Mister Beacon Episode #75
Bluetooth Enabled Anti-Counterfeit plus Lost and FoundJune 04, 2018
From sporting goods to luxury items to cosmetics, there a massive problem with counterfeiting. This 1.7 billion dollar problem is a weighty pain point in most verticals. The health and safety consequences are serious, and misrepresentation of the brand image and quality is just the tip of the iceberg in terms of negative ramifications. On this week’s episode, we talk to Ross Mandel, CEO of VerifyItNow, about the business he built around finding a solution to this problem. We discuss the growth of VerifyitNow from brand protection to asset tracking to a lost and found platform, and the opportunities and limitations of the technology behind it - NFC, Bluetooth, and Google Nearby. Watch as Ross illustrates how you can “product your brand, reduce loss, increase customer confidence, and build brand loyalty” with their anti-counterfeit and verification system.
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Steve Statler 0:17
Welcome to the Mr. Beacon podcast this week, we're talking to Ross Mandel, who is the CEO of VerifyitNow. Ross, welcome to the show.
Ross Mandel 0:28
Thank you for having me.
Steve Statler 0:29
Oh, it's a real pleasure. And you know, what your company is doing is very much in line with our area of interest and the way it's evolving, I think, two years ago, we were completely focused on location based services. And of course, that's still very interesting. But really where my interest is evolving, and it's obviously something to do with the company I work for now is thing based applications where people and products are being connected using the same technology we were using for, for location based technology. But obviously, it's, it's evolved. So tell us a bit about what verify it now does in this space
Ross Mandel 1:13
VerifyitNow, and I'll kind of go through a history of how we got to where we are today. But my background is I'm a venture capitalist, I had a marketing company for years. And I decided about five years ago, five years ago, I would venture out and visit some friends and see what opportunities are out in the marketplace. So I was visiting with a golf club manufacturer, and I love golf, and I love golf equipment and everything about golf and ask him what their pain points for what their problems are. And thinking it was golf club designed to give those golf balls, golf courses, players, but their main pain point at that point were counterfeit golf clubs. And I thought who cares about counterfeit golf clubs or golf equipment? Is not that important. They said it absolutely is critically important. I said, Why is it critically important? And they said for a number of reasons. Reason number one, we've got a strong brand in the market, we've been around for almost 50 years. And we really like to preserve our brand. If someone buys a counterfeit golf club with our name on looks the same and smells the same, it doesn't play the same. So if they use our golf equipment that doesn't work properly, they'll never go back to our golf equipment. That's the first part of it. The second part of it, is if they send in a piece of golf equipment, that's counterfeit, that's under warranty, they believe. And it turns out, it shows up in our facilities and we go to fix it, we figure out that it's counterfeit, we send them a note back that says you've purchased counterfeit equipment, please go back. And let us know where you purchased this equipment so we can control this issue. Or we can repair your equipment. So now the consumers in the middle of something he didn't want to be in. And so it's a disappointment for him. And then the third reason is counterfeits fun bad guys. And we didn't realize this until Michigan State University did a study about three years ago, on focusing on counterfeits and where the economics are. And it's a highly profitable business for bad guys, whether they're terrorists or just general bad guys. So the golf club manufacturer did more participate in this. But I thought, well, this is nicely the incident with the golf club manufacturer, I called three or four other golf club manufacturers met with them. They told me they all had the exact same problems. So I thought maybe there's a business to be made out of this did more research found out so $1.7 trillion. Business is not just sporting equipment, it's not just luxury goods, it's health and safety issues. Also cosmetics that have bad stuff, and it caused medical problems. An aeroplane disaster, Charles de Gaulle with Air France years ago, was caused with a fake airplane part, fell off a plane just before and launched into the gas tanks and killed over 100 people. So there's all kinds of issues related to counterfeits. And I thought, well, that's a really interesting business, what can we do to solve the problem? So I called some of my best inventors and best scientists and back to best technologists and said, Let's get together, figure out what kind of solution we can put together. So we came up with a solution where we tag items. And we started with near field communication, NFC. And we would tag items, and then we could determine their authenticity, we could determine when it was manufactured, where it was manufactured, if it's outsourced for manufacture, who actually did the manufacturing of the item, was it authorized? And then there's some marketing aspects as well. The second part of it is also as I say, health and safety related, so does it cause injury to people? And we thought that was important. So we really had to find the traceability or as environment See they say serialization of that product. And when that product serialized, they can trace it from the birth to the death of the product. And so that was important. So what we did is we started out with brand protection. And we developed some products. And that's we have about 15 patents that cover that area. And then we moved into asset tracking and asset tracking is special. But fact of the matter is, there's many companies that do asset tracking, we want to take it to the next level. So we also do lost and found. So now we can not only find an item, we can trace it from its birth to its death, and trace and find where it's at. And we're using various technologies, including Google's nearby technology that allows any Android phone to literally be a receiver without an app. So that's kind of our Genesis.
Steve Statler 5:53
Wow, well, you covered a lot of things there. And you make a very compelling case for why for the anti counterfeit, it's really widespread. I know it's huge in medicine as well, and lives are being lost because people think they're taking medicine to cure of life threatening illnesses. And it's not the real thing. I heard horrible statistics in Asia, that a large proportion of medicines, and not the real thing. So it seems like there's some real benefits to to solve the problem. You talked about the initial approach with NFC. And I want to go into that. But before we get there, just give us a sense of how long your company's been going and where you're at both in terms of creating the products and engaging with customers.
Ross Mandel 6:41
Yeah, and the company's been around almost five years. Our patents were granted about two and a half years ago, give or take, they started and they're still few pans outstanding waiting to be granted. And from a business standpoint, we've worked with about a dozen different companies, we can disclose who they are. And they're in the luxury goods like tronics, sporting goods, and we work with them to protect their brands. And right now we're doing on covert bases, we have not got the consumer involved. The next step is to get the consumer involved in now with new technology such as Bluetooth and Bluetooth, get shrinking in size and gaining an ability. Bluetooth suddenly allows us to do things we couldn't do in the past. NFC has a broad range of less than two inches. So that has certain security protocols associated with it. At the same time, we believe Bluetooth is the future of our business and Bluetooth associated things will help grow our business.
Steve Statler 7:39
So most of what you've been doing so far then is is it all with NFC or are you using other technologies today?
Ross Mandel 7:49
We're using, we're using NFC and we're using Bluetooth, those are the two items we're using.
Steve Statler 7:55
Yeah. And so presumably you're using other people's chips there. And what is how do you make sure that the chip can't be kind of faked? So it's NFC. And so this product has this ability to talk to a phone when it's it's tapped? How do you make sure that this is someone else isn't just going to put an NFC tag on there?
Ross Mandel 8:25
Well, and we have encryption built into our tags, okay, so everything's encrypted. And then with Bluetooth, we use a femoral ID to help that as well. But again, we use encryption, love, our scientists that are on our team came from a cryptography background. So we've used various lightweight Kryptos.
Steve Statler 8:48
So if you're gonna put an NFC tag, it's actually in can you kind of describe an example that I need to have to name names, but how does it's not just a sticker that's on the side, it's actually built into the product is it?
Ross Mandel 9:03
Well, the product is immersed or the tag is immersed into the product example if you look at a golf club, you'll see details which are labels on golf clubs. Okay, and underneath the lay labels are underneath the details. We've submersed various NFC tags.
Steve Statler 9:19
Okay. And I guess NFC is pretty good with metallic surfaces. So there's no problem with that on the on the shaft of the club, so I can see why that would make sense. So why would you an NS so NFC seems perfectly serviceable. What's the advantage or why would you even consider going to Bluetooth?
Ross Mandel 9:44
Well, the disadvantages to Bluetooth when we started was it's an active tag. The batteries didn't last long they needed replacing, and quite frankly, they are too big, right? And now with the new Bluetooth tags being developed the sizes smaller batteries last longer. So we're embedding Bluetooth and musical instruments as we speak. And those musical instruments, again, we've optimized the tags. So the last five to six years without replacement, go back to the manufacturer and replace those tags.
Steve Statler 10:18
So you cited range as one of the advantages of Bluetooth. So what's the user experience? For this? I buy a musical instrument that has a Bluetooth radio in it, which may be kind of surprising to people. How does that work? They presumably sounds like because you mentioned it's Physical Web? Do they have to have an app? Is there an app?
Ross Mandel 10:44
Well, again, going back to Bluetooth, it's tied to the nearby system from Google. So if something's reported lost, that allows an alert to pop up on the nearest Android phone. And somebody obviously has to opt in to allow that to happen currently, because of privacy issues. And going back to the app, we're soon going to we've have an app labeled gear, secure music, gear, secure music, when you buy a musical instrument and producing millions of musical instruments. Now, with this product, when you buy an instrument, you download the app, you register the product itself. And so now all of a sudden, you can trace your product.
Steve Statler 11:25
Okay.What about the impact on the manufacturing process? Because, I mean, logically, it makes sense. But if you're making 1000s and 1000s of musical instruments, presumably they're being made in all sorts of different places, how do you make sure that the tags get in there and that your system understands what instrument has got what tag in that whole provisioning thing must be complicated.
Ross Mandel 11:52
And to give you an example of that, we're working with a manufacturer that actually has outsourced to Vietnam, and we've had some language difficulties, but we've made it so simple that when the product is manufactured, a tag is embedded and commissioned, was commissioned. It goes on the manufacturers system as an existing product or new product. So we just partnered built it into their process.
Steve Statler 12:17
Okay. Cool. Very good. That's a nice line of business there. But it goes beyond anti counterfeit. How does the lost and found peace work? Can you expand a bit on you know what the experience is? So I bought my guitar, and I left it on, I left it in a in a nightclub or cafe or on the subway train. How do I get it back?
Ross Mandel 12:48
Yeah. And going back to the guitar, as an example, we found there's two different segments of the market. One is somebody goes and plays a gig and they take 10 different pieces with them, whether it's a microphone, a guitar, drum, multiple guitars, and for whatever reason, they leave it behind. And maybe they had too many pints of beer that night, but they disappeared. So what they can do is they can report it last. And then again, the nearest android phone typically will pick it up. And when the android phone alerts that a lost item has been found. They'll say, yeah, it's at that gig that I played last night. So that's one example. The other example is something got stolen. So somebody broke into my apartment or my home, they stole two guitars. And again, I reported last. So now we have every Android phone as part of our community out searching for those instruments. When the instrument shows up within a range, Bluetooth range of an Android phone, it pops up and says there's an item that has been reported lost or stolen. Can you report it to its owner? You click Yes. When you click yes, it tells the owner that sitting at Broadway in 23rd Street in New York.
Steve Statler 13:59
What about the iPhone issue? Physical Web built into Android? Not Not so with iOS was that? Obviously that wasn't a showstopper for your client. Can you explain why that's, that wasn't something that derailed it?
Ross Mandel 14:19
Well, the issue with the iPhones and with Apple, Apple will do things on their own time schedule. I can't force Apple to do anything. Nobody else can force Apple to do anything. And the majority of phones in the marketplace, whether it's in the US, whether it's in India, whether it's in China or Android, I hear numbers I hear different numbers, anywhere from 70 to 80% of the markets Android phones in the US anywhere from 65 to 75% for Android and iPhone, Android phones, so those are receivers, so we can overcome the apple issues. Now, if you're an Apple user, you have the app running and it works just fine. But if you don't have the app running and growing still out there searching for your product?
Steve Statler 15:02
Yeah, it's those deep hooks into the operating system that make this such a great opportunity and the fact that people don't have to do anything. Very good. Well, thanks very much Ross. Is there anything else that I should have asked you about? You want to say?
Ross Mandel 15:18
Well, I think the important thing in the future and to let you know, is brand protection. The issue we had with brand protection, when we originally developed it, is there were budgets to fight and counterfeiters, but there weren't budgets to support brand protection. So manufacturers suddenly realized the value of supporting brand protection protecting their brand. So they're starting to spend money in that area. It's not expensive per unit to protect your brand. But it is becoming critical. So we see more and more than that, and we're encouraging manufacturers to put together budgets for brand protection. And that can help be supported with legal dollars from your company, as well as marketing dollars.
Steve Statler 16:02
Very good. Well, Ross Mandel, CEO of verify it now. Thanks very much for spending some time with us.
Ross Mandel 16:08
Okay, well, thank you very much. I appreciate you having me.
Steve Statler 16:17
Let's pretend we're on a mission to Mars. What are the three songs that you would take with you?
Ross Mandel 16:22
Yeah, I spent a lot of time thinking about that. And three songs I would take one is self evident. One is Space Oddity. That's my David Bowie. I'm a big fan and David Bowie had been for years, and it certainly seems to fit the mood. Quite honestly, I never get tired of hearing the song.
Steve Statler 16:40
Yeah, it's fantastic. Did you ever see him live?
Ross Mandel 16:43
I unfortunately, did not see him why I wish I would have. He's one that passed too soon. And
Steve Statler 16:49
I know, I know. I saw him once in Portland, Oregon. And it was completely not what I was expecting. I expected him to be very self absorbed and pretentious, but talented. And it turns out he is talented, but he was incredibly warm and formal. chatti It was just amazing. It was one of the best concerts I've ever been to actually. Sorry to rub that in. But I that's one of my favorite tracks too. Okay so
Ross Mandel 17:17
And and also, when you think of David Bowie, you think about the future. Yes. David Bowie certainly was ahead of his time. He was ahead of his time, the way he thought the way he presented. And so that's part of it as well. The second song I think about is one I'm not afraid or not afraid. And by Eminem. It certainly doesn't fit my profile. But I like with as Tom says, he talks about venturing forward and doing it without fear. And in my role in my business, I have to not worry about certain things. And so as my second song third song is very sentimental to me. And it's an Elton John song, it's funeral for a friend. And the song is about loving minutes, because I want to long track because I'm on my way to Mars. As the first concert I ever attended at six, his first tour. And it was just a very special moment. I just reached adulthood when I went to that concert and my parents were very reluctant to online go to first concert with a friend and it turned out to be a great experience and very memorable.
Steve Statler 18:25
How amazing having that as your first concert where where were you? Where was the concert?
Ross Mandel 18:31
It was in Detroit, Michigan.
Steve Statler 18:33
All right. So this was Yeah, back in the early days. So this was goodbye Yellow Brick Road, Captain Fantastic kind of era.
Ross Mandel 18:41
Yeah, it was from yellow brick road and it was in I think about 1976.
Steve Statler 18:45
Oh, I'm so jealous. Very good. Well, thanks so much for sharing that with us.