Making connections

CR: Hello and welcome to Silicon Valley Bitesize, an update on the tech sector from the Allianz Technology Trust. I'm Cherry Reynard and with me today is Mike Seidenberg, manager of the Trust, so welcome Mike.

MS: Good to see you.

CR: Now today we're going to be talking about the Internet of Things. Now, somewhat unfairly, this seems to have been associated with wearables such as Fitbits, but it actually has far more important and wide-reaching uses. I wonder if you can start by talking about some of those areas.

MS: Yeah, I mean, I think you hit the hammer on the nail in that traditionally people thought of them as wearables - whether that's exercising, kind of activities that maybe aren't, you know, super important. But if you think about the opportunity here, it's really about data being collected off devices everywhere. And if we think about what that means in a hospital; I mean, in the hospital, for example, my brother is an ER doctor and one of the critical flows, one critical bottleneck, is moving patients from the ER into another room so they can see the next patient in ER. Something like the Internet of Things really makes that much more doable, right? You actually know where that patient is, you know you have some type of sense of progress based on equipment, et cetera. So, I think that was always an interesting real-world example for me just when I was speaking with him about in a dream scenario, what would be best for an ER. And I think the reality is today we're living in a world where that flow can be improved vis-à-vis the Internet of Things. You know, there are lots of different examples if you think about supply chain, if we think about manufacturing, and if you think of logistics. You know the list goes on and on and on. I think if you want to use a kind of more common-day thing, think about replenishment within your old household around core items. I mean, I think that that's a little far-fetched today, but it's not out of the realm of possibilities, right? Especially if you think about, maybe think of a college dorm and making sure that they have the right amount of inventory for the food, for students they're feeding. I just think it really boils down to the ability to access data from the location or from the place that you need to access it. And that really becomes reality with the Internet of Things.

CR: Absolutely. So, the idea of kind of smart fridges kind of doing the thinking for us. The other context that I've heard about the Internet of Things is its role in addressing climate change. So, monitoring weather patterns and in agriculture and those kinds of things. I wonder if you can discuss some of those and where it's happening and real-world examples.

MS: Yeah, I mean, here again, there are lots of examples, but I think that one of the best examples is a company called John Deere, and probably everybody on this podcast is well aware they make agricultural equipment in addition to other things. But if you think about, you know, if think of harvesting, fertilizing, and planting, those three elements really are very dependent upon the weather conditions and what the expected weather conditions are. Deere is putting intelligence basically at the seed level, at soil level right, when they actually insert the seed into the ground. If you've ever seen where they do it, it's actually really fascinating for me as somebody who invests in companies, that you know, primarily work in ones and zeros. It's actually cool to see a piece of equipment and how it works. But I think that what you're seeing is the melding of technology with traditional industries and making them do things more efficient, more effective. I mean, some of the things we've talked about previously on these podcasts - but bringing it into a very real-world example - in the John Deere one. But look, they’re not the only company doing that, but I think that it just goes to show you that inserting intelligence where it can add value really makes sense. And it’s cost effective today vis-à-vis, you know, we’re living in a world where you can bring back the data very cost effectively and you can send that out very cost effectively.

CR: Yeah, and you mentioned health care there. Again I’ve heard about they’re useful for keeping track of people, particularly with care of the elderly with Alzheimer’s patients, and things like that. I wonder if you can talk about some of the other uses in healthcare that you’ve seen.

MS: Yeah, I mean, some of the other uses are people with heart conditions, right. People with diabetes, making sure, you know in the diabetic example, it’s so critical for that patient that if their blood sugar drops below a certain level, that, not only do they need to do something as the patient, but making sure that the physician knows that ‘Mike Seidenberg’ had an event last night. What does that mean in follow-up care? Ultimately, the goal here for all healthcare systems is for them to be as proactive as possible, right? Think about people who have had pacemakers, or potential heart issues, monitoring those, I think they’re called heart rhythms – I’m not a doctor – and making sure that the people who need to be notified should something happen, are notified. Or more importantly that, here again, they see something out of whack in an overnight pattern and they get me to the hospital as opposed to having an event, which could be catastrophic, and doing that in the ER room. And remember, everything at a hospital level, the more proactive we can be to keep people out of emergency rooms for conditions that can be treated elsewhere, the better it is for everyone from a cost of delivery perspective, right? And ultimately, the goal here is to use technology to basically improve outcomes. Which in this case, you know if you think about improving outcomes, means that people are living longer, getting to see their grandchildren, et cetera, et cetera, and doing it in the most cost-effective way. And that’s not to be queued up in the ER room, right? It’s to basically, ideally, go to your doctor’s office so they can proactively treat that condition, whatever it is. It’s not just hearts, it’s not just diabetes, it’s people who have had post-cancer treatment, it’s all types of disease states and that’s really interesting. And remember it's also really healthy people, I see healthy people with their smartwatches looking. If you like to exercise – some of my friends wear these very sophisticated watches and they really exercise around their heart rate more than saying, oh I want to use this Stairmaster for 45 minutes at high-intensity. They really shoot for a target heart rate or target zone.

CR: Yeah, absolutely. So, in terms of the investment case, who is benefitting? Is it the makers of the hardware, the things, if you like? Or is it the analytics providers – those who are providing the data? Or is it, kind of, Cloud providers? Or is it all of the above?

MS: I mean, I think it’s all of the above, probably, with the exception of, generally speaking, hardware and technology hasn’t been a great place to be. It tends to really cost down, and it becomes almost a commodity. I think the real value here is obviously the analytics and the interpretation of the data. Obviously, you’re going to use Cloud services because there’s a lot of computation needed. There’s obviously the data transfer aspect to it because you’re basically running large amounts of data over various networks which is beneficiary to a variety of companies. Traditionally, we haven't been big investors in the wireless service providers. I don’t think that probably changes, here again, I think unfortunately they’ve done a poor job long-term of really capturing the value that people get off the data that goes across their networks. I’m not sure how that changes today. So, I think the real value is the companies that create the applications and services to facilitate what that data means, and to be able to look at it and to think both, proactively – what should we be doing here? That’s who I think probably wins. It’s a fairly nascent area. I think you’re going to have to have strong data science credentials to do well as a company. But it’s exciting, I know I’ve said this a lot on these calls, but we’re living in an era where you can do compute and storage very cheaply. And that just allows the mind to wander, if you’re in technology, you can think of a lot of things with that paradigm.

CR: Yes, absolutely. It’s interesting, its ability to completely transform industries. The one I was thinking of was hospitality and how that changed during the Pandemic and became electronic keys and contactless, and those kinds of things. Is it your view that that has been quite transformative in industries like that?

MS: Well, I think it’s becoming transformative. I was in a hotel recently where you could check in via the app on your phone, which I thought was really interesting. It was a Marriott property – I think they’re called Bonvoy now, they changed their name. At any rate, I think that here again, ultimately, nobody buys technology for technology’s sake. In the hotel example, what I think they really realise is people are fatigued when you get to a hotel at times, right? Especially if you’re travelling for business. People just want to get into their room in the manner that requires the least touches between the front desk, potentially a bell person - not that I’ve used one in a long time. So, I think if you can bring technology into the fold to make that process just easier, it’s such a win. If you think about it, using - and here again this is probably less the Internet of Things - but more like, hotels will now notify you - actually this is the Internet of Things - because they will notify you when your room is ready and they will send you directly to your room and you can use a smart device to basically enter the room and begin your stay. So, I do think it really boils down to better customer outcomes in the hotel example. Plus, remember there’s a decreasing cost of labour there, right? You’re allowing people to do more people with their jobs if they’re not having to service the customer around that check-in. I imagine that’s a pretty lengthy process so I imagine that person at the front desk could be doing other things or solving real emergencies or real problems.

CR: Yes. And do you have a sense of where the next wave for this technology might be? Are there certain untapped sectors that might benefit from it?

MS: I mean, not 100% because there’s just so much going on. But I think a lot of industries, you know, I think logistics is one, and there’s some really interesting companies that are using it – think about if you’re an airline and the amount of equipment at that facility, where is it and what’s it doing? Is it dormant? Think about an oil and gas company, right? It has far-flung operations with really expensive equipment that no-one, if you talk to them, a lot of people don’t really know the status of that equipment. Is it being used in the best way? I think those are real dollar-saving problems to be solved. So, I think in terms of manufacturing, I think in terms of logistics. Here again, when you add intelligence to data you just get really interesting outcomes, and I think that’s the world we’re living in.

CR: Great. We’ll wrap up there. Thank you so much, Mike, for those insights today.

MS: Good to see you again.

CR: If you have any questions on the Trust, please do go to the website allianztechnologytrust.com or contact one of the sales team, and thanks so much for joining us.