And welcome everyone to another Smart Money Circle episode.
I'm Adam Sarhan. With me today is Peter Evans,
who's the CEO and President of Extract Want Technologies,
ticker symbols, XTRAF and IT trades in Toronto.
Peter, thank you so much for taking the time and welcome to
the Smart Money Circle. Well, thank you very much, Adam
for having me. It's I've been looking forward
to this this call all week long. Excellent.
So Peter, I would like to begin. Can you please tell us your
story and how you got to where you are today?
Wow, that's a long story. I've been in high tech all my
life and I was very fortunate to have a couple of opportunities
with some small startups along my journey.
Very much ran digital transformation of industries,
you know, and moving from old analog type approaches to
digital. And whether that was telecom or
cybersecurity or you know, AI, SAS type models, you know, these
are all sort of the things that I've done in my career.
And I was approached to to look at Extract 1 and what struck me
as a very, very interesting opportunity, the physical
security industry, we're all familiar with guards and guns
and walk through metal detectors was probably the only
marketplace that hadn't been digitally transformed.
And with this really interesting technology, we thought we can
make a difference and create an unbelievable guest experience
when increasing security. And what struck me about the
company was really excellent technology, but it been
stumbling for direction and execution.
So what better way to join a company at that stage and and
see what we can do about, you know, getting it on to the right
path and getting it on rocket ride, which we've done.
Well, I love that. OK, so let's talk about the
company. Please let us know what you do
and some of your competitive advantages.
Yeah, Well, simplest way of putting it.
You know, Adam, you and I go to go see our favorite sports team.
We go to see a show at Radio City Music Hall or something
like that. These venues are all protecting
against the threat of weapons. And in this day and age, there's
more and more weapons. We read about these these
stories in the news every single day about yet another shooting.
It's a tragedy. In fact, it's happening so much
that we're think we as a South Side are becoming a little bit
numb to it. But you see something that
happened last week in New York at the NFL headquarters and, you
know, causes us all to wake up. What we're all used to those
screening methods, which were actually developed 50-60 years
ago with a walk through metal detector.
And at that time, we walked around with a leather wallet,
maybe the keys to our car. And so metal was a proxy for a
weapon. In this day and age, society is
looking for something different. We've got a higher experience
expectation. We spent thousands of dollars to
go see Coldplayer T Swift. And you know, we don't want to
be standing in line for 90 minutes having to take
everything out of our pocket to go through a walk through metal
detector. And you know, in our case, we've
got purpose built sensors, AI software that correlates the
data that comes out of those purpose built center sensors.
And you or I, Adam, we just walk through or school, children
going to school or people going to the favorite hospital, just
walk in as if there was nothing there.
Just keep on walking. No taking things out of your
pocket. But if you have a gun or a
knife, it will detect an alert on that.
So the average person walks through transparently and
frictionlessly, not even knowing they've been screened.
I get from a security perspective, we know who's in
the building with a gun, with a knife or bomb.
I'm making parts of things like that.
So in a world where more and more people are looking to be
protected in those places, we all gather, we can provide that
value without negatively impacting the guest experience.
And so competitive differentiators, we're known as
an and not an or most technologies.
You have a choice. I'm either going to detect all
the weapons, but I can have a very negative impact.
You're going to have to take everything out of your pocket.
It's going to be slow. You're going to be in a long
line. Or I get to turn the sensitivity
down on those systems. So maybe they don't learn your
cell phone. But now knives and calms guns
like a Glock 19 go through. We're an Ant.
I can catch the firearms, we can catch the edge weapons.
You can walk right in 3000 people per hour through a
doorway, right with very few alerts.
And so most people like our customers like Madison Square
Garden, Radio City Music, all in the sphere and hospitals and
things like that. They love them and more
importantly, their customers love it.
Yeah, for sure, because you create a safe environment.
So let's talk about that in just a little bit more detail.
So I understand when the customer walks to the venue, you
don't have to stop waiting a long line because everybody in
front of us and behind us will be taking out everything and
then putting it back in again and some security random person
standing there. Well.
You're your technology allows us to do is just walk right through
the person gets screamed with their consent, I'm assuming to
enter the property and I'm assuming you have facial
recognition. You're using AI, so clearly you
can use a lot more analysis or data to screen the person than
just a metal detector that has no idea who's walking through it
to see what threat or criminal background, whatever the case
may be, and then adjust accordingly and let security
know. I mean, if you flag it right
there, hey, there's a gun in the pocket like a security metal
detector would go Bing, Bing, Bing, Bing.
Or how does that work? Well, what sorry, let me do
this. What the system is doing is the
sensors are looking for the characteristics of the metals
that walk through. So we don't necessarily have to
use spatial recognition, but we'll talk about that in a
moment. The primary thing is you're
looking at the characteristics of metals, the density of the
reflective properties of magnetism, magnetic signals.
And with our latest iteration of the product, we're looking at
all the combinations of metals and the amounts.
And so think of it this way. An object goes through our
system that goes little bit of aluminum, a little bit of gold,
a little bit of platinum, a little bit of lithium.
That's a smartphone. Oh, this thing here has got a
little bit of gold, a little bit of platinum, a little bit a lot
more lithium, a little more aluminum.
That's a laptop. So I'm essentially doing object
identification because of all the combinations of the metals.
Now the next thing, the object that goes through, that's 10
ounces of steel, 4 ounces of brass, and 2 ounces of lead.
That's a gun. So we can identify those objects
and basically whitelist the things that are fine, laptops,
tablets, cell phones, things like that, but then highlight
that's a gun, that's a knife. And then because of that data,
we can actually say that's a gun in the backpack, that's a knife
in the pocket. From a security guard's point of
view, I'm no longer getting some walking through metal detector
going beep. Oh, it's their belt buckle or
it's their eyeglasses or whatever.
I'm now just letting people flow on through, flow on through,
flow on through. And it just, it just looks like
there's nothing there. And everyone's streaming right
through into the building. And then the security guard,
they've got a tablet and it shows a picture of you because
we have a camera taking a picture of the individual.
And it shows you exactly where and what type of weapon is
available or on that person. So now from a security point of
view, I can walk up and say, Sir Adam, do you have a gun in your
pocket? And you now know that I know
that. So you better not lie to me.
Now, the interesting thing is you mentioned facial
recognition. We're not stopping there.
The primary driver for our company is the weapons threat
and it's growing around the world.
Look at a country like the UK. They just invoked Martin's Law,
which is now mandating mandating that any venue more than 800
people must screen for weapons, otherwise they have a
significant penalty to play or to pay.
That's get some real teeth to it.
And also in these countries around the world, Singapore,
Australia, New Zealand, the UK, all of Europe, where they have
all these problems, particularly knives are becoming markets for
us that we haven't yet fully served yet.
So there's huge upside in terms of the tan.
Now, coming back to your question, when you think about
this, now you're going to Madison Square Garden to see the
Knicks poll, right? Right.
Or where you live out and down in Orlando, you're going to go
see the Magic plate. Not only can I screen for
weapons, but if I've got cameras in there, there's a potential
for us to do more and start thinking about this is Adam.
Adam hasn't been banned from the venue.
Adam has a valid ticket. Adam doesn't have weapons.
And you haven't broken stride walking from the sidewalk to
your seat. And we've done all those checks
all along the way. And then if you really want, you
can take it a little bit further and say, let's go scan social
media and notice that Adam has said next time LeBron James is
in town, I got to mess him up. Well, now we've got your picture
of social media. We feed into our systems and
they recognize you on approach to the building.
So while we're not doing all of those things today, the platform
has the extensibility to the capability to do that.
And from an investor point of view, not only is the weapons
market a significant market, a huge market for us, but we're
starting to lay on more and more value added software that we're
just stacking on top of the incumbency that we've already
created with our customers, which creates an incredible
recurring revenue model for for our business.
Yeah, I love that. And then also I'm assuming you
can upsell them want fries with that so you can give them
additional services as well. Is that right?
Absolutely. We're doing those kinds of
things today. We have some customers because
we're doing this object recognition in the in the
distribution center is one of the biggest problems is employee
theft. You know, employees stealing
earbuds, Apple watches and selling them on eBay. 1 big
retailer told us they lose about 5 to 10 million dollars per
distribution center sort of tuning for them and up sell
value is well, not only are we screening for weapons coming
into your facility, which is a big problem in the blue collar
worker environment, right? So I think every place we've got
blue collar workers, auto manufacturers, distribution
centers, places like that. But I can now also steal for
electronic theft on the way out the door.
And so I'm a data center and I'm worried about someone stealing
intellectual property on a, a thumb drive.
We can learn on that. I'm worried about someone
stealing an Apple Watch and putting it in their pants pocket
and leaving the building. We can do that too.
So there's more and more opportunities.
But right now, the demand, unfortunately, because of the
state of the world, the demand for weapons detection is
unbelievable. I've got a lot of Gray hair.
I've never seen anything like this in my career before.
Yeah, you definitely have. You.
You got your finger on the pulse, there's no question about
that. Plus demand for AI and that's
only going to the roof as well. So you're into two.
I guess the Venn diagram would become the mind 2 overlapping
circles and you're right in that sweet spot.
Exactly. Exactly.
And the AI has been purpose built to solve this problem
specifically. It's very unique.
So there's a lot of intellectual property that's been built
around that. And we're doing some things
very, very uniquely that allows us to be that and not the OR.
And we're pleased. You know, we just announced this
week a major contract with one of the school systems in the
United States, the 7th largest one in in Florida.
That was a head to head test of all the different technologies.
And hands down they said, let's go.
And you start to think about, OK, K through 12, nobody wants
guns in schools. There's 130,000 K through 12
schools in North America. And that's just one small
district that that we announced this week.
It's about a $13 billion opportunity.
And we uniquely can allow all those kids to walk in with their
backpacks, their laptops, their binders, their chargers, their
headsets and all that and not alert unless they have a gun or
a knife. So we're playing to a $13
billion market, just without one single market application.
Yeah, no, it's really, really powerful.
And then all the other schools as well and all the way up.
I mean, it just goes. It doesn't end.
I mean not even even after school, they go into the
workforce every job too. Nobody wants to be sitting next
to some guy with a gun or whatever crazy nonsense could
happen. Yeah, exactly, exactly right.
Like we saw in New York last week.
Unfortunately, since then we've seen an uptick in, you know,
office buildings. And again, the average office
workers walking with a backpack with a laptop, which is going to
alert, it's going to light up more than a Christmas tree with
the amount of metals that's in there, going through a metal
detector or any other solution. The fact that they can walk in
straight to their meeting without being detained, but we
can keep the weapons out, that's huge.
The other market that's very big for us right now is healthcare.
Unfortunately, 76% of workplace violence happens in the
healthcare environment, you know, due to, you know, mental
issues, psychological issues, drug related issues, pain
related issues. There's lots and lots of
stories. In fact, in New York two years
ago, the number one grievance of the healthcare workers when they
went on strike was keep me safe at work, right?
And so we're finding out our business is doing extremely well
in the healthcare marketplace these days because we can
uniquely catch the small little blades if we have to.
Yeah, that makes perfect sense. So let's shift the conversation
a little bit now to some timeless lessons.
How do you handle? Risk and what are some mistakes
you see people make with respect to risk management?
Yeah, it's a great question because if you're dealing with
weapons, the last thing you want to do is have a failure.
So we spend a lot of time, in fact, I'm today with a customer
as we're going through, you know, kind of an annual
preventative maintenance activity where we not only look
at the technologies themselves, but we actually look at their
whole operations. So we train extensively the
customers and we certify them. We have to train and certify our
partners also. If they're not certified, then
they can't represent our technologies because of the
liability and the risk. And then we go back with the
customers and, you know, we've delivered programs where they
can continuously test their employees to make sure the
systems are being set up correctly, operated correctly,
managed correctly. You know, a failure to do so
means that something could terrible could happen.
And you know, to manage that risk, we proactively invest in
making sure our customers are set up for success.
Yeah, makes perfect sense. OK, so let's talk about some
timeless lessons that you've learned along the way that you'd
like to share with the audience. Place in business and life
anywhere you want to go. During my career, wow.
The first one is luck comes from grit and hard work.
You know, that a lot of people, you look at somebody say that
guy's very, very lucky. That's a guy who put in the
sweat equity for years and years and years and years.
I mean, you look at this one like a Jeff Bezos.
So I remember seeing the black and white photos of him in a
little tiny office where he's sitting on a cardboard box for
his chair. And the guy put the time in.
He put the hours in, you know, And so you know, grit, there is
no Glock, there's only grip and staying very, very focused.
The second thing to me is surprisingly, it's a very, very
small industry. No matter what industry you're
in, it never ceases to amaze me how, you know, I'll run into
someone that I met 10 years ago and you know, you always want to
make sure that you treat people really, really well.
I think one of the things that we do very well is over rotate
on taking care of customers. As you said, it's a liability.
I had a great lunch the other day with a gentleman at one of
the major sports teams and he said to me, hey, on Thursday,
make sure you say hi to Tim for me.
How did this guy know I was flying to the other side of the
country to have Tim with one of his counter or lunch with one of
his counterparts? It's a small industry.
Everyone talks and they'll speak favorably about you or they'll
speak unfavorably about you. So always make sure you're going
that extra mile. Those are a couple that come to
mind, you know. And then the other thing is
don't forget to stop and spill the roses.
I mean, it's easy to say my lovely daughter went off to
college yesterday and it's breaking my heart, all right.
And so we try to spend as much time as we can and those things
are very important to me. Yeah, no, I absolutely,
absolutely. It's brilliant.
And your point about luck and grit.
So my daughter, she just got me into Hamilton, the the Broadway
show and we saw it up in the snip a stop and one of the songs
that says non-stop and there's thinking about Hamilton and
like, how's the guy so good? I mean, he's done so much and
the guy's just non-stop. So to your point about, you
know, grit and just be non-stop and you put the work and you get
the results and it's just fantastic.
All right, let's talk about the other side of that coin.
Timeless mistakes you've either you've made, you've seen other
people make, and how do you avoid them?
Wow, that's a really great question.
Timeless mistakes, boy, who's been a bunch of the long way.
I think sometimes things like following up don't just, you
know, you're on a journey for the customer, you're on a
journey as a business. You're on a journey with all
your employees, you're on a journey with all your
stakeholders. And so, you know, make sure you
stay connected when you start, when you stop remembering your
why as a business, right, you move as a company from having a
company of, of people acting like owners to people acting
like employees. I was with a great company.
And you know, we started with 37 credit cards that were maxed out
to try and keep the company afloat.
You know, our, our furniture was like a $2.00 inflatable green
sofa that we got from the dollar store.
You know, Fast forward 14 years, we, we were a $250 million
publicly traded company on NASDAQ.
And then we got bought, we got bought by IBM.
And it was fascinating to me, no disrespect to IBM, but how
quickly, like we were 1300 people, but it still felt like
that twelve person startup where everyone was passionate about
what we're doing, even though we've grown to that level.
And that passion creates this exponential kind of flywheel
effect for the business. When everyone feels like an
owner, whether they're sweeping the floors of the CEO, everyone
feels like they're, it's important to them.
They're an owner in the business and unfortunately, through the
acquisition, it was only six months before everyone felt like
an employee. And that and that the, the, the
vibe, if you will, was gone. You've got to keep that vibe.
If you lose it, then the company is just going to die eventually.
And so, you know, we work very, very hard at that here.
We're working very, very hard with our customers, with our
employees. Anything we could do to keep
that that that passion, you know?
Yeah, that is so, so extremely powerful.
That's a great lesson. Thank you for sharing.
OK, next topic is leadership. You be your leader here.
You've been leaders before. Let's talk about leadership.
What makes a great leader? And what are some lessons you've
learned about leadership that you'd like to share?
You know, there's a great quote I read once from the book of
Tao, and it was something like the leader kind of leads with a
kind of an invisible hand to the point when employees said, look,
we did it ourselves. And you know, that idea that you
know, they're all in the same journey we are.
I've had some great mentors in my career.
People have helped me along the way.
People have taken a, a chance on me.
People have kind of promoted me two levels beyond what I thought
I should be because they said, look, we believe in you go get
it done. And we give people that that
bandwidth. You give them the your trust.
It's amazing what people can actually do if you give them
that, that opportunity. So, you know, from a leadership
point of view, I'm very, very involved.
I just, it's the nature of how I'm wired.
You know, I like to get into the details.
I'll crawl around the floor pulling the Ethernet cables
there because, you know, I'm not better than anyone else.
You know, I want to show the customers we care about you at
all levels of the company. But where I can, trying to kind
of impart the wisdom on the team, then let them go, let them
run. Yeah, that is really, really
powerful. I love that.
OK, let's talk about adversity. Getting to where you are and
overcoming adversity is is almost part of parcel with what
needs to get done to succeed. How do you handle adversity, and
what are some obstacles you've had to overcome along the way?
I have this wonderful dog and he's amazing and he loves to
catch the Frisbee. He's very, very smart, very
sharp and whatever, you know, I run into sort of a challenge in
life or challenge in the business.
You and I go for a walk on the beach and we throw the Frisbee
for a long time. And it just gets you to clear
your head a little bit. Take a step back, all right, and
understand like what's really important.
It's like that old 24 hour. We'll never send the e-mail when
you're angry, pause for 20 hours and breathe.
And if you could do that, just take a step back.
Sometimes context comes around. It's easy to say this person
made this pretty mistake that that customer ticked me off
about X or Y, but sometimes you have to understand and walk
another a mile in that person's shoes.
There probably wasn't malicious intent.
What was their day like that they were going through that
they they had that negative reaction and step back a little
bit. You know, as a society, it's
easy to to default to the negative.
The way our brains are wired goes back to when we were
Cavemen, right? If we didn't assume the worst,
then you know, the Saber toothed tiger was good to eat at The
Cave one day. So you had to prepare for the
worst. But then it means that we create
this bias around the people we're working with and things
like that. There's no problem that can't be
solved. Like this customer I'm at today,
they were having some challenges and we're at the point of one.
Maybe we just need to walk away. So we came on out, spent some
time, had the conversation, just realized people are people and
how do I solve their problem for them?
So for me, take a step back and breathe whenever I can, clear
the air. And then trying to understand,
OK, what's really going on with this other person?
How can we help them to get where they've got to get to be?
Yeah, and I love that. That's that's really, really
brilliant. Instead of making that emotional
decision and why you're all ramped up and worked up, it's.
Yeah, it's now having said that, Adam, a pig, a picture was once
painted about me. That said, Peter is monumentally
impatient about outcomes. And it's true, you know, if
we're not, if you're not focused on the outcomes, if you're not
focused on delivering the value to the customer, you know,
delivering the value to shareholders, these sorts of
things, you're just practicing business.
You know, you can put up all the beautiful websites you want and
all the beautiful, you know, PowerPoint presentations.
You're practicing business, the business of business.
I had a great mentor wants. Actually, he was an advisor to
the Prime Minister of Canada on strategy.
And he used to say as a take out an MBA classroom, he used to say
the business of business is making money.
Yeah, you can, you can kind of take some some variations around
that. But he used to use that as our
guiding principle. Everything else is just
conversation. You've got to focus on the
outcomes, right? And that's what we're really
trying to deliver as a small company here.
And then fortunately, we've been able to build a very
interesting, very dynamic company that's got unbelievable
operational scale. It's all been built in a manner
to deliver the outcomes. Yeah, I love that.
So here's a great line. It's not mine given to me by
someone else. He goes it don't.
In business it don't mean a thing unless it goes catching.
Yeah, same idea, right? Exactly.
Other than that, you're just practicing business.
Yeah, I know. I love.
OK, final question for you Peters, what is the best piece
of advice you'd like to give the audience or your 30 year old
self? Wow.
Gosh, I can't remember what the quote was.
It just escaped me. But the idea is like this too
shall pass, right? You know the idea like things
happen very, very quickly. You know, when I joined this
company, it feels like a week ago, but it was actually a lot
longer. Time flies, you know, you've got
to stop, you've got to spend time on things that are
important, not get caught in the weeds, right?
You know, it's, it's the time ticks and it moves really,
really quickly. And so, you know, again, back to
outcomes, focus on those outcomes and, and the delivery
of those as fast as you can, but make sure you're having fun
along the journey. You know, I had, you know,
thought about what was my priorities and business once.
And for me, you know, make sure that what you're doing is making
a difference, whether it's a new product that you're innovating,
where it says impact on society, you know, whatever it is, it's
something new, it's innovative, it's making a difference to make
sure you have a whole lot of fun along the way.
And if you do that well, and that's, you know, treating
people with dignity, respect, these sorts of things, not, you
know, not betraying your, your, your morals.
If you do #1 and #2 well #3 objective make a lot of money
always happens. It's almost inevitable.
It's like if you do the sit ups and you eat right, what's going
to happen? You can have a flatter stomach
than if you don't do that stuff. Yeah, exactly, exactly.
So make a difference, have a lot of fun, make a lot of money, do
#1 and #2 right, you'll get #3. I absolutely love it.
Peter, thank you so much for coming on the show.
Congrats on all your success, all your future success.
I love what you're doing. You're definitely making a big
impact and hopefully we'll have you on again soon.
This is absolutely fantastic. I love it, Adam.
Let's do this more often.