CEO Voyant International Dana Waldman Interview June 4, 2008
Scott, before we begin I must state that in this interview, we make forward-looking statements about our future expectations, plans and prospects. There is a risk that the actual results we achieve will differ from those forward-looking statements. To better understand these risks and the reasons that our results may differ from our statements, please read the “Forward Looking Statements Note” on the Investor page of our website and our filings with the Securities Exchange Commission, especially Forms 10KSB and 10QSB.
A lot has taken place since this time last year. What do you feel have been Voyant’s biggest accomplishments and failures this past year.
Our biggest accomplishments have been the ability to continue to develop big potential home runs like RocketStream, Aviation Broadband and White Space Radio.
We are executing a very novel business model, essentially blazing a trail for a new type of company that is part investor, part incubator, and part operator of numerous businesses, all at the intersection of digital content and technology. We’ve issued several releases of our RocketStream IP transfer acceleration suite .We identified a huge opportunity with aviation broadband, created a solution leveraging our IP portfolio, landed a Tier-1 partner – Harris – and are now getting good traction with airlines and content providers.
We launched a whole new business division (White Space Radio), again leveraging our IP portfolio. Our launch customer is funding much of the R&D for this product, which is great for us, since we can then use the core radio design to address a vast number of related, next-generation wireless opportunities.
Biggest failure: It took too long to raise capital. In our effort to avoid resorting to vulture financing, we made a sacrifice in timescale. Our management also made sacrifices, working with no or reduced pay, and in some cases converting this back pay or personally held debt into stock.
In the last year you have been able to add some of the brightest minds to the Internet Dream team. Since you mentioned that the management team has been working for reduced salaries, how are you able to do this?
We have a great value proposition at Voyant. When you combine what we have to offer with the experience and the network of relationships the entire management team has, we have a proposition that is good enough to entice top talent. Our management team is generally here because they believe that Voyant will be a home run. We’re here for the big win.
The only research on Voyant ChangeWave, issued a sell recommendation just days before your partnership with Harris and you completed financing. What did they miss or are they missing?
Besides ChangeWave, we’ve also been covered by Small Cap Network, your own Visionary Innovations, and a few others.
Specific to ChangeWave, we’re aware of their research, though we’ve never met or talked with them. While they provided a lot of excitement in early 2007, it may be that the resulting share price got a bit ahead of the company, and that rapid volatility didn’t help us. Our goal is to build a long-term, sustainable business. Some investors have told us that they have their life’s savings in Voyant; we have our life’s work in this company. Quite frankly, ChangeWave’s sell recommendation was not all bad for us, because now we can focus more on our business and not questions created by their reports.
When Voyant introduced RocketStream’s Mac version, it was expected to be a big hit for the graphics, movie entertainment industry, etc. Why haven’t we seen any traction, or is there traction that’s just not visible to the public?
Yes, there’s a good deal of traction for our Mac version that is not visible to the public just yet. Of course we’ve been selling the stand-alone version of RocketStream to these industry verticals: entertainment industry projects like American Idol use RocketStream, as do graphics customers like Imagine Print Solutions and Franklin Graphics, but remember that our main strategy is to embed RocketStream into 3rd-party applications.
It’s these embedding opportunities that we’re really focusing on, and our embedding discussions in these industry verticals are continuing. In order to get to these embedding discussions, we had to first establish credibility by building the stand-alone RocketStream suite, and that was essentially completed in early 2008.
RocketStream is now on 5 continents with value-added resellers (VAR). Can you give us a little update.
Our VAR network allows us to utilize a professional sales force catering to enterprises without a big cash outlay on our part. In particular, Korea, Japan and China are creating huge opportunities for RS, and we’re about to turns things on at a tradeshow in Singapore.
In China, there is nothing small. Everything has a much larger scale than Americans are typically used to, and this fits well with Voyant’s style.
In Korea and Japan, where the telecom system is generally more evolved than in the US, businesses and consumers have bigger pipes than we do, and they therefore experience IP the latency problem sooner. That is why our VAR attention is focused on those countries. I should stress that the VAR deals we signed are with top resellers in these countries, and these are deals where RS first had to prove its capabilities before these partners signed up with us. RS had to prove itself in order to get “shelf space,” and we’re pretty happy with our track record in that department.
What other vertical markets are you targeting for RocketStream embedded deals?
The “lowest-hanging fruit” (easiest to capture) includes the managed IT (information tech) and entertainment industries. Next, we would include the financial sector, the legal industry and then verticals like medical imaging.
In some cases we are finding that RS is able to provide solutions for problems we didn’t know existed. For example, I mentioned the legal industry: some of the biggest law firms in the world are using RS for “e-discovery,” which is revolutionizing how law firms manipulate data. This is a great example of the broad applicability of a power solution like RocketStream.
Video is the next growth area for the Internet. Does RS allow video to be streamed or downloaded faster?
We believe the movement and trend toward more and more video, especially things like high-definition video, will continue to be great venues for RocketStream. We can help make those applications all run faster.
I would think those big pipes in Korea and Japan would be eager for a faster video transfer solution. Could RS be embedded in a video player application over there?
It’s interesting: in countries like Korea and Japan, in some ways, the telecomm infrastructure has leap-frogged the U.S.. The pipes are already larger over there, and as the pipes get bigger and the distances get longer, the more beneficial RocketStream can be. We are very excited about this. And of course in China, the volumes are staggering.
The Proginet deal: How long was the sales cycle?
The sales cycle for the Proginet deal was less than a month. It took over 2 years to build the RocketStream suite, but less than one month for our first embedded deal, once we focused on Proginet. We have been stressing to our shareholders that the big play (and revenues) will come when RocketStream is embedded in 3rd-party applications, like Proginet, not with discrete sales. Proginet’s new senior VP of Sales, Sandy Weil, is a former Partner with Accenture. He came to us and recognized the enormous value that the RocketStream engine could provide to Proginet’s products. Proginet’s products are on tens of thousands of servers at Fortune 500 companies around the world, and RocketStream now benefits directly from all that customer exposure.
Our analysis is called RocketStream Moves Big Files
It has been a couple months since you announced your aviation broadband initiative with Harris. What does Harris bring to the table?
Just a couple months after announcing our ABS initiative, we landed as a partner a NYSE-listed $8B company that is one of the premier players in the aviation communication industry. We’re pretty proud of that. Now, we are applying some of our intellectual property portfolio to a government-funded, Harris-owned radio design to deliver an aviation broadband solution that is 10x faster than the leading competitor AND at a much more competitive price point. Besides their technology, Harris also has close ties with key government agencies like the FAA and FCC, as well as with other system integrators, and these are important relationships for us to leverage.
The press release announces a Letter Of Intent with Harris Corp . Can you elaborate on what that means and if Harris has any plans for more of a commitment?
We decided to partner with Harris because our two technologies are very complementary. Together, we can bring a much more cost-effective solution to Voyant Aviation Broadband. Among other things, the partnership saves us large amounts of Research and Development expense, because we are able to leverage previous R&D from Harris. Similarly, it allows Harris to take technology developed originally for the military and insert it into a high-growth market.
These types of relationships are the sorts of things our management team has worked on for years, both from the aspect of commercial companies and from the other side, as government contractors looking to commercialize military technologies. Beyond that, we think Harris as a company has a lot to offer. They have fantastic systems integration experience, and are very skilled in the development and deployment of large scale communication systems. I’m sure we’ll find lots of ways to benefit each other and our customers as time goes on. Our work with Harris is proceeding at full speed, so we’re content working under our LOI for now, though eventually we’ll have to formalize that in a definitive agreement.
Could they become a funding partner?
Sure, eventually, but we are not soliciting them now.
When are first demonstrations expected for the product?
Funny you should ask that question. We received a call from a major player yesterday asking us to demonstrate our Aviation Broadband solution as soon as possible. Our Aviation Broadband play is certainly getting traction in the industry.
Define “traction,” and with whom.
We are now beginning to talk about our solution to a variety of players in the industry including airlines, other potential partners, and even some would-be competitors. So far, the response and interest has been terrific.
You mentioned that Europe could be the launch for ABS, and you were looking for partners with this venture. What kind of partners will be required?
We think that Europe may represent an excellent launch market. The geographical and technical fits for us are great. Among other things, Europe seems to be approving voice as an in-flight service in advance of the US, which increases the bandwidth required and therefore plays well to our strength. Additionally, the carriers in Europe are a little more stable financially than the US carriers, and that helps as well. As for partners, just as in the US, we will have technology and system integration partners, and possibly also In-Flight Entertainment partners and Service Providers.
AirCell has done the heavy lifting and banking getting their infrastructure in place. Even though your solution has been quoted as 10x faster, and much cheaper per bit, are you too late to the aviation broadband party?
AirCell has done a great job of educating the market about terrestrial-based broadband solutions for the aviation industry. Previously, most people knew only about expensive satellite-based systems. However we have a few advantages over AirCell:
- We don’t think their solution provides enough bandwidth for airplane passengers to have a true broadband experience in flight .
- We don’t believe that their solution, which depends on some very expensive spectrum that they purchased in the U.S. (remember the old AirFones?), can be used in Europe or Asia.
White Space Radio…. In our opinion, this could be a huge opportunity for Voyant.
Please see our analysis called “White Space A White Hot Opportunity”
We understand due to competitive reasons you can’t disclose the name of the customer, but could you give us an idea how and why they came to you for this order? You never announced your intent to enter this space and yet you get an order.
This is another example of how we can bring our know-how and intellectual property to bear in adjacent markets that others may overlook. You are correct that we hadn’t previously made a formal announcement about entering this market, but we had been following the FCC’s decision process quite closely, and we even issued a commentary about the topic of the TV white spaces and 700 MHz bands last August. That was when we really started to get in dialogue with potential customers in this market, and things have been happening behind the scenes there.
This initial order is for 3000 radios. Have you seen any estimates of number of devices that this market will ultimately require?
The WSR market is an emerging, new market. We expect a whole new class of services and applications to be developed for this market. As that happens, we believe that Voyant can be at the forefront as an enabler of these new applications and services. We believe the possibilities are significant and the quantities of devices could be staggering, but it’s just too early to put a number on it with any degree of precision.
Motorola and a couple other biggies have a White Space Radio and have submitted their devices to the FCC. What separates your WSR solution and will you be required to submit a device to the FCC?
The FCC mandates are pretty clear for the WSR. Your device must “get out of the way of other devices already operating on a frequency.” This is a little like a car entering a highway – you have to look for cars already in the roadway and adjust your driving to fit in with them. This is quite complex from a technical perspective, but it’s where our expertise lies. A WSR has to have the ability to 1. sense that you’re in the way 2. get out of the way, and 3. move rapidly to an unused frequency. Couple that ability with our core competence of transmitting data at extremely high speeds too, and we have a really high-value set of products on our hands.
We will have to submit our device to the FCC, but the approval cycle tends to be fairly short: usually within weeks.
The timing of your WSR order and Larry Page’s speech promoting White Space on the same day seem more than coincidental. As we drove to your new headquarters we couldn’t help but notice how close you are to the “do no evil” headquarters.
Are they aware of your White Space Radio, or management’s expertise in this field?
It did not go unnoticed by us of their interest in this area. The fact that they are a neighbor of ours is of course a plus. Google’s strong support of the WS market validates our interest in the market as a ‘big play’.
Is your goal to manufacture the radios, or to license the modulation waveforms to other manufacturers, kind of like Qualcomm’s history? What is your goal with the WSR division?
To be honest, this market is so new and so significant that we are still going through a period of defining what we can bring and what this market can really be for Voyant. It is clear that it could be enormous, but there will be many ways to approach something this new. This market is still in formation. We were fortunate to win an anchor contract that will help us fund the research and development we would have wanted to do in this area. This will help give us an early position in the market. Suffice it to say, we are very excited about the potential here.
Finish this sentence. In order for Voyant to be successful in the White Space industry……
We want to see a large class of applications and services developed for operation in this newly available spectrum, and we want to continue to see the FCC demanding “open access,” which plays well to Voyant’s strengths.
Between government funding ($100m) and $200m from VCs, much of your IP isn’t reflected on the balance sheet as an asset, and yet it’s one of the key differentiators for Voyant.
Because of the price and manner we acquired some of our IP, GAAP determines that we put the transaction value on our balance sheet. However, because this IP has been called “beyond state of the art” and we are utilizing it to penetrate multi-billion dollar markets, we are in the process of having an outside auditor provide an independent appraisal. Of course, that transaction accounts for just a portion of our IP, and we are continuously adding the portfolio as well. Some new IP comes from the WSR product and will go on the books as an asset, and there’s IP associated with RocketStream and Aviation Broadband.
In your opinion, what’s the patent portfolio worth?
That’s hard to say. There’s it value to others, and there’s the value it brings to us. If you look at the companies that funded the portfolio and the key components the IP covers, you can see that this touches on many industries and applications. Keep in mind in less than a year we have already identified 2 multi-billion markets (Aviation Broadband and WSR) that utilize this IP. It’s true value to us depends on other uses that we apply it to.
If you had to name a few companies that could immediately leverage this IP Portfolio, who would they be?
Our IP base is very broad. It encompasses RF technology, Optical technology, Software technology, and system level technology. We think there are any number of companies that can leverage this across a variety of industry segments.
Besides Aviation Broadband and WSR, can you give us an idea of what other applications/products you’re building or pondering in the labs that utilize your IP portfolio?
The WSR and Aviation Broadband solutions tapped a small fraction of our huge IP portfolio. Some of the smartest engineers in the world, created this compilation of IP, and the top VCs and US Government financed it. By the way, some of those engineers are now working at Voyant. We’re constantly considering new applications for these things, but we don’t like make specific comments until we’re pretty sure we’ve found a winner.
Let’s go back to the Google thing.
How could Google benefit from Voyant’s products or solutions.
First off, RocketStream. Google could power transfer data of all sizes all over the world and overcome latency. RS could be used internally with their servers. Their video site, YouTube, could deliver high quality videos and ads to the consumer. RocketStream opens up many revenue possibilities for YouTube.
Google’s goal is to maximize the number of eyeballs that use their services. Here’s a selling point to them for the Aviation Broadband service. Imagine telling Google, “I can get you every eyeball in every plane.” A statement like that is an attention getter.
The company has a financial note due later this year.
Is there anything in place that should make shareholders feel more confident that that note will get paid?
We are trying to balance our fundraising in both their amounts and their structure to be commensurate with our business accomplishments and our value. The investors in our most recent funding round are long-term fans of Voyant. While they are not obligated to do so, it is our expectation that they will continue to be supportive, and this round of funding will look like a bridge to future funding as we continue to accomplish business milestones. We would of course expect those accomplishments to be reflected in our value.
Access to capital for disruptive technology, let alone technologies, is abundant here in Silicon Valley, and you have a history of raising big money from top VCs. Why haven’t we seen any top VCs help fund the company, and what is your plan to get the company in good financial shape?
At these prices, it doesn’t make sense to raise a large pot of money. We anticipate accomplishing some major milestones, which we outlined at the shareholder meeting, and then plan to seek to raise funding.
Most venture funds are not interested in public entities like Voyant. SEC Reporting rules would hamstring them, and pre-money value would be set by the market, not the VCs. However, some of the businesses inside Voyant, like Aviation Broadband might provide a great opportunity for them.
In 1985, File Transfer Protocol was proposed and became an Internet standard. An over-30-year-old protocol is still being used. Could RocketStream’s proprietary Internet protocol ever become the new/upgraded file transfer standard for the Net?
Absolutely. The RocketStream Protocol could be the new standard for delivering any type of content over the Net. Today, we’re applying it to file transfer, but we plan to use it for streaming, distributed web applications, and just about any other Internet data you can think of.
Last October you mentioned Voyant was in deep talks with a major wireless carrier. Where do you stand there?
We are still in late stage talks about how RS can be used to upgrade their infrastructure. Ideally we would like them to insert and embed RS into their infrastructure. While negotiating about this solution, they asked us to look at a related problem of theirs that also needed solving. This work is still ongoing.
One of the things Wall St. needs to see from Voyant to be convinced of the Voyant story is revenues. With WSR, the VARs, and the Proginet deal, is it safe to say revenues are now here?
Our discrete product sales of RocketStream have not been sufficiently predictable to give guidance. Because Proginet is a public company and provides forecasts for their sales, we could perhaps extrapolate some expected revenues there, but we really don’t have enough precision in our estimates to give proper guidance to the financial community.
Between Aviation Broadband, WSR, and RS, Voyant is creating business to address multi-billion dollar markets, any of which would be attractive businesses by themselves. Do you see the possibility, after financial independence, of spinning these off?
Yes. Our goal is create businesses that add value to Voyant shareholders. That means monetizing our businesses in more ways than just their operation. In some cases, other ways of monetizing businesses include spinning-offs, IPOs, M&A, or joint ventures. We plan to us all of these mechanisms at one time or another.
How does RocketStream become a recognized brand?
On the consumer side, that’s not an immediate goal. RS doesn’t help the US consumer today. As far as the enterprise go, we could have spent a bunch of money on advertising, but we realized the revenues and recognition would come when we got RS embedded in a 3rd-party applications and showed the power of the engine. Our goal has been to land big embedded deals, and the Proginet deal is just the beginning for us. We have focused our efforts on business development, not on ads in trade magazines.
If you could do 2007 over again, what things would you do differently?
Last year was a learning year for us, especially in regard to communicating with our shareholder base. This management team has come primarily from dynamic private companies, where investor communication and compliance constraints are very different. In a private company, investor communication involves a few dozen people (VCs) that have signed NDAs [non-disclosure agreements], which is a lot less risky than providing updates to Wall St. that compromise away our competitive advantage or mention speculative ventures. In the interest of open shareholder dialog, I think sometimes we spoke too soon about some of the things we were working on. This year we plan on keeping deals quiet until they become more mature. Landing Harris as a partner for our Aviation Broadband and announcing the White Space radio contract are examples of that.
In retrospect, I think we that should have conveyed to the Street that the discrete launch of RS was more of a seeding/credibility event, than a revenue generator. Not doing so might have set false expectations. The real revenue stream from RS will come when it is embedded in a 3rd-party applications. However, RocketStream exposed the company and the stock to Wall Street last year, so that was a good thing for us.
Now, our intention, which we have started to execute, is to build a management team of the smartest engineers that can leverage our huge IP portfolio for new multi-billion dollar markets. With such a team, we intend to build a growing, sustainable business. Our management team has built numerous successful startups and knows what is required.
Voyant's management team has plenty of experience with startups that get acquired by billion-dollar companies. It was rumored that one of your former companies was being eyed by a major telco for several billion dollars. Mark Laisure was an early investor in Mesh Networks, an emerging wireless network company that was purchased by Motorola. In your opinion, which division of Voyant is the most likely candidate to be acquired? Or in this case, is the sum of the parts greater than the whole?
Well Scott, you are right that the management team has extensive M&A experience. In my own case, I spent many of my early days at Loral, which was a very acquisitive company, and of course my time at Lockheed Martin, Centerpoint, and several subsequent start-ups have kept me active in M&A. Mark Laisure, our Executive Chairman, has had major successes like Inktomi and more recently Mesh Networks, acquired by Motorola. Our CMO, Steffen Koehler has been with several startups that were sold to companies like Alcatel, Intel, Emcore, and others.
Having said that, right now our focus is to create a collection of long-term, sustainable, healthy, and growing businesses. We believe that when you build strong businesses, the chances to create and reap shareholder value are right there with them. We are not currently planning on any of our businesses being acquired. Our top priority – our true focus – is maximizing shareholder value. If the best way to do that was a liquidity event, we would certainly consider that.
You have had plenty of experience with the Venture Capital community. In your opinion, what kind of valuation would Voyant have if it was private?
That is a difficult question to answer. I would say, in general, that venture capitalists are able to draw on a lot of experience with emerging technology companies, they are used to betting on the future by understanding relative risk/reward ratios, and they use that experience base to set a valuation. In addition, the VCs are in it for the long-haul by definition, and they are content to stick with their bets for a number of years.
In our case, we are not your typical public microcap. We are an emerging company following a holding-company model. Our future potential is significant, but that has to be balanced against current market value, share price, and shareholder desires for liquidity. These things all go into the valuation of Voyant. In general, I don’t think our current market value is high enough, and we are not satisfied to remain where we are. We intend to continue to accomplish many more milestones to increase our value.
To see our initial recommendation on Voyant, please visit Voyant, The Next Generation Internet Holding Company
*** All words/phrases highlighted in blue are comments we found particularly interesting.
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