Why Loft Dynamics Spent 98% of Their Time on Something Other Than Product

Why Loft Dynamics Spent 98% of Their Time on Something Other Than Product

In a recent episode of Category Visionaries, Fabi Riesen, CEO of Loft Dynamics, a flight training platform that’s raised over $29 million, shared an insight that should fundamentally change how you think about building in regulated markets: “Building a simulator is 2% of the whole thing, although 98% is making sure that we can qualify the simulator in a regulatory framework from aviation. So that’s basically the main task.”

Read that again. The actual product—the revolutionary VR flight simulator that disrupts a several billion dollar industry—represents just 2% of the work. Everything else is regulatory qualification.

This isn’t a complaint about bureaucracy. It’s a strategic insight about where sustainable competitive advantages actually come from in hard tech.

The Pattern Most Founders Miss

Most technical founders build with a predictable logic: create amazing technology, get regulatory approval, then scale. The assumption is that technology is the hard part and regulation is a hurdle to clear before the real business begins.

Fabi discovered the opposite. The technology, while sophisticated, was achievable. Multiple teams could potentially build VR-based flight simulators. But navigating the qualification process? That’s where the real moat emerges.

“By today, we are still on the whole world, the only company which is having qualified simulators using that head mounted technology,” Fabi noted. Not the only company with the technology—the only company with qualified simulators using that technology.

That distinction matters enormously. Loft Dynamics founded in 2016. It’s now 2024. They’ve maintained exclusivity not through patent protection or technical secrets, but through the years of work required to navigate regulatory qualification. While competitors could theoretically replicate the technology, they can’t shortcut the qualification timeline.

When Regulators Become Your First Customer

The story of how Loft engaged with regulation reveals another counterintuitive pattern. Most startups treat regulators as adversaries to be managed. Loft treated them as customers to be served.

The pivotal moment came unexpectedly. “In 2018, we’ve been contacted by the European Aviation Authority, based on seeing a YouTube video, what we did,” Fabi recalled. The company had been operating as a pure passion project until that point. “Until 2018, our goal was not to create business from that, our goal was to create the world’s best simulator.”

A YouTube video led to inbound interest from the people who could make or break their entire concept. “That’s where they reached out, and we realized that apart from having a passion, we out of a sudden build something where is the real problem,” Fabi explained.

This inbound regulatory interest changed everything. It validated not just the technology but the market problem itself. Regulators don’t reach out about solutions to non-existent problems—they reach out when they see potential answers to challenges they deal with constantly.

For founders in regulated spaces, this pattern offers a different path: engage regulators early, treat their feedback as product requirements, and recognize that regulatory validation often matters more than customer testimonials for de-risking the venture.

What the 98% Actually Looks Like

So what does spending 98% of your time on regulatory qualification actually mean in practice?

It means building systems that can consistently meet certification standards, not just once but continuously. “We also had to create a huge organization which takes care of the customer that machine is always qualified, gets re-qualified, is maintained and so on,” Fabi explained.

It means understanding that qualification isn’t a one-time event but an ongoing operational requirement. Devices need to stay qualified. Updates need approval. Maintenance must follow protocols. Every aspect of the business must align with regulatory requirements.

It means making qualification expertise a core competency. You need people who understand certification bodies, who can navigate testing protocols, who know how to document everything correctly. This expertise can’t be outsourced—it becomes part of your organizational DNA.

Most importantly, it means treating regulatory work as product work, not overhead. The qualification itself becomes a feature that customers pay for. Small helicopter operators using Loft’s simulators aren’t just buying hardware—they’re buying regulatory compliance that they couldn’t manage themselves.

The Timeline Implications

Understanding the 98/2 split helps explain Loft’s timeline to market. In 2018, they decided to “create the whole company into direction that we really generate business.” First launch customers came in 2019. Breakeven arrived in 2022.

Three years from serious commercialization to profitability might seem slow in a software context. But in highly regulated hardware, it’s remarkably fast—precisely because they understood where to invest time from the beginning.

Compare this to a hypothetical competitor who spends three years perfecting the technology, then discovers they need another three years for qualification. Loft’s competitors face that reality now. The company has been qualified and operating while others are still navigating the process.

Why Competitors Can’t Just Copy the Playbook

The beautiful thing about regulatory qualification as a moat is that everyone can see your strategy but still can’t replicate it quickly. The work is visible, the approach is knowable, but the time requirement remains constant.

Regulators don’t fast-track companies because they’re well-funded or have impressive technical teams. Certification processes have timelines driven by safety requirements, testing protocols, and documentation standards. Money can’t buy dramatically faster approvals.

This creates a different kind of defensibility than patents or trade secrets. Those can be challenged, worked around, or expire. Regulatory qualification creates a time-based moat that compounds—every day you’re qualified and operating, competitors fall further behind in accumulated experience and market presence.

“Every day we get more requests to be part of the Loft capital,” Fabi shared. “The moment it’s understood how that several billion business is getting disrupted, the appetite is increasing.” Investor interest grows not just because of the technology but because the regulatory moat becomes clear.

The Market Transformation Nobody Expected

Here’s where the 98% effort enables something remarkable: complete market transformation. By becoming the only qualified VR simulator provider, Loft didn’t just capture market share—they created an entirely new market.

“Three years ago, there were two simulator centers in whole Europe where it was possible to get a check ride on the H-125 simulators,” Fabi explained. Today, Loft has “already 15” installations with “nine will follow very soon.”

Each of those 15 installations represents a training site that didn’t exist before. They’re not replacing existing simulators—they’re enabling training in locations where it was previously impossible. Small operators who could never justify sending pilots to distant training centers can now “afford their training device instead of sending their pilots far away to a place to get trained.”

This market creation only happened because Loft invested in the 98%. If they’d focused purely on building great technology without regulatory qualification, they’d have an impressive demo that nobody could legally use for professional training.

What This Means for Your Business

If you’re building in a regulated industry, Fabi’s insight demands a fundamental reframing of where you invest time and resources.

First, engage regulators as early as possible. Don’t wait until you have a finished product. Understand what they need to see, what testing they require, what documentation standards they expect. Build those requirements into your process from day one.

Second, treat regulatory qualification as a core competency, not a compliance function. Hire people who understand certification. Make regulatory expertise a valued skill within your organization. Measure progress on qualification milestones as seriously as product milestones.

Third, recognize that the regulatory timeline is the market timeline. Your path to market isn’t “build product, then get approved, then sell.” It’s “build qualification capability while building product, so when the product is ready, it’s already certifiable.”

Fourth, understand that regulatory moats compound over time. Every day you’re qualified and operating, you’re building expertise, relationships, and track record that competitors can’t replicate quickly. This isn’t a race to build the best technology—it’s a race to become the most qualified operator.

The companies that win in regulated markets aren’t always the ones with the best technology. They’re the ones that understand Fabi’s insight: the product is only 2% of the work. The real business is in the 98% that everyone else wants to skip.