is our main motivation and mission. But we’re also exploring other market opportunities -- such as shipping, cosmetics, and other product categories -- and securing their supply chain.
The way we do that is by using technology we developed that uses radio frequency identification (RFID), which everyone has built into their smartphones using near-field communication -- this is how things like Apple Pay work. We enhanced this detection with our own technology, which is patent pending, to create a sensor layer on anything from a medicine bottle to a box, an envelope, or a shipping container seal. Our customers apply the seals to their packages and scan it with their phones to identify that it’s an authenticated device. Then anyone throughout the shipping process can scan it and know that the package is authentic, and has never been opened or tampered with at all. We can do that with a level of certainty that has not been possible before.
Can you tell us a little about your background and how you got involved in this project?
I’m a software engineer and have been working with RFID for years. One night, I read a blog post about a man who bought an iPad from Walmart and found only a stack of magazines inside. When he took it back to Walmart, they told him they couldn’t give him a new iPad because there was no way to be sure the box had actually been tampered with. I thought this was an interesting situation and wondered if RFID would be able to solve this problem.
I wasn’t really worried about building a company to help people buy iPads, so my co-founder, Tommy Rompel, and I started learning about all of these counterfeiting issues and began exploring what this powerful technology could do. We decided the pharmaceutical problem was what we wanted to tackle first.
Is this exclusively a global problem, or are you working domestically as well?
The worldwide counterfeit goods industry is estimated to be $1.7 trillion and pharma counterfeiting accounts for $200 million. The pharmaceutical supply chain security in Canada and the United States is very robust, but people in other parts of the world don’t have the same level of certainty about their drugs. In other product categories, we face different issues.
Cosmetics are a big domestic counterfeiting problem. With shipping containers, we are concerned about security. One of our customers ships goods to and from Mexico on truck and train, and has had issues in the past with people breaking in and hiding illegal drugs or weapons in their shipping containers. Then their drivers get stopped at the border. So these are definitely domestic and international issues.
How did you decide to start your business in Tucson and what has it been like?
I moved here in January 2017 from Alberta, and I immediately fell in love with the place. For a little over a year, Tommy and I were working by ourselves on this project. As of spring 2018, I knew no one in the Tucson startup or business community.
We have a local non-profit organization called Startup Tucson which has really encouraged entrepreneurial activity here. I went to one of their events and connected with their team. That started a rapid and heartwarmingly helpful experience. About six months later, we had received a sizable grant from the National Science Foundation, and we were opening our first office. We had an opening party and ribbon cutting, and about 150 people showed up. The mayor of Tucson came out to cut our ribbon, the Chamber of Commerce hosted our event, and the whole community really gathered around us. This city is just so inclusive and helpful.
What are some state or federal policies that have helped or hurt you along the way?
At the state level, we have the Arizona Angel Investment Tax Credit which is for early stage investors. You have to get certified by the state economic development agency, and then you get a tax credit that de-risks investment to a huge degree.
On the federal level, we’ve gotten to take advantage of the Small Business Innovation Research (SBIR) program which is offered by about a dozen agencies including the National Science Foundation (NSF). A couple of times a year they put out requests for proposals, and if you’re working on something that lines up with one of their requests, you can apply for a grant. In the summer of 2018, there was a post that fit us perfectly. We wrote a proposal explaining the technical risks, and the scale and impact of the problem we were working on, and NSF gave us a grant for about $225,000. This was a huge inflection point for us. When you can say that the NSF agrees that what you’re working on is important, that opens a whole world of possibilities and gets investors more interested. This is an incredibly important program, and I wholeheartedly endorse it. Franky, I don’t think we could have gotten here without the NSF.
My nitpick has to do with export controls. Our technology uses encryption, and the actual devices we make have little computer chips in them. In order to both identify the product as authentic and establish secure communications between the chip and our software system, we need to use encryption. We don’t invent the encryption, we leave that to the experts. So we take already made software libraries, we put them on the chips and our servers, and then we use that crypto.
Federal law says if you want to export a product—hardware or software—that has encryption, you have to have it vetted by a federal agency. It’s not a hard process; you fill out some forms and answer questions about what you’re doing and submit it. I understand why they do this, but the fact of the matter is that the encryption we use is on every smartphone and web browser in the world. It’s ubiquitous on this planet, and it took 4 to 5 months to get the green light from the federal government to be allowed to export our technology. More importantly, this doesn’t only restrict physically exported technology. Even talking with foreign entities about the technology you’re developing is restricted. So, for a startup like ours with only one product, to have to wait almost six months before being able to even start talking to people outside the country—whether they’re investors or prospective customers—is a major problem. Especially when the technology we’re using is already ubiquitous around the world. I think we need some policy adjustments here. I don’t know what that should look like, but if we don’t adjust the policy, we need a streamlined process at least for small companies. It really slowed us down in a pretty destructive way.
What are your thoughts on lawmaker’s interaction with entrepreneurship?
My general sense is that government should stay out of the way of entrepreneurs except in instances where they have good reason to get involved; like the SBIR program, which is incredibly important to spur innovation in our country. I don’t feel fully qualified to answer this, and my view of government is colored by the fact that I’m from Canada. From my perspective, both the Arizona government and the federal government are on the right track.
Do you have anything else you would like to add?
If there's one takeaway from this profile, it’s not about us at SGNT. It’s about the startup community happening in Tucson. Ideas and new companies are coming from here and creating value, and I hope people will start to take a good hard look at Tucson when deciding where to start a business.
All of the information in this profile was accurate at the date and time of publication.
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