Speaking at the Echelon Wealth Partners Digital Media and Technology Conference in Toronto on Wednesday, CAN Telematics CEO Brent Moore and chief financial officer Richard Clarke made the case for the future of their asset tracking platform in the quickly expanding Industrial Internet of Things marketplace.
Founded in 2007, CAN Telematics introduced their Trakopolis platform, a configurable, cloud-based asset asset tracking and management solution, in 2009, which now processes more than 1 million messages per day from over 14,000 connected people and assets.
“Imagine you’re a company, and you have remote and mobile assets like equipment, vehicles and people,” said CEO Brent Moore. “You want to keep track of that, you want to see where they are, you want to see how fast they’re going, you want to see if they’ve moved from one position to the next, and then you want to start layering on other elements of visibility and connectivity.”
A privately held company, CAN Telematics expects that projected growth in connectivity related to the Industrial Internet of Things market will lead to a mass adoption of specialized systems capable of harnessing and leveraging the flow of information.
The company aims to do with Trakopolis what Salesforce.com has done for CRM, not only concentrating on one particular vertical, but creating a solution for any company in any industry that needs to track assets.
Basically, they’re focusing on eight verticals: the Oil and Gas Industry, Construction, Insurance, Transport, Rental Equipment, Mining, Forestry, and the Service Industry.
Trakopolis is built for asset tracking, whether that be vehicle fleet management, shipping containers, or lone worker situations, with add-ons and up-sell applications, including compliance with Department of Transportation log book for hours of service standards, cycle time and fuel usage reports for the forestry industry, CanHaul shipment and backhaul load locators, fuel tax calculation reports compliant with the International Fuel Tax Agreement, or the integration of custom GIS mapping data.
Having grown organically since their founding, this past March, global control technologies company Honeywell announced the integration of Trakopolis into its wireless ConneXt LoneWorker gas monitoring solution for tracking the safety and location of workers in the oil and gas, construction, utilities and other hazardous industries working in remote or sparsely populated areas.
“We’ve paired that gas detector with our intelligent device, that can be in a vehicle, and it creates a Wi-Fi cloud,” says Moore. “So now the worker is connected, and we also have locations. This very well-established product is made new again by marrying it with our technology, so that you get 1+1=3.”
Access to Honeywell, which it turns out is the largest manufacturer of industrial gas detectors in the world, exposes CAN Telematics to a much larger customer base than they previously had.
The partnership with Honeywell is so recent that CAN Telematics doesn’t have any figures yet relating to how big it might get, but in their early research they identified 150,000 potential units where people would be using gas detectors when they’re alone, or in a “lone worker” situation.
Honeywell has already paired CAN Telematics with 31 of their distributors that they believe are best suited to the company’s solutions.
“Those 31 distribution partners have about 200 locations, and probably 300 sales reps across North America,” says Moore. “And because everybody’s quite excited about this revolution with the gas detector business, while our specific negotiations with Honeywell are for North America, we’re hoping to take it global.”
Revenue-wise, the end user who buys Honeywell’s gas detection hardware integrated with CAN Telematics software also activates a subscription directly with CAN Telematics, from which CFO Richard Clarke estimates the company will generate a 15% gross margin.
“The real crucial part to that is that we’ve got access to that Honeywell channel,” he says. “So we can sell those customers our other products, such as asset tracking, fleet tracking, even our insurance offering. So we’ve got pure access to that customer, a direct relationship, and still very strong gross margins.”
Outside of the Honeywell partnership, CAN Telematics’ channel partners include Driving Force, Bell, Telus and InsureMy.
“Our go-to market strategy, we sell directly,” says Moore. “We sell through Bell Mobility, coast to coast. So we’re doing four-legged sales calls there, as a natural extension of their product.”
“Because everybody’s quite excited about this revolution with the gas detector business, while our specific negotiations with Honeywell are for North America, we’re hoping to take it global.” – CAN Telematics CEO Brent Moore
Their clients include Anadarko Petroleum Corporation, the British Columbia Safety Authority, CWS Logistics, Canyon Technical Services, Canfor, Driving Force, Forbes Bros., Layne Christensen, Quinn Contracting, and Scott Safety.
The company answers to 140 shareholders, “all friends and family”, through whom they have raised $13 million, which Moore characterizes as a lot of cheques in the $5,000 range, which probably makes for lively Christmas and family reunions.
At the end of CAN Telematics’ last fiscal year, ended June 30, revenue was $6.2 million, with product development and sales growing through organic revenue.
With a sales staff of four, though, CAN Telematics is looking for capital to expand sales beyond the 10%-15% of that North American channel that they’ve already mobilized.
With an estimated 12,000 units in a closable state within their existing sales funnel, and between 12,500-14,000 subscribers right now, the company has a lot of market to grow into.
“We’re up on Microsoft’s cloud, we’ve got a very advanced API. We’ve put a couple million dollars into that,” says Moore. “And then, by collaborating and using other features in the App Store, we can simply extend that functionality and take our platform into many different verticals.”
CAN Telematics has load tested for a capacity of 150,000-200,000 subscriptions actively using their platform, and also invested in disaster recovery, scalability, and optimization of the platform’s performance.
Brent Moore, originally from Grand Prairie, Alberta, grew up in Buffalo Farm on his family’s ranch. At the age of 24, he opened a bar.
“I didn’t want to do that forever, so I sold the bar and bought a bunch of oil field rental equipment,” he says.
Keeping track of his oil field rental equipment became an imperative when the bank, who had backed his purchase, began to demand, “Where’s all this inventory that we lent you money on?”
At that point Moore could only reply that it was rented out to customers, and that he basically had no idea where it was or what they were doing with it.
Back in 2006, asset tracking was not a developed technology. So Moore and his colleagues decided to develop it themselves.
“First thing we did, we developed a little website that was going to use GPS tracking to help freight matching. We were going to partner with some groups, and then we recognized that they were making all the money. So we said, we need to get into this ourselves.”
The company survived a near-death experience following the 2008 financial crisis, and is now waiting out Alberta’s oil & gas slump, with many of its clients there having made the decision to idle their assets pending a gradual return.
Meanwhile, CAN Telematics is in the process of one of the reverse take-over transactions seemingly common among oil & gas companies these days.
“We’re currently actively raising money under a preferred share structure with Echelon Partners, as well as ourselves,” says Clarke, “with the intent of, in September or October, having the company listed with a $5 million or $6 million concurrent financing.”
Having done over $6 million in revenue during their last fiscal year, Moore adds, “There’s no doubt, with what we have in our funnel, you could see us double revenue next year. It’s a brand-new product, so we don’t know. It’s a little too early to understand the sales cycle timing, but it is getting plenty of attention and decision-makers are dropping what they’re doing to meet with us and Honeywell to discuss it.”