VSBLTY Groupe Technologies Corp. (CSE: VSBY) CEO Jay Hutton on Securing and Monetizing Public Spaces
Gerardo Del Real: This is Gerardo Del Real with Small Cap Stock Digest. Joining me today is the Co-Founder, CEO and President of VSBLTY Groupe Technologies Corp. (CSE: VSBY)(OTC: VSBGF), Mr. Jay Hutton. Jay, how are you today?
Jay Hutton: Excellent. Thank you, Gerardo.
Gerardo Del Real: Thank you for taking the time. We were talking off air a bit, I am fascinated by this story for a number of reasons. I do not want to be the person that is so fascinated by it that I try to articulate the company and the direction it's going, instead of you, who co-founded this company.
I would love for you to provide a thorough overview of the company because I do think it's an interesting company at the perfect time.
Jay Hutton: Yeah. Hopefully it is the perfect time. My guess is, it is. We've been in this business for – I guess in 2020 we're celebrating our fifth anniversary. We started with this notion of delivering to retail that which retail has been missing for many years.
Retail has an interesting problem, and that problem is that there's virtually no digital surfaces in retail. And because big brands – Unilever, Johnson & Johnson, Coca-Cola – have invested so heavily in the internet, and by the way, not invested in print or broadcast as a means with which to advertise, they have vectored most of their spend to the internet.
That is because of the fact that it is agile, you can modify your message on the fly, but principally it's because of measurement. If I'm deploying banner advertising or any kind of advertising really on the internet, I have real-time measurement. I know who's looking at it by profile, by demographic, and I know how long they look at it. I know where they come from, where they go to, what's called referring page, the next page sort of in the internet world. All of that has taught brands – again, the biggest brands in the world – that measurement is everything.
So the notion that we brought to this marketplace, was what if in the same way Google created this ability to provide web analytics, inform an advertiser what is happening with their viewing audience on the internet. If we were able to bring that ability into physical spaces, we would have something really special. And that was the initial idea of the company. So we use computer vision to interpret, report, collate on the things that that computer sees, but by camera obviously. What we call camera or sensor.
So that may be as benign as, these are number of people that came into the store. But it's obviously got a great deal more granularity. These are the genders of the people that come into the store. If I have a digital placement on a Pepsi cooler, these are the number of people that walked by and did not look; these are the number of people that walked by, looked; these are number of people that walked by, looked and approached. The genders of them, the ages of them, the sentiment of them. All of this delivered to us by artificial intelligence inspired computer vision.
So the ability for us to give that outcome to a brand, a Pepsi, "Hey, we spent half a million bucks creating a digital campaign that we're running on multiple channels, internet, print, et cetera, we deploy it in retail and this was our specific outcome in real time. On a Wednesday at five o'clock, these are the number of people that were engaged with my message across the nation." Oh by the way, if this message was optimized for 25 year old females and it's not delivering that outcome, we change the message and we do it on the fly.
It's really kind of staggering agility for a marketplace that hasn't had that kind of agility for a very long time. Let me give you some metrics. The marketplace suggests that there's something like 2% digital penetration in retail today right now.
Gerardo Del Real: 2%?
Jay Hutton: 2%. By the end of 2021, the metrics are 79%. Even if you don't believe that, let's assume we're skeptical because we're old and we've seen this movie before.
Gerardo Del Real: Sure.
Jay Hutton: Let's assume we don't believe that. Is it half of that? Is it 2 to 40? I mean, this is ridiculous. Let me tell you, we've been in this for five years now, and I am confident that in the last two quarters we're beginning to see that inflection point. It may be not difficult to ascertain this, but I am by definition a sales guy, and I watch for market metrics. I watch for market behavior.
Things are happening in our marketplace that would never have happened a year and a half ago that indicate a change is afoot. One of the things that's happening is we are now shortening our sales cycle. So in a company that sells what we sell, the more you evangelize, the less you are selling. The more you are educating, the less you are selling.
But as you move into a modality where when you approach a customer, they know what you're going to talk about, that's golden. That's when things are changing. That's when the climate is changing.
In the last 90 days, we've seen CVS announce a 9,000 store digital upgrade. Just in the last 60 days, we've seen a major other large drug retailer announce a $15 million RFP. These are all wonderful things because they indicate a sea change and that's what's happening right now. Retailers are starting to understand that their shelf has advertising value. This is the first time we've seen this.
Gerardo Del Real: Let me ask you this, Jay, because I remember in the late '90s you mentioned you had a sales and marketing background. I remember in the late 90s, media companies – I lived in New York at the time and I remember how slow the transition was when it came to ad spend from physical billboards to actually spending on advertising online. It took several years for the major retailers to realize that seismic shift was occurring.
You mentioned the 2% penetration and where that's going. Have you had a bigger recognition of the trend from brands or from the retail side of it?
Jay Hutton: Oh, it's 100% the brands.
Gerardo Del Real: Not surprised.
Jay Hutton: It's really interesting to me because even though I love them, I spend much of my day talking to retailers, they're very cost conscious and they don't want to invest in something ahead of the exact right time to invest in it. But if the brands are saying, "Hey man, I'm buying this internet impression, it's yielding me enormous benefit and I want to do that in your store," that's a different message.
I'll tell you a very quick story. I won't name the retailer because I think this is confidential information, but we were meeting with a very large grocery retailer a month and a half ago, and they come in the room and they said, "We just had an epiphany." Interesting. What was the epiphany? "We've just realized that 16 million people come into our stores every month and if we were a digital billboard, 16 million people can be monetized." And so I thought to myself, I didn't say it, but I thought, "Welcome. Welcome."
Because this is exactly what we're saying. What's different about it, is sure you can make the case that a digital billboard in a retail has a certain value, but I'm adding to that. I'm adding non inference-based measurement. I'm not guessing as to the number of males, females, 25 year olds, 35 year olds. I'm not guessing. I'm giving you actual impressions and I'm doing it in real time. There's nothing that does that in physical spaces today. And that's why it is taking off.
Gerardo Del Real: My simple way of explaining that, you can correct me if I'm wrong, would be you offer analytics and measurements to physical spaces. That's not all you do.
I want to talk about the safety and security applications for what you do as well here in a little bit because I find it, again, using that same word, I find it fascinating the different markets you're in, Mexico City, other places around the world, and some of the other things that this software is able to do.
But would that be accurate? Analytics and measurements to physical spaces in real time, in a way that, frankly, I don't believe exists right now.
Jay Hutton: No, that is accurate. And if you want me to address the public safety, I can transition it quite elegantly because I often get, as the CEO, I often get the what would appear to be a criticism of, "Hey man, it looks like you're in two different marketplaces that are miles apart. How do you justify that from a focus perspective?" And my response is usually, "Wait a minute. It's artificial intelligence. The plumbing is the same."
Whether I'm looking for two guys that came into Rite Aid or ShopRite on a Friday night and stole beer, and we engage with them, we take their photo, we kick them out of course. But now we've got a photo of them on a local database, and the next time they come in, we know they're there. That's the most basic loss prevention application that came to us through basic artificial intelligence.
So we thought to ourselves, "Oh my gosh, we happen to be in this other marketplace as well." It was as much of a surprise to us as it was to our development crew, as we then doubled down in the security category. We then understood we had a very interesting efficacy for smart cities.
The Mexico City example is really interesting. New president comes to rule, well was elected in January, he started his term in January of this year, for their 6-year fixed terms. He came to power on a public safety platform. I mean, if you're in Mexico City, you have a very high probability of being a victim of some kind of crime.
Gerardo Del Real: Absolutely.
Jay Hutton: Especially if you live in one of the major cities. So the first thing he did was recognize that there needed to be a public safety infrastructure investment. They started with lighting, very basically, lighting. So in places where there was no light, let's add a light. The company that won that business was a lighting company that did something quite clever. They added a camera to their light standard.
And now they approach us and say, "Well, we've got this ability to deliver what the government wants, which is lighting, but now we also have this ability to sell the citizens, not top down security, but bottom up security. Citizen safety." So the citizens have the ability to buy a security kit from us, enroll in the network that we're building and run analytics.
So if there's people dwelling around the outside of your home, you know about it. If there's certain people that return time after time, even though you don't know who they, our software can identify them as a recurring visitor. We look for body articulation algorithms. So if there's a fight happening, we can pick up an alert on that. We have weapons detection algorithms, so if there's a weapon being brandished, we can alert on that. We're delivering this ability to provide safer cities because of the technology and how we leverage computer vision.
And again, what's unique about it, and what I'm most proud of, is we bypass all the very legitimate concerns about privacy because this is a citizen-led initiative. It is bottom up. We're excited about that and we think it has enormous value across, our focus initially is Central and Latin America, but of course other cities in the world suffer the same exact fate. In fact, we've got a deployment that just started last week that we press released in Johannesburg, which is very similar in nature. Again, citizen-based safety, private, gated communities that are adding capabilities so they can provide a greater safety apparatus for the people that live there.
Gerardo Del Real: You mentioned brands being 100% the group that has recognized the value here. I'm curious. You obviously can provide a safety value for any big group that is looking for that, but simultaneously, you can monetize these physical spaces. Have the brands recognized that you could do both simultaneously?
Jay Hutton: Yes. I would say that we are a little bipolar when we speak to retailers and brands. We speak principally about our retail story. But very rapidly we're adding, I'm going to sound like a geek for a moment, we're adding algorithms to our apparatus that would allow us to look for loss prevention behaviors in retail.
So even though I'm telling what is principally, at least initially, a monetized story, you have the opportunity to generate revenue from this new platform. We will very quickly be able to augment that with a cost reduction story. I mean loss prevention's an enormous multi-multi-billion dollar problem in the US right now.
So short story, one of the biggest problems in the drug class of trade, as opposed to the mass class of trade or the grocery class of trade, it's designated the drug class of trade, so Rite Aid, CVS, Walgreens, one of the biggest problems in that category is what they call sweeping.
Bad guys come into the store and using their arm, they sweep the entire contents of a shelf into a basket and they take off. We have algorithms that can look for the sweeping gesture. So we're talking about body articulation algorithms that look for the gesture, and when we see the gesture, we can alert on the gesture and conduct some kind of interdiction. This is why we are not just a monetized platform, but we're quickly pivoting into the category of cost reduction or loss prevention.
Gerardo Del Real: Like I said in the beginning, that's absolutely fascinating. Paint a picture for me, Jay, of 2020 and what that looks like. If you're an existing shareholder, why he or she should be excited, but if you're not, and you're looking at VSBLTY as an opportunity, what will 2020 bring in a perfect world development-wise?
Jay Hutton: We're a company that has a lot of eyeballs on us. I would argue and certainly I can give you a lot of evidence to support the notion that we're just at that inflection point. I'm a Canadian so I can use the phrase, "We're at the hockey stick." We're beginning to land the kind of partners and contracts that will justify rapid growth into 2020.
In the month of September, we signed Sensormatic. Sensormatic is the multi-billion dollar retail division of Johnson Controls. They dominate the marketplaces that they serve. They are in 105 countries. They're in 85% of the top retailers in the world. The reason why we did this deal, which is a private label deal for all of our products, they basically sell our products as if they were their own. We can rapidly move into C-suite conversations because we don't have to go through the necessary steps to prospect the customer. We're already there with that relationship.
So 2019 for us was identifying our scale partners so that when the parade begins, when the circus begins – and it's beginning now – we're in a position to execute well. Because as a small company, you could never be able to build the organization fast enough to deal with that inflection point. That's one channel.
The second channel is the largest POP display manufacturer in the US. We haven't announced the name of this company yet, but we will shortly. They did $17 billion in sales last year and they're going to be incorporating our digital technology in all of their POP display.
The third one is the largest in-store media company on the planet. Last year, a multi-billion dollar business. They have 70,000 stores under current media contract, which are today all analog served, if you know what I mean by that, all printed materials.
Gerardo Del Real: Sure.
Jay Hutton: They are, like everybody, recognizing the inflection point, recognizing the need to get with digital, and they're doing that now with a series of partnerships, and we're one of those partners.
So for us, everything is lining up quite nicely to get ready for 2020 to be the real inflection year, not only just in the market externalities. I gave you some examples of what's happening on the buy side, but also what we're doing in the organization to ensure that when the storm hits, we're not a startup with 40 people trying desperately to keep in front of the wind. We've got our partners already up to speed, trained and ready to go, so that when those demands come in, as they are now, we're in a position to really rock it.
So in terms of numbers, our projection for 2020 is between $13 and $16 million in SaaS revenue. We have a market cap of about $17 million right now, Canadian dollars, and I'm expecting that we'll be quite favorably impacted by the revenue we're going to start to generate. Because we're a SaaS company, we get that recurring business and we get a favorable multiple because of it.
Gerardo Del Real: Absolutely. Jay, it sounds, again, I'm going to use the word one last time, like a fascinating story. I am looking forward to keeping in touch and having you back on to get updates on what looks to be like a very, very important 2020 for the company, and for shareholders of course.
Jay Hutton: Great. I'm looking forward to it. It's going to be an exciting time, an exciting journey.
Gerardo Del Real: Pleasure, Jay. Thank you so much for your time today.
Jay Hutton: All right, cheers. Thank you.