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Remsense (ASX:REM): Interview with CEO Steve Brown
April 24, 2023
We spoke with Remsense (ASX:REM) CEO Steve Brown about the significant functionality which the company has built into its foundation Virtualplant product. We also talked about the emerging relationship with IBM and the potential for this asset identifiction platform to be used across a range of companies and industries.
Full transcription below.
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Stuart: Hello, and welcome to “Stocks Down Under.” My name is Stuart Roberts, and I’m one of the co-founders of our service. And joining me this morning on Friday, the 21st of April, 2023 from Perth is Mr. Steve Brown, who’s the founder and CEO of RemSense. Steve, good morning.
Steve: Hey, good morning, Stuart. Pleasure to be here.
Stuart: Not a company that many people will recognize. You’ve been traveling a little bit under the radar screen lately, but that’s about to change thanks for a creation of your team’s called Virtualplant. Let’s talk about Virtualplant, and then we’ll talk about the journey that brought you and your team to this marvelous product.
Steve: Yeah, sure. So, Virtualplant is a photographic digital representation of a client’s asset. It’s developed in conjunction with AWS. It enables clients to be able to view their assets in a much more human-centric way and also to be able to interface into their existing business systems without major transformation of their business. So, it’s a very easy bolt-on software tool that provides visualization and brings silo data together in a very easy way.
Stuart: Right. So, the example you showed me when I was visiting your office a little while ago, imagine that the boiler room at some factory, a few hundred kilometers away, and we wanna do a virtual walkthrough of that boiler room to check that each piece of equipment is there and that nothing’s really performing out of the ordinary. We can do that with RemSense, and any dummy in the organization with the appropriate authorizations can get and take a look around.
Steve: Yeah, it’s a bit more than that because it’s not just, you know, the ability to walk around in a very highly detailed photographic environment because of the additional software that we’ve developed, and the additional way that we work, and some of this comes from our partnership with IBM, is that we are able to effectively read every single piece of text or number within that facility.
So, if you are walking through naturally, and you’re looking at things even quite close, and you see a number, we actually are able to automatically read that. And what that means is that client, you know, most clients have asset management systems, and they put asset numbers on assets to be able to link that asset to a particular asset management system.
What we’re able to, in the background, after we’ve scanned, automatically read that text string, automatically say, this is the number, is it on the asset register? If it’s on the asset register, we then say, this is, say for example, pump number five, we automatically in the background geospatially tag that particular pump as pump number five, and then link pump number five to the client’s existing asset systems. So basically, it’s an easy way to go in and out of data without having to completely redevelop or re-scope a client’s existing setup.
Stuart: Right. People have been talking about the Internet of Things for the best part of 10 years now. You’ve actually brought this to reality, and you’ve got customers who are paying for the privilege of your very user-friendly version of Internet of Things.
Steve: Yeah. So, essentially it is Internet of Things, but it’s Internet of Things, again at a completely different level. So, there’s two aspects I guess that we can do. So, for a start, we can bring any sensor data that’s out there that’s on an IoT device. For example, a pressure meter on a pump. We can bring that straight into the environment. So, you’ve got a photograph, you’ve got a photographic environment, you’re moving along, you click on the pump, and if you want it to, it’ll show you the pressure that that pump’s operating at.
In addition to that, the other side is that we’re actually using visual analytics. And it’s a very similar way that we’re using the visual analytics to identify plant and asset numbers. We’re actually using visual analytics to automatically scan, categorize, and detect things like corrosion.
So, we go through in the background, find corrosion, identify what the corrosion is on, is it a structural member, is it not a structural member? How bad is it? What standard does it comply to? And then generate a report. So, all this can be done without people necessarily needing to be on-site to inspect these items. They can look at it in the leisure of their office, wherever that may be in the world. And then they’re able to actually say, “Well, okay, we are really interested in seeing these five things. These five things look pretty critical to us.”
So, rather than going, looking through the entire facility, they can send someone just to look at the things that matter. And that to us is another huge productivity gain, and we’re doing that in conjunction with the analytics packages that are available through our IBM partnership.
Stuart: Now, you mentioned three beautiful words, beautiful letters, I should say, IBM. Virtualplant was born several years ago, and we’ll come back to the origins in a moment. But as you’ve built it up with some of your foundation customers, IBM came knocking. They’ve got an enterprise resource planning software package called Maximo, and they think they’ve got what, what it takes for IBM’s entire user base for Maximo in terms of the kind of functionality you just described.
Steve: Yeah, look, we certainly believe, you know, in partnership with IBM that what we have makes their system much more user-friendly when it comes to being able to utilize the system, and adds a new dimension to what their existing software can deliver. So, most of these packages that you see these days, you know, they’re either spreadsheets, or their databases, or they’re all forms-based, whereas Virtualplant is visual-based, and we all work in a visual way.
You know, we see things, we don’t need to think about what we’re looking at, because when you look at something, you’ve got a pretty good idea of what it is before you, you know, your mind just works it out before you think about it. So, the ability to go from what is a database or a forms-based system to an actual visual of where, of that particular piece of the equipment that you’re looking at is really powerful.
And then to be able to walk around that piece of equipment, do some simple measurements, identify what you need to be able to access it, if you have a maintenance job to do, adds a huge amount of power to the planning of jobs whether it’s a plant shutdown, or whether it’s a normal routine maintenance issue. And, you know, we are finding that that productivity gain through our use of our clients is substantial and pays for Virtualplant very quickly.
Stuart: Right. This company originated because, Steven, your spare time, you love playing around with drones. So, you thought you’d create a drone company.
Steve: Yeah, I did.
Stuart: It’s gone way beyond that, obviously, in the last few years. But what interests me is then a lot of your background has been working in the oil and gas industry over the years. [inaudible 00:07:51.374] the road from where you are is Woodside, and you are approaching them to talk to them about your drone-based services opportunity. When they said, look, can you create, and they described what Virtualplant was. Can you do it for us, and let’s see how it works? It’s fair to say that Woodside is now a very satisfied customer.
Steve: Yes, they are. And we continue to work with them and do more work. In fact, they’re currently funding a further development of Virtualplant that adds more features that they want to see. That enables us to be able to use that elsewhere for our other clients. So, they are a good customer, but it was a little bit more involved than that in the, I left the corporate role to take a break, decided to, at the early days of when the drone industry was kicking off in Australia.
You know, I think we were one of the first three or four companies in that space, and ran that for a few years. Very, very difficult business, the drone business. It’s easy to get into. It’s now incredibly competitive. And I realized that, look, the business is not really where I wanna be moving forward. So, I decided that what we needed to do was actually build a space in the market, which was for some bespoke technology development work for the clients. And that’s where our arrangement with Woodside came from.
So, we negotiated a frame agreement with Woodside to develop bespoke technology. And one of the projects, excuse me, that they came with was the fact that they would like to have the ability for anyone within the company, from the secretary to the CEO, to be able to easily understand what their assets were, and what they looked like. And they wanted that for a whole range of reasons. They’d gone to the market, there was a lot of very clever stuff out there, a lot of very expensive stuff, a lot of hardware-intensive stuff, but it didn’t meet their requirement, which was any device that’s approved anywhere, anytime, anybody that’s also approved.
So, we took the challenge on, and we developed Virtualplant. It matured over a couple of years to the stage where it became a viable product that was in use within Woodside. It’s in daily use today, and it was a product that we could see had some commercial legs. So, we negotiated initially an agreement with Woodside to license the product from them.
We did that but, and it was their IP because they paid 100% for the development of it. To that point, they licensed us the IP. Subsequent to that, the commercial opportunity became even bigger. So, we last year acquired all the IP from Woodside. So, the RemSense now totally owns the IP. And, you know, we’re out there aggressively marking that product. Woodside have been extremely good to us. They’re a great company to work with. They’re a great, you know, partner to have in that development space.
And what we ended up with was not something that came out of my head that was, oh, I think industry might like this, and have someone more coming down the terrace, well, here trying to sell that. We actually developed something that the client wants. This is specifically something that a client that has a distributed asset base around the world, or around the country could utilize. So…
Stuart: And proof of the pudding is proven.
Steve: Yeah, absolutely.
Stuart: Proof of the pudding is that Woodside started telling its friends at Chevron about this, and now you’re working actively with that company. And it’s fair to say that one of the seven ugly sisters of the oil industry is a heck of a lot better even than your big brother at Woodside.
Steve: Yeah. I’m not sure that Woodside encouraged Chevron to take it up, but certainly, you know, Chevron are very interested. They’re a very key client of ours. We progressively started to do a smaller facility. We’ve got larger facility. We’ve recently announced, you know, that we’ve been awarded all their major assets in Australia to keep that progression going.
And what we’re doing with Chevron is that we’re using the Virtualplant scanning techniques, but we’re actually interfacing the Virtualplant imagery that we generate into their existing business systems as well, which is a system that is supplied by KONSBERG. And it’s proving to be, again, a very good partnership. So, to have two tier-one clients utilize what we do in a big way, and continue to expand what we do, you know, be very proud of that, and it’s a good tick in the box.
Stuart: Now, so basically you, you’ve, you’ve got it all coming together. You’ve got a very supportive relationship with IBM, foundation customer in Woodside, a big follow-on in Chevron. And now, your business development agents are scaring the world, talking to other clients about the opportunity.
Steve: Well, not quite yet. The reason for that is quite simple is the early last year we pivoted the business a bit because we realized once we started to talk to IBM, that the product we had needed to be a bit different to be able to interface with IBM and SAP, and KONSBERG and others. So, we spent time last year maturing and developing the product to a stage that, towards the end of last year became, you know, the product that we have today that’s being utilized and out there.
So, we are out there in the market at the moment with a rights issue that’s being backed by Peak Asset Management. They’re managing it for us to generate the funds to build our business development team out, to enable us to get out there and promote this more widely. I mean, our team at the moment has been focusing on opportunities in Australia, and we’re progressing, I think the last count was about 76 opportunities within Australia. But the international work is where we are looking for, you know, funds to basically build out and get on with it.
Stuart: Now, RemSense has grown just with that initial user base to about four or four million in revenue. So, it’s fair to say that once you’re in a position to go out and start talk, addressing some of these new opportunities that you’re in a position to do. You can grow fairly quickly from here in terms of bringing this thing potentially to profitability.
Steve: Yeah. So look, we’ve actually spent the time to get this right, and that was done at a sacrifice of revenue last year. So, our revenue in prior years was [inaudible 00:15:06.468], was in the, in the $4 million range. Our revenue for this year is going to be less than that because of the last six months of last year, in fact. But we spent the time, and we spent the money to get it right.
We didn’t wanna go out there to sell something that wasn’t quite right because you live and die by your reputation. So, we make sure that we got the grounding right. And where we’re at at the moment is that we have a product that was developed for industry to solve real problems. We’ve got established tier-one clients now that we’re expanding. We’ve got global partnerships with IBM and others that enable us to have an established route to a global market.
We forecast cash flow positive in this calendar year. And, you know, our business has two main parts, which is, you know, the scanning work on site necessary to set up Virtualplant, and then [inaudible 00:16:05.314] revenues. So, we’ve spent the time, we’ve spent the money, we’ve invested that to get us to this stage, and we are now prime for growth.
Stuart: And Steve, I heard as well the business is so scalable, right? Once your team’s out there and has done the original walkthrough to set up Virtualplant in a new plant, it pretty much runs itself, and being a cloud-based business, if there’s one thing the cloud’s good for is scale, right?
Steve: Yeah. So, from a scale point of view, we are ready to scale. We have a team of people that do the scanning for us that are really have been developed as the training team that would go out and help, you know, other organizations conduct their scanning globally. Our business model, for example, is not to open offices around the world. That’s just too ambitious at this stage. So, we want partners in other countries to utilize Virtualplant, and our job is to train them, can make sure the quality control there. And importantly, we are controlling all the data.
So, other people doing some of the site work for us, we are the ones that control and process, and analyze the data. So, we are keeping, I guess, the secret sauce component to ourselves.
Stuart: Right. Well, Steve Brown, well done on what you and your colleagues have achieved to date. And we’re looking forward to a great 2023 and 2024. So, keep up the good work.
Steve: Yeah. Look thanks, Stuart. We are certainly excited. You know, we see the opportunity. We understand what we need to do. We understand where we’re at in the market at the moment, and we are just looking forward to what the next 12 months brings.