Watch Episode #86: An Industry Q&A with Matt Sailor
The Future of Artificial Intelligence in the Automation Industry
This week's show features our host Ron Callis interviewing Matt Sailor. Recorded live on Monday August 26th, 2019 at 12:30pm EST.
About Matt Sailor
Co-founded IC Realtime and has served as CEO since its inception. Mr. Sailor is involved with all running facets of the business and has a proven executive management track record with over 20 years of experience driving growth and innovation within the Security Industry. As the Former Vice President of Mace Security, and a major contributor to an incredibly explosive 1,000 percent sales growth factor, Matt is a thought-provoking leader with an act and vision for excellence.
Here are some of the topics Ron had the opportunity to discuss with Matt Sailor:
- Matt´s background in the industry
- Keeping up to date with technology
- Savant Partnership
- Manufacturing in Korea vs. China
- AI World (new AI-enabled recorders and cameras)
Ron: Hello, everybody! Ron Callis here with another episode of Automation Unplugged. Happy Monday. I know I'm keeping you guys on your toes here, because sometimes I'm coming to you live on Mondays, and sometimes Wednesdays. But I have a really good excuse as to why I'm not coming to you live this Wednesday. I'm actually moving. Wednesday is moving day here in the Callis household. I would love to tell you that I'm moving into my new house, but my new house is now not ready. There was last minute changes with the builder. I'm actually moving into a hotel for the next month, and then next month, during one of my shows, I'll give you the exciting news that I'm actually going to be moving into my new house, which my wife, and my son, and my dog are very excited about. But nonetheless, Matt, our guest, CEO from IC Realtime, was very willing and able to work with us on dates and times. Super excited to bring Matt, the one-and-only Matt Sailor, here from IC Realtime. They're actually just up the road. I'm here in Cooper City, Florida, and he's up in ... I want to say he's in Pompano, but he'll correct me here, if I'm wrong, in just a moment. This is officially show number 86. Automation Unplugged is brought to you by my day job over at One Firefly, where I act as the CEO. Act is maybe the right way to describe it. Let's go ahead and get started. Let me bring in Matt. There we go. There's Matt. Of course, Matt, it says your name is Mr. IC Realtime.
Matt: Hey, why not?
Ron: Why not? How are you doing, sir?
Matt: I'm well. Thanks, Ron. Thanks for having me on.
Ron: No, thank you for taking time out of your busy day. Did I get it right? Are you up in Pompano?
Matt: Pompano, that's right. Pompano Beach.
Ron: Awesome. Where are you coming to us from? Are you in your office? Are you in your boardroom? Where are you at?
Matt: I'm in Pompano.
Ron: Very cool. Now, Matt. Let me go ahead and jump over to our tech, because we are on the bleeding edge of technology here, streaming live into Facebook. Let me actually make sure we're live. Give me one moment here. Let me check my technology. You may or may not be surprised with some of the challenges we have sometimes in streaming.
Matt: I'm not surprised at all.
Ron: All right. Yeah, we are live. We got a nice audience. Actually, we got some people already saying hello. We got Jordan. She says, "Welcome, Matt."
Matt: Thank you, Jordan. Nice to see you. Nice to meet you on the Internet.
Ron: Let's see. Who do we have here? We have AdrianandPerla Pop, says, "Welcome, Matt Sailor."
Matt: Hello, Adrian.
Ron: Let me put another. Oh, man. We got a Guillermo. He says, "Hi." We got a Kendall Ellison. She says, "Good start to the week."
Matt: Hello, hello.
Ron: Thank you, Kendall.Matt, whenever I have a guest on, I always ... Man, they're just coming in. We got another one. "Welcome, Matt." All right.
Matt: Thank you.
Ron: We always love, for my audience, I'm sure everyone here has probably heard of IC Realtime. You're a very well-known brand in our industry. You are the founder of that brand. But I always love, and if you would not mind, giving us a little bit of background on where you came from, how long you've been in this industry, what actually pointed you in the direction of starting your company, all of that good background. I'd love if you wouldn't mind digging in.
Matt: Not at all. Not at all. Ron, thanks again for having me, and everybody who joined, thank you so much for joining. I've been in the security industry, Ron, for going on 24 years now. Prior to opening up IC Realtime, my tenure was at Mace Security International, which then was a publicly traded company. We had opened up a surveillance division to piggyback of Mace, the actual pepper spray, and we ran that business up very, very healthy in a matter of about five to six years. And during that tenure, I really learned what people needed and what they didn't need, and I saw what was not being delivered to the industry, and decided, "You know what? I'm going to deliver it."So we opened up IC Realtime at the end of 2005. It's been a tremendous run. And really the key to what we do is we listen to the people that deal with us, and we provide them with solutions wrapped around the problems that they incur every day. We're not opinionated on what we want to do. We want to do what other people need and want in the industry, and I think that's been one of the keys to our growth and success over the last almost 15 years.
Ron: Matt, I did not know that origin story, that you started in '05. How was it? Were you established enough to feel that you feet were firmly on the ground? Because not too long after you started your business, we ran into this collapse in '08, '09, and '10, of the economy. How did you handle that? Did it make you stronger?
Matt: It did, it did. It was a fun time, it was a challenging time, but like everything great in life, nothing comes easy. And if it's worth attaining, then it's not easily attained. So we had some hiccups early on, and it was tough wrangling everything together. And as you had said, the economy wasn't at its best, but fortunately for us, the surveillance industry is one of the few not directly affected by the economy. As a matter of fact, we did really well while the down cycle was taking place. Mostly, for I think there was fear that was built, and security became something that more of a need, rather than a want. And I think the timing was really well on our side for that. It wasn't as difficult as many may have thought, as far as getting the footing. What's difficult is to keep up with the technology and continually to offer things that are not in the marketplace. Be creative, I should say.
Ron: I'm actually just finishing up a book called Double Double by a Campbell Something And Other. If you're watching this and you know the author of the book Double Double, type it into the text, or into the notes here, or the comment section, and I'll read it out. But in that book, he actually had a chapter on, in essence, downturns in economy. And his whole theme is, "I choose not to participate." So even if the economy's doing real stuff, as a business, you don't have to participate. You can take all the actions to protect and secure yourself, and it sounds like in your infancy, that's what you guys did.
Matt: We did, and you know at the time that we came out, it was a time that people were very hesitant about taking risks. And I'm a big proponent on when people are scared is the time to be aggressive, and when people are aggressive, it's the time to be scared. So that time people retracting, they were pulling away from marketing, they were fearful of the economy and what it would do. And we did kind of the exact opposite. We spent all the money we could. We went out there to every trade show. We heavily marketed. And thankfully, for us it paid off.
Ron: Now I just had one of our audience members here actually give us the answer. Double Double is by Cameron Harold. So if you're out there and you haven't picked that one up. By the way, Joe Whitaker, Thoughtful Integrations, they're out in the mid-west. He says, "Matt, I think I'll be at your dealer summit. See you soon at expo."
Matt: Looking forward to it Joe, and yes you will.
Ron: Oh, that's awesome. Now, Matt, how did you end up pointing your business at the CEDIA Space? And/or is that even how you view it? That's how... I'm an insider in the CEDIA space, so maybe that's how I view it. Did you and your leadership team make a focused effort as you were exiting Mace and you were launching this business to really serve that custom integrator in this residential home technology space? Or how did you... What was the target?
Matt: No, we really did. I look for voids in business. I look for what I call blue water, not red water. And when we were looking at ancillary offerings and companies that we felt would be behoovant of having our gear, but not only behoovant of the gear, but moving towards more of an integrated solution, AV became ever-present to us. And we first looked into this, there was no security player out there that paid any attention into integrating. We're going back almost a decade now. So when we first started looking at this, people looked at us and said, "Why are you so interested in an industry that doesn't even have cameras in the space?" And my answer was, "That's exactly why I'm interested in the industry, is because they don't have cameras in their space. I think we saw a long time before it was mature, that IOT and inter-connectivity between different types of equipment that will live on the same infrastructure will be ever-so necessary. And we reacted to it very, very early. We were in that space for almost five years without any competition. And then obviously, as usual, when people see you doing well in a space, others comes for that space. But I think that we built enough of a headstart, if you will, on integrating with the technology that even to this day, no one's yet to catch up with us.
Ron: Well, alright. Speaking of what's right around the corner, and I mentioned the word CEDIA. We have CEDIA right around the corner. It's in a couple of weeks. We'll all be flying out to, looks like it's going to be in Denver this year. What are your thoughts? Do you got some secrets up your sleeve that you're able or willing to talk about right now? And/or if you can't, what can you talk about, as it relates to the show?
Matt: Well what I can tell you is this year will be quite different from every other year. We are showcasing a lot of unique technology. I don't know if you want me to mention the name of the company that we're showcasing with.
Ron: It's only if your team has authorized you guys to put that out there. If you're allowed to, yeah, I'd love you to spill the beans. But I don't want you or me to get in any trouble.
Matt: I can't spill a lot of beans, but what I can tell the listeners and you, Ron, is that we've recently formed a very unique partnership with Savant, that will be unveiled at CEDIA. We have people at their booth, and they in ours. And we have designed some really technologies around not only installing the gears seamlessly, with auto-find of the camera, but putting a lot of specialty products and unique touches within both software platforms, that will deliver some very, very unique offerings. Those are the things I can't talk about, but they will be on display at CEDIA, and we're really excited about the opportunity to partner with Savant. It's an excellent relationship.
Ron: That sounds spectacular. When will the greater level of detail be coming out? Will it be at the show, or will it be preceding the show that the details will be public?
Matt: There's a press release that'll be released this week about the overview of the partnership. The actual details of the synergetic values that we've built in between our two offerings, that will be released at CEDIA.
Ron: Okay. Awesome. Understood. We've got so many comments, they're flying in here. I'm going to just put one on the screen. There's a question for you mat. Guillermo, he says, "Do you see adapting your existing products/tech to target other industries, other than surveillance, such as retail, for example?
Matt: Absolutely. Thanks, Guillermo, for the question. You know, we look at machines now... Surveillance used to be looked at purely for a camera's sake, meaning an event takes place, you want to go and receive the data to see what event took place. Nowadays with the introduction of AI, deep learning, with all types of analytics that re being heavily deployed, it's become somewhat of a management tool. And so we are avidly looking into both gov, military, education, transportation, as well as retail, to give a lot of nuances that they don't get from a pure security system.My example would be security has only been used for video retrieval to see what happened, when in essence, the analytics that are in these system are very behoovement of, as his example, Guillermo, a retail location, where now you have people counting. You have heat zones which show where you are in the store, which part of the day are warm, where most people go to look and why. It gives you a lot of metrics that you can then use as a management tool, not necessarily a security tool. So the answer to Guillermo is absolutely, and there's already a lot of features built into our entire offering that are wrapped around that. Hopefully Guillermo may be in CEDIA and he can stop by, and we can show him some of these.
Ron: And I'm curious Matt, as it relates to, and I'm just going to... It's a little bit above my grade, so I'm going to keep it simple, only for myself. If you say, get into the retail space for all the reasons you just described, heat mapping and customer counting, and such. Do you see that you bring the classic integrator that lives in the CEDIA channel, and you bring them into these other verticals? Is it that, and/or you in fact going and presenting at other places with other types of businesses that entirely focus on those spaces?
Matt: Ron, I think it's a hybrid of both. I definitely want to migrate the AV world into things that they may or may not be doing right now. And at the same time, I'd like to do backwards education to the demographic that both of us would be looking to appeal. So I feel that it's helpful to do marketing towards the area in which you want to appeal, to create brand awareness and feature set awareness, but also bring the integrator into that loop, so that when they do maybe propose an offering, it doesn't come off as foreign to the listener. They've probably already heard it and been educated about it.
Ron: Got it. That makes sense. And Guillermo did pop a message, he says he's going to keep in touch.
Matt: Excellent. Thank you, Guillermo.
Ron: Thank you. Now, I'd like to jump if we could, because in my mind anyway this is connected and that is, you have a pretty badass... I don't know if I'm allowed to, yeah it's my show, I can say that. You have a badass AI solution for surveillance, and that is the product you call Ella, which is your software. Could you describe that? And I actually pulled the webpage up, so I'm going to try to maneuver my tech so the audience can see it on their screen. And is there any updates at CEDIA around Ella, if you could expound on that, that'd be cool.
Matt: Sure. A lot of people now are talking about AI. They're talking about deep learning, they're talking about optical character recognition. They're talking about a lot of terminologies that get thrown around, but there's not really an in-depth understanding of what AI and deep learning really are. So far too often, Ron, I see people mentioning AI in areas that have nothing to do with artificial intelligence. So getting to Ella... We came up with Ella about two years ago in conceptual. And the reason was, was honestly, I was sitting at my computer, and we were looking for something. And of course, what do we do? We all go to Google. And in Google, 85% of the worlds' queries go through a single search engine. So as we were looking for, I forget about what topic, it may have even be a car, it dawned on me that why is the entire world able to be queried through keystrokes, and yet in surveillance, we're still limited to what day, what time, what channel, where was it? And you have people doing mundane things constantly. They spend an average of two to four hours to find an event. So when we thought of that conceptually, we said, "It's impossible that you can actually search the world." You think of Google, you can query the entire world in a few milliseconds. But in the camera world, you can't even query an enclosed system that only has a month worth of data. If you looked at those two, and you said, "Wow, look at how large the query base is of a Google, and look at what we're stuck with doing in surveillance." That kind of stimulated the thought of, "There's got to be a better way." We actually reached out to Google directly, and we found out very quickly that it was their GCP Google product that was really holding all this metadata. They were very intrigued by the thought of using the search engine and their GCP product for something other queries of a web. So when we brought this to them, I was actually surprised that they took it so well, and gave us so much assistance in it. You fast forward to now, and basically what we've done is we've mimicked Google, in all intents and purposes, to be solely for your surveillance system. So Ella is the platform. Ella is a small hover box that you'll put in your location. Ella then bounces off the cloud product that Google offers. What's really interesting about Google, and I think your readers and your listeners will find this interesting, is that for the first years of Google's life, they lost a lot of money. And everybody was wondering, "What exactly are they doing?" And they didn't realize what was happening. What was happening was they were gaining an amazing amount of information by basically recording all the queries and keystrokes, and being able to then zone it down to different commonalities. So they were really data acquisition. And everybody was wondering, "Why are you creating so much data that's unusable?" At the time they were creating it, it kind of was unusable. You fast forward now, and they have a 15 advance on anybody else in data collection. So really, Ella is based off of a 10, 12, 14 year run of Google, collecting all these algorithms. And within each video stream is what's called metadata. So basically, your subject matter lives in your video stream. It's just no recorder, and security knows how to extrapolate it. So what Ella does, just like Google, is she allows you to use what's called natural language search. And that means you query based on the subject matter you're looking for. "Ella, please find me a red Jeep Wrangler in the last three days in my driveway." There is no more time restraint, day restraint, it just comes up. And she understands every make and model of vehicle, she understands every color in the color spectrum. She has over 2.3 million prompts built in that she's able to search either verbally, or through a query stroke, just like Google. So an example would be, let's just say your mailbox got knocked down. You would then ask Ella, "Ella, camera three, show me when the mailbox got knocked over." And in a millisecond, it's going to pull up the truck backing into the mailbox. "Ella, show me when the FedEx delivery was in the last six days." You'll have six FedEx trucks only in your query, and it'll be returned just as quickly as Google returns a web search. So it's really unbelievable. Until you see it in person, it's hard to wrap your head around it, especially in the... I guess I don't want to be mean to our industry, but our industry's ancient in the way they retrieve data. And Ella is really, in my understanding, the first deep learning, AI algorithm specifically created for video surveillance feeds. She's hardware agnostic, she's produce agnostic, and she's stream agnostic. You don't have to you use IC Realtime. You can use eVigilant or any of your preferred vendors. It doesn't have to be an IP camera. It can be analog, it can be whatever it is, as long as it has an RS-232 port. So basically, not only did it avail you to take future systems into real technology, but it allows you to go back and revisit years' worth of installs that are using legacy systems that there's nothing wrong with, although they don't have any of the advanced features of the new ones. So rather than having to replace a 10, 20, $30,000 system, you can merely add Ella onto the platform, and within 23 hours, you now have a deep learning AI algorithm running all your queries.
Ron: This strikes me, Matt, as a technology that if integrators would simply demo it for their customer, I can't imagine a consumer would go, "Yeah, that's so cool, but no, I don't want that."
Matt: No, you're right. It's been, let me just say this, I'm blessed, it's been the easiest product I've every created to sell. It sells it-
Ron: Because when you show it, it's so gee whiz cool, that people would go, "Of course I want that."
Matt: It's so simple and so slick, I couldn't imagine after using Ella for the last year, especially on my home and business, just for personal uses, I couldn't imagine having to type in a date and a time again. It makes no sense whatsoever. Why don't you just search for the subject matter you're looking for? You want to find the black German Shepherd? "Ella, show me black German Shepherd on my lawn the last three days." And every clip will come up with the black German Shepherd. She's able to differentiate every dog breed. She can search for a black Labrador Retriever, a Golden Retriever, you name it, she'll find it.
Ron: Because you're accessing Google's knowledge database of all of those types of breeds? Right, as you said-
Matt: Google knows everything. If you go into Google right now and search Golden Retriever, what happens?
Ron: You get Golden Retrievers.
Matt: Same thing with me. How does it know there's a Golden Retriever? There's metadata in the video. Same thing in video surveillance, it's just we've never actually used the data that exists.
Ron: Wow, that's... Alright, so I've got a bunch of people that are oohing and ahhing. Adrian and Perla, they said, "Leading edge technology."
Matt: Thank you, Adrian and Perla.
Ron: We've got Joe Whitaker, says, "Ella is huge, not just for home, but for much more. Ella, show me the person falling the hallway." Oh, for hospitality.
Matt: Well yeah, because Ella understands behavioral algorithms. So she understands "slip and fall", she understands "violent motion." If you have audio connected, she understands when you raise your voice. She understands when you start cursing. So Ella is a predictor. If you had Ella in a school, she'll understand gathering. She'll automatically alert you that a minute ago, there was nobody there, and now there's 30 people. She'll alert you that there's violent behavior that it sees, and it could be stopped prior to it starting. There's so much within the platform, and we are showing some very unique features that have just come off the press, that unfortunately I can't tell you, but please stop by our booth and check them out, because they are as changing to our industry as Ella is in herself the new feature set that we've added.
Ron: Alright, so this is almost breaking news. You're telling me and the audience that there's going to be game-changing technology advancement with Ella, and that's all you can say now, but in a few more weeks, come to the booth, and they can see it, and demo it, correct?
Ron: Oh, that's-
Matt: If your jaw doesn't drop, I'll buy you a beer.
Ron: There you go. Hey guys, free beer offer right there. You heard it here first. McKenzie says, "This is incredibly cool. How many years has this technology been in the making?"
Matt: We've been cooking this, McKenzie, for almost two years. It has not been something easy to do. I don't think I could've done it without Google's participation. As I said before, I was really, really blessed that they were so into it. Because for them, they saw this as a totally different use of technology that already existed that no one had thought of yet. So for our industry, it's a game-changer. But also for them, you think about it from their side. It probably opened up a lot of ideas of what the data that they've accumulated over all these years could be used for, that are above and beyond doing a web query looking for a used truck. That point when I did that query and I realized, "Why can I do this for the whole world, and yet I can't find a guy breaking a window in a car unless I take three hours?" So it really all came together, we're fortunate and blessed that they were into it as much, if not more than, us. And we're now partners in it. And when they did a testimonial about it that said it was one of the best uses of their algorithm they've every seen outside of Google's query. So it's really just-
Ron: Wow, that's pretty spectacular. So I'll throw up another comment here. Let's see here. Well, I did throw that one up there. There's Magnolia, she says, "I can't wait to see your booth at CEDIA. Brilliant, intuitive technology."
Matt: Thank you so much, look forward to meeting you as well. And I think I saw another question. It is based off Google's AI platform, and that's the GCP Deep Learning Product.
Ron: Yes, that's someone, One Firefly asking that question. And Ted says, "I'm building a house, I clearly need Ella."
Matt: Yes, you do, Ted. And I know somebody who can help you get it.
Ron: Yeah, exactly. If only you knew someone. That's fine. Now, Matt, just to broaden this out a little bit, and if you don't mind if we stay on the subject of AI?
Matt: Mm-hmm (affirmative).
Ron: Where else do you see AI fitting into this industry, fitting into the life of the integrator? Maybe broadening it to cameras, recorders, and/or wherever... You're on top of this AI thing. Where else is it going to make it into home integration?
Matt: One of the things, I'll give you a hint on what we're doing, is going to be based around facial recognition using AI technology. And something that's really interesting about that is AI is at it's infancy right now. People are just understanding how to leverage it. But the possibilities truly, Ron, are endless. I'll give you an example. We look at automation now at truly being automated, right? But in reality, is it really automated? Because I have automation in my home, and I have to pick up a device. I have to open the device and turn it on. I have to choose an application, I have to open the application. I then have to choose the room in which I want to control, and then basically I push buttons to make lights and shades and TVs go on. Is that really automation?
Ron: Alright, so I think I see a crystal ball. I think I've got my magic eight ball, and I'm shaking it. I think what you're going to tell, and you're not telling me this, so I'm just predicting.
Matt: Please, guess.
Ron: I'm predicting... And you mentioned the name Savant.
Ron: So I'm predicting that you're going to offer, at some point, facial recognition to where the system knows who's in the room, and therefore if you speak to the room or activate a command, it's going to follow your presets or preferences, versus someone else's.
Matt: Now that's a pretty good idea, Ron. I should think about-
Ron: Is that a good idea or what?
Matt: It's a good idea.
Ron: If only I knew somebody that can make that happen.
Matt: Well you know, here's the reality of AI. In the future, I'll give you a brief . So what happens now when you come home? You come home, you park your car, you get out of your car, you go up, you unlock your door, you have to turn your alarm off. You then turn your lights on, you turn your AC to the temperature that you wish it be, you flip the channel on that you like to watch the news in, and maybe you start cooking dinner. Those are a lot of things you just had to do. Now what if you told you, you walk up and the camera recognized your car. It knows it's me coming home. It unlocked my mag-lock. It disarmed my alarm, prior to me getting to the door. As soon as it recognized it was me, I already told it that I like it at 71 degrees, I watch channel 432, it's Fox, and I like my lights dim. So what if I walked into my house and my door was unlocked and my alarm was off, and all my channel went on, my lights came on. AC reset itself. And then when I left, it did the exact same thing in reverse. That's AI. That's really automation, when you don't have to do anything. When it-
Ron: And I don't see how you could do that without cameras.
Matt: You can't. Well, you could do with motion sensors, but it wouldn't be able to identify unique people. So for instance, AI, also, people have to understand, it builds a brain. And the longer it runs, the smarter it gets. Ella able to understand commonalities that happen in scene, and I'll give you an example. If you had Ella at your home, and it was looking at your driveway, and at the end of the week, it noticed between 3:00 and 3:15 a school bus pulled up every day at your house, at the end of the week, it's going to give you what it called commonalities, and it would like to ask if you'd like to name those. So now we're going to call it "kids returning home from school." The next time you wish to query your kid getting home from school, you now ask Ella, "Ella, please show me my child getting home from school today." It already commingled it with the bus and the delivery. That's AI. A lot of people talk AI, but they don't deliver AI. Another thing would be, you mentioned what are other uses of AI? AI is able to do what's able to do product movement and product missing. So if I had a camera in your home, it's going to automatically memorize where everyone of your paintings are, where your expensive sculptures are, where your TVs are, and if any of those get moved, it's going to immediately recognize that the scene changed. That's another use of AI when it comes to theft. Ron, I could sit here for days-
Ron: That is a fascinating new frontier. I'm going to call the that future. That is an exciting place to be.
Matt: It is. It's actually the present. It's right now.
Ron: Wow, that's amazing. Well, it's my future because I'm building a new house, so now I know what I'm about to have in my house. How's that?
Matt: Absolutely, absolutely.
Ron: That's funny. Now, I want to, well there's lots of comments coming in here. Here's a comment. Adrian says, "Oh man, I need to figure out a way to integrate Ella with my Samsung Smart Fridge."
Matt: Sure, we can do it. The Smart Fridge is also a hub that's linked to Internet, and it's using sensors that are telling you're out of something. For instance, it has a milk sensor, or whatever it may be, and when the weight gets to low, Smart Fridge means it'll automatically order it. That is AI. It's actually taking and learning from what you do. There's a huge possibility that we will be interfacing Ella with multiple different types of platforms in the very near future. I can't tell you what-
Ron: Hint, hint, audience. Stay tuned. Be watching IC Realtime closely. Here's Thomas. Thomas says, "Very impressive, looking forward to knowing more about it."
Matt: Thank you, Thomas.
Ron: I'm not going to lie, I knew Ella existed, but I'm really pumped to get Ella and put her to use, sooner than later, hearing you talking about it, Matt. Real quick, I want to jump, and we've been going for about 30 minutes here. And I'm mindful of your time, Matt. So just really quick question, and I'm curious. In the news, this is a news-based question.
Ron: You have Trump and China going at it in terms of tariffs. And they're going at it back and forth it. The latest was that China was going to now increase tariffs on another $75 million in goods. I don't know how that affects IC Realtime, I don't know how that affects your dealers. Can you shed some light on that, on this tariff war that seems to be going on?
Matt: Yeah, I want to start with the fact that most people disagree with what he's doing, and I fully agree with it, even though it affects my company in a negative way. China, for many, many years, has been stealing our intellectual property. Believe it or not, I had it done when I created a product way back when, in the optical, when we were doing spherical video. It's not fair, it's not right, and something needs to be done. So I'm actually pleased that something is being done, because I believe for the long run it's going to benefit everyone, including our industry. Now in the short term, is it painful? It is. The good thing is it's painful for everybody. You've got to remember, 75 to 80% of electronics all come out of China. That's not my opinion, that's fact. So it's not just affecting the security industry, it's affecting TVs and tablets and cell phones, and literally almost anything else you can think of. But I think what it's doing also is it's creating very clear lanes for people who are willing to change. So something for us that I find, you know, I try to take any negative and turn it into a positive. Are we getting increases on tariffs from goods coming from China? Yes we are. Are we passing them on to our dealers? No, we're not. We're absorbing them in full. I refuse to let my dealers suffer for something that's not in their control. So it just means I make less money, and I'm all about that, because it services my clients better. Most people are raising their prices. But what we've done is, far before this came into effect, we've been investing in company out of Korea. And it's a full-blown factory that is not 100% producing for IC Realtime. In the next three months, our first eight skews will be released. They will be TAA trade compliant, DOD, DOT compliant. They will have no tariffs placed on them. And they will be able to be put into any military GSA gov base out there. By year's end, we hope to have 30% of our stock coming out of Korea. And by mid-2020 I expect 75% of my product line to be out of Korea, and not China. So I do like this, because I believe it's going to clean a lot of the small players who are just racing to zero. I think they're all going to fade away, because they can't absorb these tariffs. They don't have enough margin to begin with. They're trunk-slammers, if you will. I don't mean to be mean to them, I know there's a place for them. But they don't do any of us any good, because all they do is race to the bottom. So I think in a way I'm pleased about it. And what I'm really pleased about is that within another eight, nine months, we will have a turnkey solution having nothing to do with China whatsoever. And that's going to be something very few companies in my space can say.
Ron: I have never personally been a manufacturer, but I've heard of the IP concerns with China, for maybe forever, I've heard of that issue. For the vendors, manufacturers like yourself, that would send your gear over there to get manufactured per your specification, how did that... And not for you personally, but maybe conceptually, how does that theft work? Is it that you have to give them all your innards and plans, and as a result, some of that IP ultimately goes to people that it shouldn't, and thus they start producing that gear illegally? Or maybe for the novice, how does that theft happen?
Matt: A lot of ways, Ron. I would say the most prevalent is reverse engineering, which is basically just acquiring a product, disassembling it, seeing how it's built, and then making one of your own that mimics that. That'd be the number one way that you take intellectual property. It's very hard to disprove. You also have two totally different legality systems, being here and overseas. So even if you had a rock-solid, iron-clad case, what exactly are you going to do with it? You're going to open litigation in China? That's not goin to work, they don't allow it. So it's really been unfair, but back to your question, which is how is it done? Reverse engineering is number one. And then they pull apart the software streams. And they take the strings and the dines and the codes, and they recreate it. It's not as difficult as you think, if you're in the manufacturing world.I could do that to someone else. I would never do it, because I don't think it's correct. So that was kind of when I mentioned that I'm happy this is coming about, even though there is a pain that's caused from it. Because this is long overdue. And it's really unfair that people will brilliant ideas, and they spend their life savings on them, and they create these fabulous solutions, and then someone with no creativity, no imagination, just steps in, literally steals it out from under them, and there's nothing they can do. That person goes out of business, their life dream ends, and the company overseas then benefits. I don't see any fairness in that at at all. So again, it's not hard to do, Ron. Reverse engineering would be the first way to do it. But there's also theft in all kinds of ways of intellectual property. It's hard to defend against patents that are even granted, because what do you defend against? Where are you going to hold litigation?
Ron: Yeah. So is it that moving the manufacturing to countries that aren't China and that have better legal systems, is that really the answer?
Matt: It is, you know. Thankfully, it comes with it. The initial onset, why do you move away from China is obviously the ban. And the strong negative stance that America's taken on anything being imported from China. In one way that's a little foolish, because most every chip and processor has something to do with China. You'd be very hard-pressed to pick up any piece of electronics that you have in your home or your business and not find whether the product was made in China, but components inside it were made in China. The laptop, the ear plugs you have in, the phone that you carry. Every one of those is either assembled or made in China, or has major components that are coming from China. So I think that it's great to see this spread out. China has caused a monopoly, recently. And you've seen brilliant countries like South Korea and Vietnam, and different areas overseas, like Taiwan, really suffer. Because their technology's getting stolen every day as well from China. This is not just an American problem, this is a global problem.
Ron: That's fascinating. It's interesting to hear your perspective as the manufacturer that's had to fight that battles, and to hear you say, even though there's some short term pain in terms of financial penalties that you're having to pay, but long term you see the benefit for the United States. And so you're-
Matt: I'm hoping that there's incentives that come out from the U.S. that allow open manufacturing here. We looked into it five years ago, and the price was just non-behoovant of even starting, because the labor's five times as much, the taxes, and the factories, and all the land that goes with it. There's no grants, there's nothing to help it. So I would hope not only that we do what we're doing now, but I'd love to see America start incentivizing people like myself to bring manufacturing back to state side. I would love to be here, rather than Korea. The problem is, is it's not cost-efficient. It's almost impossible.
Ron: No, that's understood. I'm going to throw up a comment here from Allison. She says, "Awesome interview, great seeing Matt on the show."
Matt: Thank you, Allison.
Ron: And Adrian, his comment was, "Fascinating." Matt, I'm again mindful of the time, and so I'd love to close with a topic focused around our audience here, the integrator.
Matt: Of course.
Ron: And as a business professional, CEO Executive, you're running a very successful company, one of the leading companies in our space. And you've worked with integrators for many years, decades.
Matt: Yes sir.
Ron: Do you mind sharing some advice? A lot of our audience are integrators, from owners to GMs, all the way through the organization to the technicians, speaking about some things they perhaps could be mindful of to maybe be better businesses or to grow more profitably in the years ahead?
Matt: Absolutely. I think it's a great question. If I were to give one example, or should I say, if I was to give any advice to our listeners, it would be stop being a one trick pony. I see too many people still doing one or two things. Meaning, there's still alarm people, there's still video people, there's blind people, lighting people, shade people. There is theater people. You need to be an integrator nowadays. And what I try to tell my people is become as familiar as you can with every component that touches the IOT or the connected space, because the eventuality is your product will have to work with it to. So my advice would be, if you're an access control guy, get into home automation. Get into the IOT connected space. Even when you talk about simplicity like Alexa. Alexa is really far more advanced than everybody gives her credit for. And I'm not just speaking of Alexa, I'm speaking of that type of product that's coming out. What did it do? It basically took a little microphone that allows you to connect a cloud through an Internet connection, and basically be a voice Google. But Alexa's now migrating into controlling everything in the home. So I see a lot of my dealers and they say, "I don't want to integrate with Alexa. That's a plain old, off-the-shelf, Best-Buy product." My answer to that is, I disagree with that strongly. Because we're sending to the end user, and the end user does want to use Alexa. The end user does want to say, "Alexa, turn on my lights, turn off my lights. Alexa make the AC this temperature." So I think it's less what we want than what they want. Nowadays the end users, the end consumer are much more educated than we would like to believe. They carry Smart Phones, which in essence are brilliant. They have devices throughout their house that you can buy at Best Buy for $300 that give you basic automation. So when I hear people say, "I'm not going to integrate with Alexa," I look at that as why? Why wouldn't you say, "Oh, Alexa's an excellent voice system. I can tie her into my automation, all your lighting, your security." We have an APK that runs with Alexa, so that when you're watching TV in your living room and the doorbell rings, I say, "Alexa, bring up front door on channel one." And she comes up. Why would I not what that? So although you look at it as a competitive device, I think people have to start back to your question. Every little device that lives on the Echo system is going to be very important to communicate with. Whether it's a thermostat, whether it's a smoke detector, whether it's your blinds, or your lighting, or as one person mentioned, your refrigeration system. Everything in the next 10 years will become an IOT device. So my advice is learn as much you can about your competitors, if you even see them as such. Learn as much as you can about the drivers of what your customers want when it comes to more off-the-shelf solutions, like Apple Home, Google Home, and all those things. And stop being opinionated about what you want to sell, and make sure you're able to sell things your customer base wants to buy. Does that resonate well, Ron?
Ron: Loud and clear. I think that's a brilliant perspective, because you and I both have probably heard so much hating on the Google Voice and the Alexa product to look at it from the other perspective. If the consumers want it, we're here to serve their needs there. I think that's-
Matt: Ron, I think we're on that path to reader-mentality, and they reason I justify it is this: If you'll notice in AV, how long did it take for the large players to get involved? Long time.
Ron: Yeah, quite a while.
Matt: I've been around almost 15 years, and you've just seen the in last 18 months, really Apple and Google enter into this space. Do you know why? Because they can afford to be last. They want to make sure that the industry is mature enough for them to step into it. They want to watch everyone make mistakes, because they have enough money to push through, and they don't have to be first. But the telltale is, when you Google, and Facebook, and Amazon, and Apple all embrace IOT, automation, connected home, it's not longer an "if". It's now. So there is no, "I'm not going to play with them." You're going to be out of business if you don't start playing with them, because the consumer... If you give them names to choose from, and I ask you, "Oh, Crestron, Savant, Google." Which one you think they recognize?
Ron: Crestron, Savant, Google? Google, of course.
Matt: Right. So they don't understand that the commonality, and the injection that they have, that connection. You know, Apple has a cult following. Whatever Apple creates, doesn't even matter if it works well or not, they're going to buy it. So if you don't support it and make sure your gear interfaces with it, who do you think they're going to leave of the job? Apple? Or you? It's going to be you, not Apple. So I think it's one of those things maybe you either join them and make things work with them, and embrace them. And if you really think you're going to fight them, then good luck.
Ron: Get left behind.
Matt: I don't agree with you, but who am I to tell you what to do?
Ron: No. Well, there you go. Matt. Straight from an experienced veteran's mouth. Matt, thank you for joining me on episode number 86 of Automation Unplugged.
Matt: Thank you for having me, Ron. And I really do appreciate all your viewers and the comments. I'm grateful to have the people asking questions. Anybody, please come visit us at CEDIA. I'll be in the booth. Can't wait-
Ron: What booth are you? Do you have that top of mind?
Matt: You know Ron, I wish I did.
Ron: Wait a second. I'll get it. I know it's on the homepage of your website.
Matt: I apologize for not knowing my own booth number.
Ron: Well, if you asked me mine, I don't know mine off the top of my head, either.
Matt: Okay. I'm full of knowledge, just not that answer.
Ron: There you go. Alright. I'm going to get it really quickly here, because I know... There it is, you're in booth 1721.
Matt: That's it. 1721.
Ron: There you go. Now, just don't ask me mine. Because I'm not even where you are. I didn't put mine on the front page of my website. I actually saw that, I was like, "Man, that's a really good idea." So later today, you're going to see it on the front of the One Firefly site.
Matt: That's awesome.
Ron: That's funny. Well, Matt, thanks again, sir. And we'll see you in a few weeks at the show.
Matt: Take care, thank you so much. Bye.
Ron: Bye, now. Well, guys and gals, there you have it. Episode number 86. You have Hagai, Hagai says, "Very cool." Thank you sir, appreciate you watching. And again, thanks for... There's Jerry, Jerry actually just posted... Yeah, actually there's a bunch of you that are posting the booth number for me there. Jerry says, "1721", thanks for putting that in writing, Jerry. And, yeah, everyone. Thanks for joining me for episode 86. That was a lot of fun. Matt is full of energy and ideas. And those guys and girls over at IC Realtime, they're kicking ass and taking names. And we're very honored Matt on the show and have him share his insight and opinions. And on that note, I'm going to finish with a plea. If you don't follow OneFirefly on Instagram, please go over there and check us out, and follow us. We're over 800 followers now, which is kind of cool. Keeping in mind, we just started our Instagram back in September, at CEDIA last year. So we're almost at a year, and if you're not following us, please do so. And in terms of these shows, even though I am moving, and I'm going to be in a hotel later this week, for the next month, because of my housing situation, were still planning to come to you every week with a show. So stay tuned. You'll notice also on our page, we're now scheduling these in advance. So you're going to see the schedule notification, and then if you want a reminder, you can sign up. And you will ultimately be able to get notified. I do have Hagai, he just posted a comment. What did he say here? He says, "We have their system in Easton. The police department loves it." So I'm assuming he's referring to the IC Realtime, probably the Ella system. And that is the new Access Networks, Easton, Pennsylvania office. So that is pretty awesome to hear, Hagai. So everyone, again, I'm going to let you get back to your regularly scheduled program. And I will see you next time, on the next show. And until then, be well.
As CEO and co-founder of IC Realtime, Matt Sailor has over 20 years of executive and management experience in innovation in the security industry.
Ron Callis is the CEO of One Firefly, LLC, a digital marketing agency based out of South Florida and creator of Automation Unplugged. Founded in 2007, One Firefly has quickly became the leading marketing firm specializing within the integrated technology and security space. The One Firefly team work hard to create innovative solutions to help Integrators boost their online presence, such as the elite website solution, Mercury Pro.
Resources and links from the interview:
- GCP (Google Cloud Platform)
- Intelligent Video Surveillance Search Engine Ella
- Savant and IC Realtime Partnership Press Release