Nightingale Intelligent Systems (ASX:NGL): Interview with CEO Jack Wu

 

Nightingale Intelligent Systems (ASX:NGL)

We spoke with Jack Wu, founder and CEO of Nightingale Intelligent Systems (ASX:NGL), about his unique drone-based security platform, its ability to operate outside of the Cloud and the Tier 1 customers that Nightingale is working for. Drones are an important productivity tool in security solutions and Nightingale has a service that is utilised by the US Air Force.

Full transcription below.

 

Looking for solid investment ideas?

 

Stocks Down Under Concierge gives you high-conviction

BUY and SELL tips on ASX-listed stocks!

 

We aim for a return of 20% to 40% per trade.

 

GET A FREE TRIAL TO CONCIERGE TODAY

 

No credit card needed and the trial expires automatically.

 

 

Transcription

 

Stuart: Hello and welcome to Stocks Down Under. My name is Stuart Roberts, and I’m one of the co-founders of this service. And joining me on Friday the 18th of August, 2023 from Newark, California is Mr. Jack Wu, who founded Nightingale Security Solutions, ASX: NGL. Jack, good evening your time. It’s still Thursday in California.

Jack: Yeah, it’s Thursday, 7 p.m. Good evening.

Stuart: Right. So, Nightingale Security, I should say. Is there a solution in the name or did I just make that up?

Jack: No, there’s security in the name. Absolutely. There’s no solution. But there’s solution in our product.

Stuart: Right, right. Now, Jack, this is a great privilege for me. You’re probably the only the second college dropout that I’ve ever met, running an ASX-listed company. But when you dropped outta college, you just didn’t drop out and land anywhere. You got hired by a guy called Carl Page, who just happened to be the brother of Larry Page. You were working on a startup called eGroups in the late ’90s that got sold to Yahoo for about half a billion dollars. So your career was set at that point.

Jack: Yeah. I mean, that was definitely, you know, a lot of hard work, but also, you know, part of it is just luck, right? You know, right, place at the right time in the right industry. But it taught me a lot about being in the right place, in the right time with the right industry. And that’s why I got into automation or drones.

Stuart: Right. So, fast forward a few tech companies that you’ve been involved in, including one that was funded, for example, by Tencent. And you’ve advised other companies that folks would know about such as Yammer and Eventbrite. A few years ago, you realized that drones as a security tool was gonna be a big thing, and that was the beginning of Nightingale Security. Tell us what you’ve achieved in this company since its founding.

Jack: Well, what I can say publicly is, you know, the company have achieved a platform that is capable of solving a lot of large perimeter patrol and rapid response issues with customers that’s in critical infrastructure, oil and gas, utilities, military installations, data centers, and lots of other, you know, categories of industries. You know, some of our more notable customers are, like, folks like Halliburton, for instance, in oil and gas, [inaudible 00:02:50.628] which is also an oil and gas. We also have customers like Lucid Motors, who’s in the electric car manufacturer and, you know, US Air Force, and folks like Iron Mountain, who’s in data center. And we also have other, you know, data center customers like Nova based outta Utah. And of course, these are just some of the customers. There are other folk. Oh, BioPharma, Sanofi, I have to mention them because, you know, now they’ve been with us for about four years now. So, I’ve literally, you know, became good friends with my contact there. So I really have to mention them. Or else, they might get mad at me.

Stuart: And what all these customers have in common? Traditionally, you’d have security guys patrolling the perimeter or driving around the facility. Now we can replace that human approach with drones that can go straight to the source of what’s the potential security disturbance and find out very quickly what’s going on.

Jack: Yeah. So, I mean, what they all have in common is they all have large facilities. We’re talking hundreds of acres, sometimes thousands of acres or square miles. So, it’s very difficult for physical, you know, security guards to walk the perimeter or even drive around the perimeter. And it’s definitely cost-prohibitive to install cameras when your perimeter is miles long. So, a drone, essentially, is a camera. Right. It’s a flying camera. Now, if you make it autonomous and easy to use, it could be become a camera on demand where you want it, when you want it. And with our thermal camera, we can have nighttime surveillance capabilities as well. And we also integrate with ground-based radar and other sensors like cameras, vibration sensors, anything that can give us the location or gunshot detection, for instance, right? These will give us the location of the incident where we have to go.

One very good example is we’re currently working with one of the largest police departments in the United States, and we are going to be performing, you know, DFR missions, drone-as-a-first-responder missions. We have already been doing that with the city of San Pablo here in California, and we’ve been doing that for a couple of years now. But the product definitely now is very well tailored to respond on a moment’s notice. So whether it’s a gunshot, whether it’s a 911 call, we get there first. We fly, we get there faster, we reduce the liability of these police departments. And because the police officer doesn’t have to show up not knowing what’s going on, we broadcast the video live to the police department command center, and they will be able to dispatch as needed, you know, a police officer. And the police officer will also be able to see the video themselves while on their way to this incident, and they will be able to respond accordingly, knowing the situational awareness. They’re not going in their blind. So, we provide this type of capability to law enforcement. And of course, the ability to, you know, fly distances to cover wide areas is also very important to both the commercial customers and the government customers.

Stuart: Right. What’s the biggest challenge that you’ve had since you started this company?

Jack: Regulation. We think regulation is always behind technology, very similar to autonomous cars, is that we’re egulated by aviation authorities of each country which we operate. And regulators need to understand the technology, which means that the technology have to be built first. Regulators need reassurance for the technology that it works as advertised, which means we have to take the time to prove it to them. So, after all these years, we are now finally having a very good path towards the regulatory waivers that we need from not just the FAA, but we recently, by the way, we’re one of the first company, if not the first drone-in-a-box company that just got beyond visual line of sight waivers.

Stuart: Right, right. So, as the regulators…

Jack: So that was very significant.

Stuart: Yeah. Life is becoming easy for you. Now, obviously, a lot of the work that you do has long lead types. If I’m a police department, I don’t just want to buy on the spur of the moment. I’ve gotta thoroughly evaluate…

Jack: Correct.

Stuart: …the technology. So, it’s fair to say that some of the transactions you’ve done have taken up to six months to close. Talk to us about some of the businesses you’ve been able to publicly report that’s involved these long lead times on sales.

Jack: Yeah. Well, the US Air Force is one, but it’s a very important one. You know, without going into too much specifics about our dealings with the Air Force but we are protecting large air force base where there are nuclear, you know, weapons on site, and there are lots of research facilities on site. Our system is integrated with ground-based radar to be able to detect ground-based threats, and the system is capable now, once the integration is complete… Well, it’s already complete. Once you initiate the radar, the radar detects the threat, the drone can automatically respond to that threat. So, we have the capability now doing that, and once we’re able to demonstrate that capability, we’re now seeing potential for expansion for that program.

Stuart: Right. Right. So, you and I are talking before we press the button, about how important drones have become around the world for all sorts of applications. You know, for instance, where there are drones to measure or estimate reserves for mines, for instance, in Western Australia. Where do you see the drone revolution going from here? As in, they become a thing in so many industries now, but what’s the trajectory?

Jack: I think it’s gonna be one to many, which means one pilot or one operator is gonna be able to operate multiple drones simultaneously. You’re going to see more autonomous operations, meaning the drones gonna land itself, charge itself, it’s gonna do all these logistic things, boring things by itself. Whereas the humans are going to command them, give them a high-level objective, and then they will be able to generate, some call it AI, we call it algorithm. They’re just things that are very advanced that definitely enables autonomous operations. Now the layer that’s going to be built on top of all this, you know, the infrastructures that we’ve already created, the platform, the drone, the base station, and the command and control software is going to be the true AI layer.

And that layer is going to be able to collaborate and be able to allow a group of drones to perform a single task by themselves by having them distribute tasks on their own. So, if you wanna, you know, like, map that area, go boom, and four or five drones will be able to do it simultaneously. Patrol that long perimeter, oh, you got two or three drones. The system will automatically decide how many to use, where each drone should be dispatched while the humans simply digest the data. Or you can build another layer of AI applications on top of that, which is analyze the data in real-time. So, the business itself, how it’s going to evolve in the future is now we have a platform, sort of like when you have a PC, now you need a word processing software, graphic design software, and then you need a browser. You need to be able to communicate with other computers.

And then finally, on top of that, you have AI functions that’s going to automate a lot of the tasks that you do every day. So, drones or robotics, it’s just another computing platform. So same thing is going to happen here, except this is all happening simultaneously. It’s happening in parallel because the technology maturity level for robotics and AI, they’re literally sort of parallel in each other. And eventually what we’re going to see is the fusion of AI software with autonomous platforms like our drone. So, that’s the future.

Stuart: And it is fair to say the unique competitive advantage that Nightingale has built is the ability to power this with edge computing. So, some of your computors operate in the Cloud, doesn’t matter whether you’re…

Jack: [crosstalk 00:12:23.700] Correct.

Stuart: You’re there in the facility that you’re guarding.

Jack: Well, our application security, for instance, this is our main application, requires us to be ready on a moment’s notice. Requires us to fly in the rain, in strong wind, sometime in hail, in snow. And it also requires us to operate in case of emergencies when we have maybe loss of power, maybe loss of network. So being edge-based, having the data stored on-prem, and having all the necessary software stored inside our base station at the customer location allows us to continue to operate, even if all the networks are out. Allows us to operate as long as we have solar or any other independent power source, we will still operate, even if the plant has no power or the base has no power, we will still be able to operate. Those are the capabilities that really help us stand out from our competitors. Whereas the cloud-based solution, hey, look, when everything is rosy, great. If you want to do inspections, you can set a specific date and time when the wind is sunny, when the wind is calm, now you can go through your thing, right? But for security, we don’t have that option. You know, we’re like a guard dog, boom, go. We gotta go.

Stuart: Well, as I like to joke. You’re like “Battlestar Galactica,” if you remember in that TV show, the reason why the galactic has survived the Cylons, it was old fashioned. They couldn’t be hacked.

Jack: Yeah. So, I would say that security is an old-fashioned industry, but it’s old-fashioned for a reason. Because you have to rely on years and years of experience, and you have to rely on your ability to prepare for the unexpected. So, our system is extremely robust, and the reason for that robustness is because we know we’re servicing an industry that’s very old-fashioned. But because they’re old-fashioned, they’re dying for some new solution that can basically help them go beyond guard gates and guns and security cameras.

So, this platform, once it is adopted or widely adopted by the security industry, it will become indispensable. Who’s going to give up the opportunity to be able to look at anywhere in their facility day or night, or being able to respond to an alarm no matter what the weather condition, short of hurricane and tornadoes, right? They’re going to see this as a technology convenience. Just like all technology convenience, once it’s adopted, it becomes a force of habit. You don’t want to give it up. You don’t wanna live out without, you don’t wanna live without your car. You don’t wanna live without your cell phone. You don’t wanna live without the security drone because your facility’s too big and you don’t want to go outside.

Stuart: Right. Well, Jack Wu, I’ll wave the stars and stripes in honor, [crosstalk 00:15:36.303] what you’ve achieved at Nightingale Security, and here’s to a great FY-24, as you build on a lot of the relationships that you’ve acted on so far across a range of industries.

Jack: Yeah. As a Taiwanese immigrant to America, I’m proud to have that flag behind me, and I really appreciate the opportunity, which is why we work really hard to make sure that our product live up to expectation.

Stuart: Right. Jack Wu, keep up the good work.