What’s Wyatt’s “iPolice App” to stop shootings?

What's being teased for Wyatt's upcoming "webinar" pick?

This ad makes me sad in many ways, but readers have been asking… so let’s get you some answers.

Here’s part of the intro email from Ian Wyatt, who’s pitching a “urgent trade alert” that will be part of another of his webinars (or if you want to be old-fashioned, “infommercials”) to be hosted on Friday. We don’t know yet which newsletter he’ll be promoting, or whether he’ll give the name away for free to those webinar listeners or will just further tease it to get subscribers.

“NEW tech stock IPO secures America’s schools!

“Click here to become an ‘early investor’ today.

“In elementary school, I never prepared for ‘active shooters.’

“My teacher never put a barrier in front of the classroom door – and instructed me to hide under the desk.”

That’s probably true for most of us, and as a parent of school-aged children it’s genuinely horrific… not so much because I’m sure my kids are at risk, they’re still far more likely to be killed in my car on the way to school than they are to be shot at school, but because we can’t help but imagine what it feels like to be part of one of those communities, and empathize with those families. And, of course, it’s incredibly frustrating that the problem is getting worse each year, not better.

So what’s this have to do with making money? More from Wyatt…

“You see, I’ve uncovered a new “Smart Crime” technology that protects our kids… and secures our schools….

“I’m getting ready to “load up” on this stock. Frankly, I’m expecting 291% profits from this huge growth stock.”

So that’s intriguing… what other clues do we get before this webinar takes place?

“Why Atlanta, Baltimore and Chicago are 100% IN on this new tech.

“The fastest and easiest way to find ‘active shooters.’

“Why this is called ‘the Police Officer’s New Best Friend'”

So who is it? Well, the clues are limited… but the Thinkolator sez Wyatt must be talking up ShotSpotter (SSTI).

ShotSpotter has been public for almost exactly a year, it’s a still-small (market cap about $350 million) tech/service company that installs audio surveillance devices in cities (and now on some campuses) which serve as a “first detection” network for gunshots, and they sell cities an annual subscription to this service that will triangulate the precise sounds of gunfire and alert police about a specific “shots fired” location, often several minutes before a 911 call comes (if, indeed, anyone calls at all).

The business model sounds pretty compelling, and as they present it in their investor presentations it’s quite scalable, with relatively low installation costs that should, if they’re right about the fact that their marketing can get more efficient, let them improve margins consistently as they grow sales. It’s not entirely a technology solution, though, so it’s not as perfectly scalable as a software network — the systems are apparently still monitored by human beings who help to direct police officers to incident sites.

I don’t know that this will ever be a meaningful product for schools, though the company is certainly aware of the opportunity in the school market following horrific school shootings over the past decade or two, and has installed ShotSpotter systems in schools in the past (including a test in an Oakland school back in 2013, for example), but so far it hasn’t seemed to particularly catch on in the K-12 market. I don’t know whether that’s because the product is a bad fit for the need, or because the cost would seem very high for a lot of schools, or something else. It doesn’t seem that the indoor “Site Secure” product they used in that Oakland school is still a big part of the company, but they do specifically talk about indoor location specificity with their SecureCampus product that’s targeted more at Universities.

Financially, there’s some appeal here — it’s not a cheap stock, to be sure, and you shouldn’t expect a cheap stock when revenue is growing at 50%, but they are anticipating that they will be profitable by the end of this year, and if they can convince their core customers to continue with the system (or more importantly, expand it into new precincts and areas of the city), the scalability kicks in pretty nicely. They’re still so small right now that there’s opportunity even just in their core cities that can provide some basic growth — places with relatively high crime and a fairly large number of shootings, like New York City and Chicago and Baltimore — though to get much bigger they’ll have to get more cities on board… and they’ll have to make sure that their fairly high-ticket service continues to show some “return on investment” to keep earning a part of those tight city budgets.

Charlotte, for example, reportedly canceled the service a couple years ago — not because it didn’t work, but because it wasn’t worth the money… and with a lot of pressures on big city police departments to incorporate lots of new technologies, including other surveillance systems and body cameras, not all cities will opt to buy everything.

Right now, Chicago is by far their biggest customer, covering more than 100 square miles with ShotSpotter sensors by next year… with claims of excellent success in the most dangerous neighborhoods, but also some controversy. It’s also the best example of the company’s “land and expand” strategy to get new customers with relatively small installations in the highest-risk areas, and then convince cities to continue increasing their coverage area.

I haven’t looked into it enough to make any qualitative assessments about whether I think the product is worthwhile or will make a huge difference in public safety, but on the financials it sounds pretty good — very high revenue growth, emerging earnings, and, assuming the product renewal rate remains high, pretty good predictability from those recurring future earnings… everyone wants to have a cloud-based “subscription business” right now, so this certainly fits that trend.

There are a few analysts covering the stock, with guesses that they’ll earn something in the 18-25 cent range next year and close to a dollar in 2020, with rapidly improving margins — so you can certainly make a case for the stock, even at the relatively high price of $32 and a PE of about 35 on 2020 earnings forecasts. It won’t be low-risk, and a lot will depend on how many customers they can acquire, and whether the cost to acquire those customers will keep rising (as it did last year), but it is, at least, mathematically possible for them to grow into their valuation… and for a lot of tiny cloud startups, you can’t really make that claim with a straight face.

I’m not rushing out to buy ShotSpotter, and I don’t expect it to make any difference in K-12 schools, but it’s a decent small company and it trades at a price that can be justified given their growth rate. I’d want to learn more about other cities that have decided to buy or cancel the service over the past few years and form a stronger opinion about the efficacy and the appeal outside of the most shooting-prone neighborhoods in a few big cities, but that’s just my first impression after reading about the company this morning — when it comes to your money it is, of course, your call. So what do you think? Wanna jump on ShotSpotter before Wyatt talks it up on Friday, or before it hits the LD Micro conference this afternoon? Think it’s already too expensive? See some skeletons in the closet that we should be aware of? Let us know with a comment below.


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20 Comments on "What’s Wyatt’s “iPolice App” to stop shootings?"

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Sarah
Guest
0

I hope no one drops a book, bursts a balloon or slams a desk top just to get out of a boring lecture. ….how often will police ‘false alarm’ before they dont bother turning up at all. Still ‘fear’ will sell till that day comes.

mineral shoe
Guest
0

“I hope no one drops a book, bursts a balloon or slams a desk top just to get out of a boring lecture.”

In programming, you’d just keep inputting instances of that many more drop-books, balloon bursts, desk-slams, all other you can think of, differentiate the oscillations of these from the oscillations of sound from the guns, more honed and honed…. I think tech could reach it airtight eventually as to your drawback.

B Don
Guest
0
After the shooting starts is a little late . . . solving the problem (not necessarily the same as developing a successful business for investment) requires detecting firearms before they come within range of victims. While it is a difficult problem, there are some approaches that have passeed fundimental technology screening. The Federal research establishment (DARPA, FBI/Justice, research contractors, etc) have shown no interest over several decades (with a range of excuses), though I don’t know if it has been suggested recently, or if NIH has been involved. If it is to happen it’s likely to take some “unbalanced, overpromising”… Read more »
WALTER OROURKE
Guest
0
ADT and Vivint detection firms now offer similar products for detection of glass breaking and other sound detection items on their monitor installations to refine them for gunshots would seem to be a relatively simple addition for many of their existing customers including public buildings like schools or hospitals. Still it is an interesting use of technology to filter with an exact sound of a gun discharge over the range of weapons and their individual sounds vrs. other similar noise within a school and at other locations. Additional detection may be required to verify gun discharge such as air samples… Read more »
bstew
Irregular
17

Algorithms can be refined to the point almost no false positives but it will have little benefit if there is anyone nearby with a cell phone. 911 operators want quite a bit of in formation before they dispatch so a signal from a machine will be a challenge.

yukonjack
Guest
0
Most shooters are not criminals in the sense that they have a record. When a background check is done to purchase a gun, they never do a mental screening for possible mental type illnesses or drug usage to treat mental disabilities. This is why they miss 2 out of 3 shooters who have mental difficulties. You have to go to the source to fix this problem, or at least control it better. This is where technology and drugs fail miserably. They never access the root cause of problems. SSTI is another attempt to respond to the afterthought. There was a… Read more »
David
Guest
0

Does anyone know anything about Patriot One and their solution to the gun violence problem?

Rusty
Guest
0
I know little about this particular technology, but don’t discount it. They are likely just scratching the surface of it’s capabilities once AI replaces the human element. Gunshots generate an acoustic profile that is somewhat unique to the caliber and type weapon. The first gunshot would likely put nearby sensors on “high alert” (increase microphone gain), shift AI processing power to those nodes, and automatically start filtering background noise. An initial location would be refined as each additional shot was fired. Within a few seconds the location would appear on officers map screens, with info on number of shots fired,… Read more »
elk82070
Irregular
49
Bought a stake in SSTI back in August of 2017. I liked the technology very much and it’s application in particular. The concept of “shot recognition” and then “location” is of great assistance to law enforcement. Albeit, the shot recognition is after the fact and it’s application as a deterrent is marginal. I bought this one simply because I saw a specific use and they were the only game at the time. In a way, it is like a remote cam only this just senses sound. I have been pleased as the stock has tripled for me. In my opinion… Read more »
raesrealm
Irregular
15
The only tech I’ve seen yet that has any capability of preventing live shooter-bomber incidents is the portable, covert PATSCAN microwave system from Patriot One Technologies (PTOTF). They got FCC approval and started installing in Vegas hotels right after the Mandalay massacre, and I know they patrol the beltway in DC and NYC (probably others) in unmarked vans… these devices can detect concealed weapons without the perp knowing so authorities can apprehend them safely or even follow them back to their lair… This tech can keep them out of the schools, arenas, train stations, airports… before the killing spree begins!… Read more »
cagboulder
Member
7

@RAESREALM – I think I like your point that PTOTF for prevention is good, probably better than Shotspotter because that’s only for after the fact help.

elk82070
Irregular
49
As I said above, I do like the technology and application. I did see the Fall River failure. The technology is by no means a deterrent to gun violence. If sold that way, I would consider that a fabrication. It is a “response tool”. It is after the fact. Sadly, it is used to detect the shot and location. I believe that the idea is to assist law enforcement in accurate response to active shootings. Maybe a minute or even seconds of direction to a shooting will assist. It is just one additional tool in the toolbox. If Wyatt is… Read more »
cagboulder
Member
7

I think I like raesrealm’s point that PTOTF is for prevention, and that’s probably better than Shotspotter because that’s only for after the fact help.

jim
Guest
0

6/9/18 Energy & Capital issued a teaser by Alex Koyfman for a company that manufactures a device that can detect dangerous items from harmless items. The device can be concealed and unobserved. Does anyone know the name of the company?

raesrealm
Irregular
15

@jim: See comments above on Patriot One…

Mark Konkel
Guest
0
Milwaukee is using the ShopStopper systerm. There was great fanfare with the launching of the system. I really don’t see how a response based system can prevent shooting violence. The weak link is the response time of the Law Enforcement Officers (LEOs). They only respond after a shot is detected, and location determined. http://fox6now.com/2018/04/17/police-woman-shot-killed-near-22nd-and-orchard-in-milwaukee/ I’m thinking the only way to prevent indiscriminate shootings is to have some sort of Big Brother mind reading system that can pinpoint the individual is on site and actually getting ready to fire, and by then it probably is to late, since the response probably… Read more »
jcropper
Irregular
7

I think i just watched what he is refuringto its a rope with weights firedfrom a special gun the ropewrapes around the guy 2 times and locks to it self no tazer 3ropes he istied up

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