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Unith (ASX:UNT): Interview with CEO Idan Schmorak
August 22, 2023
We spoke with Idan Schmorak, CEO of Unith (ASX:UNT), about the company’s recent commercial success and what investors can expect from UNT in the next 12 months.
Full transcription below.
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Marc: Hello and welcome to “Stocks Down Under.” Today, we’re joined by Idan Schmorak, the CEO of Unith, ASX: UNT. Welcome.
Idan: Hey Marc. Thanks for having me.
Marc: No worries. You flew in all the way from Europe. You’ve got a bunch of offices in Europe. Barcelona, Amsterdam.
Marc: You guys are all over the place. So, we’re happy to have you. There’s a lot of people that won’t know who Unith is. So, let’s kick off with that. What do you guys do? How do people sort of see it in everyday life? Talk to us about Unith, sort of high-level.
Idan: Unith creates a conversational AI solution of digital humans. We create digital humans that any business can create for themselves to represent them in front of customers or in front of their employees. Very simply, imagine going through an onboarding process in a big company with a digital human, which is your digital colleague and takes a lot of pain and boredom out of the process. Throughout the last two years, we’ve developed proprietary technology, making us market leaders in terms of cost and server efficiency and also human likeness in this field. So, our humans are the most human-like, and I invite in this opportunity, everybody to go to unith.ai and just speak with those digital humans.
Just a few days ago, we’ve announced the first demos and released them to our website. We, throughout the last two years, besides developing proprietary technology, we also onboarded some clients, one of them, a big-five tech company to use it themselves. They are our clients and we are working very hard to deepen this relationship as well as tapping other verticals and bringing other commercial wings alongside the technical milestones that we achieve.
Marc: Right. Okay. And so, you’ve been on board for a while now. Talk us through how you’ve gone, and say, the last 18 months or so, where you are now.
Idan: So, 18 months ago, I joined September 2021. Next month is going to be two years. I was brought to fulfill a vision. The vision was to communicate on real time with avatars. The pain at that time, or the problem at that time was that the industry wasn’t there. Technology was not there. It was very costly. And you see this with other players at the markets, the setup fees were, and still with some of them are above $100,000.
Idan: While companies that wanna experiment or embed the solutions aren’t necessarily the ones that are able to pay that. And we have developed the technology starting with a small team. After one quarter, was November or December of 2021, that we’ve presented the first proof of concept of the working digital human, and not long after we commercialized it, signing a first contract in digital health. We have learned a lot with these processes. And then throughout the 18 months coming, which brings us to now, we’ve developed proprietary scalable technology, we’ve onboarded further clients, and we’ve strengthened the company’s balance sheets. We are having no debt. We have raised capital the last February on an oversubscribed capital race that shows the interest from the market for us and built credibility just basically, taking every milestone at a time ahead of time.
Marc: Right. So, you’ve come a long way. In terms of the technology itself, what needs to be done from this point forward? Because I’ve seen the development over the last few years, so that’s come a really long way.
Marc: But there’s always work to be done, right, on the tech side.
Idan: Yeah. Correct. Users that are potential investors that go on the website and try and use it right now, they would see that it’s really cool, and the conversational part is also heaps better than what it was before. But there’s still plenty of work to do in terms of scalability, in terms of the human likeness, the seamlessness, how fluid the conversation is. And in the next few months, we’re gonna do it. We’re also going to shorten the amount of time that it takes to onboard with us. So, instead of this being through a few meetings process, we’re gonna automate the whole process, bringing it to a self-service platform, which we’re working on these days.
Marc: Right. So, talking about onboarding, what does it entail? So, what stuff does a customer need to put into the system to be able to use it properly?
Idan: It’s really simple. First, you choose the face that represents you. We could also clone you. Then the voice, we can also clone your voice in a process that takes around 30 minutes. You just read a few sentences from an app. The third part is giving us your data set. We take your data, whether it’s on a PDF or presentation, everything that has a text in it. We upload it to the system. And it’s connected with GPT technology, not ChatGPT, but GPT, which basically allows this system, the computer to scrape the document and to base contextual answers based on the document.
Idan: And then you get a calling. You uploaded your sales document or your marketing document or your customer support or your FAQ, you got a digital calling that is the domain expert in this.
Marc: Okay. And so, in your presentations, you can see if you’ve got an enterprise solution, you’ve got a small business solution, basically, or self-managed solution. So, even for Stocks Down Under, a small company, SME, we could easily sort of set it up for ourselves.
Idan: Easily. So, today, we have one revenue stream active from that front. We also have our BTC division. We can discuss that as well. But the enterprise solution is basically, we go, we sell, and now we can onboard small, medium, and large enterprises on this as well. For the future, our strategy is very clear. It’s a very simple SAS software as a service model in which there is a setup fee and a subscription fee per digital human.
In the future, we intend to introduce two further revenue streams. One is a partnership stream that we’re going to actually start very soon that basically will allow partners to connect to our system and resell the solution. Digitization partners, big companies that are doing digitization for other organizations could sell and embed digital…
Marc: IBM, Cisco, Telcos.
Idan: And the other side of that is, of course, the self-service platform, which should allow small businesses as well to onboard themselves. We are developing the self onboarding part for all fronts actually. So, it would just be easier and a more easy process to onboard. But later on, it would also be available to small consumers as well.
Marc: Right. And so, you talk a little bit about the revenue models for the self-serve one. So, talk us through those three models. How would it work for…Well, you actually already mentioned that, for smaller companies. But maybe for the bigger ones, enterprise solutions, what sort of model when you ramp up in terms of commercialization are we looking at?
Idan: So, we try to keep it simple also for perspective clients, of course, investors. There’s a setup fee to set things up, to start working with us, to create your first digital humans or the first few digital humans. And then there is the subscription. The subscription is based on the amount of users that are gonna speak with this. And once you cross a certain amount of users, the revenue model, the pricing changes to scale. And the intention is to have a compelling enterprise solutions that encourages enterprises to have more and more digital humans serving them across different disciplines.
Marc: Right. So, if you look at enterprises in your presentations, you talk about a big-five tech company, and obviously, you can’t name the name, which was BUG via ASX. They don’t like that sort of stuff, but it happens with all tech companies. I’ve seen hundreds over the years.
Idan: It’s the first thing that you sign as an NDA that you cannot use a big player’s name.
Marc: Yeah. ASX doesn’t get that yet, but anyway, that’s a different conversation. But for companies like that, big tech companies, what are the typical use cases they see? Because I can think of hundreds straight off the top of my head like in all sorts of areas.
Idan: Yeah. So, first, the first thing that we started doing with them is onboarding and delivering information. Executives in financial divisions, for example, could waste a lot of their time explaining complex ideas to project managers or to people that come to them a week after with a proposal. And sometimes the proposal is not even relevant. Now, these financial executives could spend on just induction onboarding other people from the organization on the ideas. And now, they have a digital replacement, the digital them that does it for them.
The next one is onboarding for new employee, partners of the company. Basically, carrying any some sorts of a complex idea, sometimes it also requires a funnel. Sometimes you wanna test, so our digital humans could provide a testing scene. So, they explain it to you, they get you through the funnel, and then they test you and give you a grade in the end.
Idan: And it is all connected to any necessary system in terms of data set, database, onboarding systems to actually mark how much you got in the test, and associate this with your users. We try to have our software, not only as simple to onboard and use, but also the most connective that we can to support broad usage.
Marc: Right. Okay. And so, in terms of commercialization, you’re a young company, but you started the commercialization phase. Talk us through what’s next, say in the next two years. What is sort of the ambition or the aspiration is probably a better word, in sort of these different segments? So, including the enterprise side, the SME side.
Idan: So, more than the ambition, we have a very detailed plan, a business plan, which has a few scenarios in it that is dependent on capital and also in our success. But we have a very thin line between commercialization and tech development. And these go together. As we get the tech milestone like now, we would present a commercialization milestone. Every tech achievement will be attached with the commercialization achievement to basically avoid any big mistake that any startup company can do, which would be developing something that no one needs, or going towards the wrong avenues. So, everything that we develop, we see a commercial potential, a product market fit. And we would very soon show the market commercialization milestones that goes hand-by-hand with this.
Marc: All right.
Idan: So, tech, commercialization, improvement in tech, more commercialization.
Marc: Right. Makes sense.
Marc: All right. Last question. For people that don’t know you just in, you know, the elevator pitch on Idan, what’s your background? And what brought you to Unith?
Idan: Yeah. So, young exec, seven to eight years, Israeli Air Force technology operations. Then private sector, Israeli startup called VFR. We sold the 3D technology, opened their office in Europe, and developed a proof of concept for the alteration of this public company. Basically, taking complex technologies, simplifying them, lowering the cost, and making it bandwidth and market friendly. And this is what we do here at Unith. I might be the face, but we have a strong team of 31 employees now in both Amsterdam, Barcelona, and remote engineers and PhDs and machine learning, video processing, and front and backend, which are extremely dedicated and are doing all the heavy lifting behind this beautiful software that we’re going to commercialize with a single goal of having software that millions of users would use, which is my dream as well.
Marc: Yeah. And it certainly sounds like that’s a very real possibility, given the easy sort of scalability of this, right?
Idan: And the second thing is that the market goes towards us. We see in the last six months that our pipeline has grown exponentially with inbound leads, people coming to us, customers coming to us, businesses, enterprises, public sector even, across different sectors as well and disciplines saying, “How can I use AI and your solution, digital humans, to improve my business? How can I deliver information in a more interesting, effective way?” And we are very proud to see the market goes towards us because we are ready technically to go towards them. And we plan to show further milestones in that regard as well.
Marc: All right. Exciting times. Thank you very much, Idan.
Idan: Thanks, Marc.