Monday, 3 November 2014

Disruptive Lunch: Mainline Power, Lime Rocket and Farmbot. Some sexy and some practical.

Too often when we think of disruptive business models our collective minds conjure up visions of computer screens, smart phones, personal sensors and scrolling lines of computer code. The Disruptive Lunch at BBY last Thursday reminded this blogger that although the use of software is at the forefront of many developments, there's still a place for some cleverly engineered hardware. Three businesses presented their disruptive models, and of the three Mainline Power was the most accessible, Farmbot the most Australian and, Lime Rocket the most Gen Y / Millennial.

Mainline Power offered a view of their power track system. The power track offers a flexible alternative to traditional power points, as it allows users to tap into fixed power at any point along the track. Additionally, the "plug" can be placed at a myriad of angles allowing the user to avoid the anguish of awkward plug/transformer situations where you're unable to use a socket because of restricted space. We were also shown their data module that uses power track to access conventional electric systems for the transfer of data.

Jonathan Clark, the Mainline Managing Director, gave a comprehensive and honest assessment of the product and business. I always enjoy it when management is honest regarding missteps they've taken. In the case of Mainline the business, according to Clark was somewhat unfocused in targeting its ideal consumer of the product. The problem with the power track system is that you could apply it anywhere a traditional power point is located. In reality, it's more an industrial, semi-industrial product because the main selling point is its scalability. Therefore, the Mainline team has refocused on the educational niche winning business in universities and schools where staff and students require facilities to recharge the now ubiquitous laptops and tablets they take from location to location. The above video shows the system. As much as I'd like to have this in my kitchen or ideal room, I prefer to think about the possibilities in situations where crowds gather.

In terms of the actual revenue numbers and details regarding current cashflow, Clark didn't elaborate, which probably is the fault of those of us not asking him about it during the question period. There were some examples of mandates, including a middle eastern high school. That school is the first of 35, with the inference being that if you get the first one right the likelihood is that further mandates will follow. The only competitor Clark mentioned was Singapore based and was a higher cost and complexity supplier. Mainline was quite open in saying they are looking for investors, preferably those with some insight into the building sector in general. I'll be following up with Jonathan Clark this week with a view to getting further information about installation cost comparisons, current order book and the size and type of financing they are seeking. Mainline Power might lack the sex appeal of some of the offerings we've seen recently, but investors shouldn't ignore the amount of infrastructure investment currently taking place across the globe.

Farmbot just felt very Australian to me. The emphasis on rural water supply management in the continent of such vast distances and limited rainfall seemed like something that should have come about a while ago. Having said that I know at least one blog reader in the agri-engineering sector who'll know doubt send me a mail with several examples of midwestern US companies doing a similar thing. Given that Farmbot says they have a number of very specific patents on various pieces of the technology involved in their offering I'll just deal with what was presented.

The Farmbot system uses fixed receiver stations that can pick up signals from sensors anywhere within 35kms. That's a lot of square kilometres and a good start for a system that costs about $150 per sensor and a subscription of $416 per year. I'm not sure whether that price of $416 is per user or per receiver station, but in any case it is cheap given the requirements of running a rural property in Australia. I didn't catch the receiver station installation costs, but I sensed that the business being reasonably new was still finding its feet regarding pricing. Apparently stations are up and running in the Hunter Valley area of New South Wales. I also didn't catch the number of sensors you could have per station. Right now Farmbot is concentrating on water management, but other sensors such as soil moisture and gate status are imminent. In the future, the list of sensor types is only limited by your imagination, but Farmbot lists:
  • intrusion alert sensors
  • traffic sensors (including number plate recognition)
  • river level sensors (flood resistant)
  • weather station (simple and advanced)
  • electric fence monitoring with fence power level / health measurement
  • electric power usage
  • general machine sensing
  • fuel tank levels
  • custom sensor platform for user specified or supplied sensors
I'd like to see some automation sensors added that activate systems, such as heating, cooling, etc. These would permit greater distance management possibilities for small farm owners.

So what else do get with your Farmbot subscription? The data is cloud based. Anytime a sensor triggers a warning the property manager gets an SMS with details. That message will provide a link to the owners account via a browser that provides the current status and historical data regarding the water source being measured by the sensor in question. All this should according to the company save $1800 per year for a property based on four water inspections per week, 30 minutes of travel and a 4 km round trip per inspection. It should cover its set-up costs by the end of the first year, making this a great system for industrial scale projects and management intensive semi-hobby properties. Personally I see this as an interesting solution for small communities of properties that lack scale normally to run commercially viable operations. Surely a single caretaker, manager could cover several small farms simply and quicker than what is now possible? Farmbot seems to be in Version 1.x right now, meaning investors might want to take a closer look at this one sooner, rather than later.

I'm going to try and see Lime Rocket's offering of venue based games this week in Sydney. As an early Gen X investor (over 40 years old) I need to see and preferably "touch" some of these social media type offerings. As the long time readers know, I usually join (Posse), subscribe or buy something (InStitchu suit) from companies that I see at this type of corporate event. I take the view that if you're going to give an opinion or provide an investment case to someone that you need to have some experience of the offerings.

Lime Rocket is difficult for me as it's predicated on the idea that venue crowds are more smart-device focused. This means you need to grab the attention of individuals if you're going to maximise their revenue per head in your venue. Simply put you want people to stay longer and spend more if you own or manage one of Australia's 60,000 pubs or clubs. I can understand that impulse, but electronic trivia games with prizes? I don't understand much of what Gen Y does, but are they going to embrace a night out spent hunched over a smartphone trying to remember the names of the Mutant Ninja Turtles?  Perhaps that's unfair, and exactly the reason I'm donning the jeans and Pink Floyd T-shirt and heading to Glebe in Sydney this week to check-out what Lime Rocket is doing?

I don't think it's any coincidence that Lime Rocket CEO, Mike Gardiner is ex-Tabcorp Australia. Tabcorp provides various gambling platforms for users in Australia. As someone who's spent time looking at the pub sector in Australia during the early part of the century, I was very concerned about the reliance these venues had on video poker machines to drive revenue. That gaming machine model fell apart when regulators and governments put a limit on the exponential growth rates we had seen in poker machine numbers. Lime Rocket looks to me to be taking up the gap between poker machine acceptability and the need for something that engages venue "goers". This, of course, is not a bad thing if you believe that it works and unlike many of the listeners at BBY on Thursday I wasn't as enthusiastic about this as some. Gardnier's team also hopes to provide their offerings to arena type venues on the "jumbo-trons" that we're seeing more often. I'm still of the view that at arena venues crowds gravitate to apps that allow them to pre-order food, upgrade seating or win prizes without the game add-ons. This blogger is not going to pretend that Lime Rocket is going to succeed or fail on the strength of one presentation. I am pledging to be at the Toxteth Hotel this week to see why I should be more positive. If you're a reader with a thirst for trivia or just a good beer, then contact me, and I'll happily compete to see who's got the juice when it comes to Lime Rocket.


1 comment:

  1. So I assume you are watching the Cup from the Toxteth Hotel....