IKE - IKE GPS Group

[BlackPeter]

Still cant help but feel they are undervalued.

Isn't that what holders (of any stock) always think? Otherwise they wouldn't hold, wouldn't they?

Looking at IKE ... while they may or may not have a useful tool for the utility industry  - so do many.

I used to work for decades in an industry providing products and services to utilities (like electricity suppliers and lines companies), transport (like railways) and public emergency services (like fire service and police) all around the world. To sell them something you need not just to have a good product, but you need detailed knowledge of the specific industry as well the right (long term) connections into the respective organisations. Bit like doing business with China. Personal connections and trust are often more important than the best product.

Getting into this trusted club of suppliers is very difficult - and takes often decades of investment.
I don't know, where IKE is on this journey, but doing it is generally very tough for start ups. And lets face it - it makes sense, customers prefer to buy from big organisation they know well and can trust. Significantly reduces the risk that they end up with solutions which won't be maintained or where the supplier hasn't got the means to fix any of the inevitable issues.

So - how do you measure the "value" of this start up? (scenario 1) By its earning potential if everything goes right and all relevant utilities need the product and only can buy it from IKE? Or (scenario 2) do you look at its likely uptake and earnings potential (as compared to a statistically relevant sample of other start ups)?

I am sure the answer related to them being undervalued would be quite different between scenario one and scenario two. 

[Minimoke]

Isn't that what holders (of any stock) always think? Otherwise they wouldn't hold, wouldn't they?

Looking at IKE ... while they may or may not have a useful tool for the utility industry  - so do many.

I used to work for decades in an industry providing products and services to utilities (like electricity suppliers and lines companies), transport (like railways) and public emergency services (like fire service and police) all around the world. To sell them something you need not just to have a good product, but you need detailed knowledge of the specific industry as well the right (long term) connections into the respective organisations. Bit like doing business with China. Personal connections and trust are often more important than the best product.

Getting into this trusted club of suppliers is very difficult - and takes often decades of investment.
I don't know, where IKE is on this journey, but doing it is generally very tough for start ups. And lets face it - it makes sense, customers prefer to buy from big organisation they know well and can trust. Significantly reduces the risk that they end up with solutions which won't be maintained or where the supplier hasn't got the means to fix any of the inevitable issues.

So - how do you measure the "value" of this start up? (scenario 1) By its earning potential if everything goes right and all relevant utilities need the product and only can buy it from IKE? Or (scenario 2) do you look at its likely uptake and earnings potential (as compared to a statistically relevant sample of other start ups)?

I am sure the answer related to them being undervalued would be quite different between scenario one and scenario two. 

Its probably a mix of both scenarios
Its the earnings potential if things keep going right - doesn't mean all things. They just need to be on the right side of the ledger. And not all utilities. Just a decent share. In fact if there was market dominance the only possible path is down hill. And scenario 2 which is likely uptake and earnings potential . Looking at a statistically relevant sample isn't necessarily useful. We all know start ups are risky when you look at the numbers. So you need to dig under the numbers at the product, the Directors, the CEO, the staff and the market. And when i look at Ike I like what I see.

[BlackPeter]

Its probably a mix of both scenarios
Its the earnings potential if things keep going right - doesn't mean all things. They just need to be on the right side of the ledger. And not all utilities. Just a decent share. In fact if there was market dominance the only possible path is down hill. And scenario 2 which is likely uptake and earnings potential . Looking at a statistically relevant sample isn't necessarily useful. We all know start ups are risky when you look at the numbers. So you need to dig under the numbers at the product, the Directors, the CEO, the staff and the market. And when i look at Ike I like what I see.

Just wondering whether you could specify "I like what I see" a bit further.

I am sure we both have seen during our time as investors plenty of start ups with always nicely sold ideas, more or less successful capital rises, early product implementations and following that either a decade long battle (supported by regular shareholder handouts) or an earlier or later termination. Well, that's 19 out of 20 start ups. The last 5% are surviving longer, some of these are doing really well on the stock exchange and an even smaller number starts to not just survive but really return capital back to their investors.

Not sure I remember lots of successful start ups selling to utilities, though. Do you?

Just want to learn and understand what you think IKE has, what the others haven't.

[Minimoke]

Just wondering whether you could specify "I like what I see" a bit further.

I am sure we both have seen during our time as investors plenty of start ups with always nicely sold ideas, more or less successful capital rises, early product implementations and following that either a decade long battle (supported by regular shareholder handouts) or an earlier or later termination. Well, that's 19 out of 20 start ups. The last 5% are surviving longer, some of these are doing really well on the stock exchange and an even smaller number starts to not just survive but really return capital back to their investors.

Not sure I remember lots of successful start ups selling to utilities, though. Do you?

Just want to learn and understand what you think IKE has, what the others haven't.

Here is the start of your learning https://ikegps.com.

The thing with utilities is that they are  essentially boring things that sit around for donkeys years and no one pays them much attention (Unlike say FMCG). But you traditionally need human labour to keep an eye on them. And hunan labour is getting more and more expensive. So you want to optimise what you get out of humans while letting technology do the donkey work. So when someone comes along and has offerings that provide solutions to known problems then that gets my attention. And the known problem is how do you service and maintain boring old things like power poles

[BlackPeter]

Here is the start of your learning https://ikegps.com.

The thing with utilities is that they are  essentially boring things that sit around for donkeys years and no one pays them much attention (Unlike say FMCG). But you traditionally need human labour to keep an eye on them. And hunan labour is getting more and more expensive. So you want to optimise what you get out of humans while letting technology do the donkey work. So when someone comes along and has offerings that provide solutions to known problems then that gets my attention. And the known problem is how do you service and maintain boring old things like power poles

I do understand the need for network maintenance and the desire to reduce human involvement. As I said - I used to work in an industry supporting utilities all over the world and do understand their problems.

A good process, good training and discipline typically solves the issues they have and reduces the failure rate.

And yes, tools (potentially like the ones provided by IKEGPS) can help to support such a process (if you have one). However - it is not hard to implement stuff like that using any good repository and some spreadsheet applications. Just look around the globe - plenty (well, near all of them) of regions do quite well running their lines without IKE tools, and the US is really not a good example for a country with a well run network. The hard thing is not finding and using a tool to support a process, but the hard thing is to implement a process in the first place and make sure it is followed. If you haven't managed to do that, than any tool will only turn a manually created mess into an automated mess.

So - I still don't see how IKE will conquer the world of US line companies ... I guess if their tools are not just good, but profitable, then there will be tens of local competitors around who can do the same thing (remember - you just need a good repository, a spreadsheet application and lots of discipline to make sure people document what they did and follow the rules), and most of them will have better connections to the US line companies than a start up from far away New Zealand.
 
But hey, I do wish IKE and its investors all the best. I really do. I am just wondering what their chances are that IKE ends up in the 5% of successful start ups vs in the 95% of failures.

[Minimoke]

I do understand the need for network maintenance and the desire to reduce human involvement. As I said - I used to work in an industry supporting utilities all over the world and do understand their problems.

A good process, good training and discipline typically solves the issues they have and reduces the failure rate.

And yes, tools (potentially like the ones provided by IKEGPS) can help to support such a process (if you have one). However - it is not hard to implement stuff like that using any good repository and some spreadsheet applications. Just look around the globe - plenty (well, near all of them) of regions do quite well running their lines without IKE tools, and the US is really not a good example for a country with a well run network. The hard thing is not finding and using a tool to support a process, but the hard thing is to implement a process in the first place and make sure it is followed. If you haven't managed to do that, than any tool will only turn a manually created mess into an automated mess.

So - I still don't see how IKE will conquer the world of US line companies ... I guess if their tools are not just good, but profitable, then there will be tens of local competitors around who can do the same thing (remember - you just need a good repository, a spreadsheet application and lots of discipline to make sure people document what they did and follow the rules), and most of them will have better connections to the US line companies than a start up from far away New Zealand.
 
But hey, I do wish IKE and its investors all the best. I really do. I am just wondering what their chances are that IKE ends up in the 5% of successful start ups vs in the 95% of failures.

I'm old enough to remember the days when we did math on an abacus. Then we progressed to a slide rule. Then calculators came out. Then spread sheets came out. And IKE now has a set of tools for doing things.

I have no expectation that it will conquer the world. I just reckon it will grow, be profitable, pay a dividend and then be ripe for a takeover.

[Minimoke]

Just wondering whether you could specify "I like what I see" a bit further.

I am sure we both have seen during our time as investors plenty of start ups with always nicely sold ideas, more or less successful capital rises, early product implementations and following that either a decade long battle (supported by regular shareholder handouts) or an earlier or later termination. Well, that's 19 out of 20 start ups. The last 5% are surviving longer, some of these are doing really well on the stock exchange and an even smaller number starts to not just survive but really return capital back to their investors.

Not sure I remember lots of successful start ups selling to utilities, though. Do you?

Just want to learn and understand what you think IKE has, what the others haven't.

IJE list Jul 2014.

No debt. $10m in cash. Receivables exceed payables by $3,9m At what point do you consider they are no longer a "start up"

[BlackPeter]

IJE list Jul 2014.

No debt. $10m in cash. Receivables exceed payables by $3,9m At what point do you consider they are no longer a "start up"

Quite easy - they are not longer a start up when they are able to demonstrate that they can sustain themselves for a prolonged period of time without he need to eat into their reserves. Lets call that "Break even" - shall we? IKE so far had losses in every year I could get my hands on (2024, 2023, 2022 and 2020 - not sure, what happened in 2021).

Before Break Even it's just a question of time when they need their next CR.

And yes, just in case you ask  - I consider e.g. PEB (I know, different industry) as an outstanding example for an eternal start up. They are  specialised on making up stories which pull money out of shareholders pockets and they live of that money. Not saying IKE is in the same game, but I do see the potential ...

[Minimoke]

Quite easy - they are not longer a start up when they are able to demonstrate that they can sustain themselves for a prolonged period of time without he need to eat into their reserves. Lets call that "Break even" - shall we?

Before that point it's just a question of time when they need their next CR.

So, Synliat, for example is a "start up"

[mfd]

Quite easy - they are not longer a start up when they are able to demonstrate that they can sustain themselves for a prolonged period of time without he need to eat into their reserves. Lets call that "Break even" - shall we?

Before that point it's just a question of time when they need their next CR.

What's the sample of start ups that go into the 95/5% stat you quote? Do you think the probabilities still apply for a fairly advanced start up like Ike, or could the chance of success be drifting well into the double figures by now? Maybe even over 50%?

[BlackPeter]

I'm old enough to remember the days when we did math on an abacus.

Wow. Mr Methusalem, I presume?

Then we progressed to a slide rule.

Slide ruler was invented in 1620 by Edmund Gunter of Oxford. I am surprised that you still remember this time, but I guess given your then amazing age its forgivable that you don't understand that slide rulers don't replace the abacus - they solved a different mathematical problem (dividing and multiplying vs. adding and subtracting).

....

Then calculators came out. Then spread sheets came out. And IKE now has a set of tools for doing things.

I have no expectation that it will conquer the world. I just reckon it will grow, be profitable, pay a dividend and then be ripe for a takeover.

What I am saying is - its not rocket science to do the maths (or write the SW). If it is profitable, every John, Dick and Harry will. However - the big problem for some of the utilities is lack of process and lack of discipline. Obviously - a solvable problem, but none where a SW tool will help.

Will they grow and be profitable? Well, I do not know, and you don't either. Too small numbers so far - and lets face it, some of the growth numbers look already like running out of puff. In this phase of the business sales numbers they should go up exponentially, and they don't. But again - good luck!

[Minimoke]

Wow. Mr Methusalem, I presume?

Slide ruler was invented in 1620 by Edmund Gunter of Oxford. I am surprised that you still remember this time, but I guess given your then amazing age its forgivable that you don't understand that slide rulers don't replace the abacus - they solved a different mathematical problem (dividing and multiplying vs. adding and subtracting).

What I am saying is - its not rocket science to do the maths (or write the SW). If it is profitable, every John, Dick and Harry will. However - the big problem for some of the utilities is lack of process and lack of discipline. Obviously - a solvable problem, but none where a SW tool will help.

Will they grow and be profitable? Well, I do not know, and you don't either. Too small numbers so far - and lets face it, some of the growth numbers look already like running out of puff. In this phase of the business sales numbers they should go up exponentially, and they don't. But again - good luck!

I suppose you didnt use coloured rods then?

Slide rule allows advanced maths over the abacus. (of course I dont remember that far back. But i'm equally capable of using google)

Just as well IKI have also entered the education game as well.

Who knows what tommorow will bring. I stay invested because i expect them to grow. If information comes to light that changes this view I'll exit my position.

[BlackPeter]

So, Synliat, for example is a "start up"

It is Synlait. And it depends on how you define "prolonged time". Synlait had at least 8 profitable years (2014 to 2022) and just screwed up afterwards. That's not a start up, but yes, in a way you could consider them as having returned to Start up - Status (will they live or will they die?), and a pretty broken one as well.

[Minimoke]

It is Synlait. And it depends on how you define "prolonged time". Synlait had at least 8 profitable years (2014 to 2022) and just screwed up afterwards. That's not a start up, but yes, in a way you could consider them as having returned to Start up - Status (will they live or will they die?), and a pretty broken one as well.

My broad view of IKE is that is no longer a start up. But is in its infancy.

[BlackPeter]

What's the sample of start ups that go into the 95/5% stat you quote? Do you think the probabilities still apply for a fairly advanced start up like Ike, or could the chance of success be drifting well into the double figures by now? Maybe even over 50%?

"Advanced start up" - I like that expression.

And yes, it is a good question. I remember the 95/5 rule mentions as well a 2 year time window.

No idea how the stats looks like for "advanced start ups", but I would be surprised if an extension of the start up status would mean an increase of the likelihood to turn profitable. It just means that they are still finding enough (old or new) investors happy to keep drip feeding them.

And yes, there are examples for "advanced start ups" turning profitable after decades of nurturing. Amazon was one of these examples, and Xero (closer to us) might have scratched the corner with FY24. But lets face it - we are now talking about one out of ten thousands or so. Does IKE belong into this group? I don't know.