Kristin Myers: And today we are diving into IotaComm. Founder and CEO Terrence DeFranco is here with me at the desk. But first, let's take a listen to a little bit about IotaComm.
What if buildings could tell you exactly what they need before something goes wrong? Well, meet IotaComm. Its corporate roots date back to 1998, but IotaComm as we know it today took shape two decades later, when Solbright Group and M2M Spectrum Networks combined their technology, wireless network, and data capabilities.
Today, Chairman and CEO Terrence DeFranco leads a technology company as it connects buildings, schools, and industrial facilities to real-time data. And its secret weapon? Well, that's a nationwide portfolio of FCC-licensed 800 MHz spectrum that the company says has been independently valued at roughly $85 million.
Now, with its commercial platform live and paying customers on board, IotaComm is raising capital and preparing for its next phase of growth. Management is targeting a major capital event in 2028. So the question remains: Can IotaComm turn its connected infrastructure into its next big growth story?
And here with us now is Terrence DeFranco, Founder and CEO of IotaComm. Terrence, thank you so much for joining us today on the floor of the Stock Exchange.
Now, we all just heard that package sharing a little bit about IotaComm. But I'm going to just ask this question because, as I was telling you before, I was a little bit confused about what facility intelligence actually was. So talk to us a little bit about that.
Terrence DeFranco: Yeah. So, in this world of AI, right, everything is about data. So what IotaComm does is basically bring connectivity in the form of wireless communication.
So you see from the introduction, we own a bunch of FCC-licensed radio spectrum. So we have a network as our foundation for connecting things within large buildings like the New York Stock Exchange.
But data, really just gathering it, really doesn't have a lot of value. Applying analytics, understanding some pain points that customers have, that's really what our business is about. It's about collecting data from facilities and hard assets, digitizing them, and then using that data to help drive an ROI for those customers off those assets.
That could be in the form of energy savings, efficiency, extending the asset life of those machines and buildings. So it really is all about facilities and assets and being able to leverage data to really drive a better ROI for customers.
Kristin Myers: So let's back up a little bit because I want to hear a little bit more about your story. Because you spent 13 years on Wall Street running investment banking at Baird, Patrick, and now you're selling, you know, sensors to schools. So what happened? Why that change?
Terrence DeFranco: So a pivotal point in my career was 9/11. I left Wall Street a few years later, became an entrepreneur, ran a company that I felt a very strong sense of purpose for.
And the same thing with IotaComm. The beginning of our company is 2013, and that's how long I've been involved. And it really is about exercising a sense of purpose and really understanding that your work could have a sense of impact.
And that's, you know, truly what I think is behind not just IotaComm, I think really any early-stage company. Entrepreneurs are not driven necessarily by the dollars. A lot of times, if they are, they probably make some poor, poor decisions.
When you're driven and really focused on the impact and the value, you know, that's really what I think is the driving force. It was the driving force for me in the last company. It's the driving force for me here.
There were some transferable skills: corporate strategy, building companies, capital raising, and very familiar with the capital markets. So really understanding that.
And I'd say probably the best of the transferable skills is really the storytelling. You know, what are you trying to accomplish? What is that impact? And being able to really condense that down into stories that really resonate with people. And it's multiple constituents. It could be your customers. It could be your partners, your employees, shareholders. Those are some of the transferable skills that I was able to bring along.
And I think, you know, a lot of people who come from either consulting or investment banking especially kind of understand strategy, and then throw a sense of purpose into them, it's the makings of, I think, a good entrepreneur.
Kristin Myers: So you mentioned a second ago that your network is run on this FCC-licensed spectrum. Almost nobody in your category does that. So was that why this was really all worth buying?
Terrence DeFranco: Yeah. So it really goes back to the problem. Like, what's the challenge in the market? So we're all familiar with Wi-Fi, cellular, and Bluetooth.
We also know the challenges of connecting things sometimes in buildings. I know where I live, you walk into the grocery store, you're in the middle of the building, and you can't make a phone call. You try to expand Wi-Fi. You know, we all have experience with Wi-Fi in our homes. Sometimes it works, sometimes you move out of range, and that's just in a home.
So imagine if you're in a large commercial building, and I'm just referring to this building, you know, you try to use Wi-Fi to try to provide connectivity across the entire building. You have a hard time doing that with Wi-Fi, cellular, and Bluetooth.
So it's been a barrier, to say, a lot of friction for the adoption of data analytics in facilities like this. And so that was really the grounding of it.
FCC-licensed radio spectrum historically has tremendous value just simply as an asset class. So it makes for a great, valuable asset as the foundation of the business. But then now taking it and translating that into where it can actually solve for a pain point in the market is really what the whole business is about.
Kristin Myers: So continuing on about this licensed spectrum, obviously we all know about the pain points of dealing with Wi-Fi, but really kind of connect some of those dots a little bit more. What does that mean that you can provide, or at least promise, to your customers that perhaps some of those more Wi-Fi-enabled companies can't?
Terrence DeFranco: Yeah. So this all falls into a realm called low-power wide-area networks. So it's very different than what we're used to for our cell phones.
Wi-Fi and cellular are more broadband communications. Those are the things that we as consumers really demand. We want to be able to stream Netflix movies on our phone. We want to be able to watch live events. We want to be able to have all types of applications running on our phone.
So that mobile connectivity, broadband connectivity, cellular and Wi-Fi are great for that. But when you start getting into connectivity within buildings, that's where that trade-off happens.
And so what our network is able to do, while we're not able to transmit broadband content over it, the trade-off is that it can penetrate barriers very, very effectively, much more effectively than Wi-Fi, cellular, or Bluetooth. But also, the devices that operate on the network can operate on batteries for upwards of 10 to 15 years.
And so now you're talking about capabilities that can match a use case. So while we're not streaming Netflix movies, on the other hand, we're able to create ubiquitous connectivity across an entire facility, across an entire territory, cities and campuses and things like that, much more effectively. And not just from a feature standpoint, but from a cost standpoint.
And that really addresses the big problem of wireless connectivity and using them for smart buildings and smart cities.
Kristin Myers: Talk to us a little bit about the sales cycle, because when you deal with schools, you're dealing with, you know, school budgets and the school year. Sometimes they change that budget based on who is appointed. So how does that impact your sales cycle?
Terrence DeFranco: It impacts it big time. You know, so when you look across really what is the total addressable market for what we do, there's 100 billion square feet of commercial office space across the United States. So that's really the target for our solutions.
The key to it is really trying to identify which of those industry segments really feel the pain the most, and then you can more effectively work your way through that sales cycle.
Some are going to have faster sales cycles than others, but then some of those might actually be demanding more complex solutions. So as a company, I often describe our company as a 32-sided Rubik's Cube, even though it was pointed out to me recently that that math doesn't really work out.
Kristin Myers: I was just thinking about a Rubik's Cube, and I don't think it does.
Terrence DeFranco: No. Sometimes I think it's supposed to be 48, but anyway, it's the complexity of taking a platform like ours, where you've got connectivity, artificial intelligence, and now trying to match it to pain points.
And as we were talking about before, we're still in a fairly nascent market also. So you take that, you combine it with the different sales cycles, trying to adapt it to pain points that are in the market. It definitely is a lot of iteration as we go to market.
But that's part of the thing that our investors to date have really helped fund, was always a learning curve of being early and being in nascent markets. That's a great trade-off for investors.
Now it really is up to us to have identified those opportunities, and we think we have. Some of that was on the product development side, just making the product a lot more attractive financially for folks, but then also understanding what are the buying patterns that are happening in some of these markets.
K through 12, higher education, municipal customers, notoriously very tight budgets and, you know, a lot of bureaucracy to try to make decisions with them. But we balance that also by going into commercial markets where the impact is a lot more significant.
Smart manufacturing, for example: a lot of assets, a lot of facilities, a lot of moving parts, a lot of complexity. That's really what our platform is built for.
And then you take into account the fact that manufacturing facilities, even hospitals, hotels, they're very complex organizations. That's really where the intelligence from a platform like ours really shines.
So it's a matter of trying to be open to as many segments as possible, but stay focused.
Kristin Myers: That's right.
Now, IotaComm is private. So what has the market done with companies that sell sensors and software into buildings? We actually have two answers to that question.
So first up, let's start with Samsara. They sell industrial and fleet sensors by subscription. Now, the company listed on the New York Stock Exchange in 2021, and today Samsara has a market value of more than $22 billion on upwards of $2 billion in annual recurring revenue.
But that is the version that worked. There is another version. Latch and SmartRent both went public through SPACs, special purpose acquisition companies, in 2021, selling connected buildings.
Now, Latch delisted in 2024, and SmartRent is still public, but it is trading almost 90% below its debut.
Now, this is the same category. The market paid for recurring revenue and then punished everything else.
So we're back now with Terrence DeFranco, Founder and CEO of IotaComm. Terrence, as I was just talking about, we heard some of those companies are doing incredibly well. Not so with Latch and SmartRent.
So when you're thinking about IotaComm, how are you thinking about avoiding that same sort of fate that Latch and SmartRent had?
Terrence DeFranco: Yeah, I could probably list off another 10 or so companies that have really gone through the challenge.
And I think Samsara is really a terrific example for us and a model for us to look at, to try to replicate. What they're leveraging is existing capabilities. That broadband connectivity, like I was talking about in the last segment, can really provide that connectivity for certain applications.
And what differentiated them, I think, from the other companies is their business model. They were able to really lean in and continue growing year over year that recurring revenue, right?
And for us, that really is part of our founding as well. I'd say that, you know, we talk about the licensed spectrum being such a differentiator for us. For investors in an early-stage company, it's rare to find a company that has an asset base that's not only that valuable, but that unique.
But on top of it, that in and of itself isn't a formula for success. The formula for success is in business model innovation and truly understanding: How do you make the economics work of truly solving a problem in the marketplace?
And that's the thing that current investors really benefit from. Like I was talking about, as we go to market and try to efficiently fail, efficiently learn, keep taking back those lessons and improve.
But the grounding in an asset with a very innovative business model like we have, where we've essentially integrated all of those pieces to create an end-user solution that truly makes a definable return on investment for the customer, that's where you succeed.
You don't succeed in creating great applications. You succeed in solving customer pain points.
And between what we do on the connectivity side, which is largely founded in our licensed spectrum, but it's also leveraging the same standard in unlicensed frequencies, there are very few companies in the world that can reproduce what we're doing to reduce that friction.
But at the end of the day, it's taking a page out of Samsara's playbook and really focusing on that recurring revenue aspect of the business model.
Kristin Myers: So I have to ask you about the big question that everyone has been talking about in the market, which is, of course, AI.
I'm not sure if you are thinking about AI as an accelerant or sort of a game changer, but I know that IotaComm has AI-assisted insights. So talk us through a little bit about how IotaComm is really sort of incorporating AI and what AI is allowing you to do now that perhaps you weren't able to do before.
Terrence DeFranco: Yeah. So we're kind of end to end. We use network connectivity to install sensors and gather data, gather data directly from machines, and build that into an analytics platform.
Artificial intelligence hits the world, and it hit it hard. For our market, for our business, it's been a tremendous catalyst for us, not necessarily just for the capabilities, but it's also creating that demand in the market.
Organizations are now saying, "Hey, I have ways of being able to easily integrate data into our business now with artificial intelligence. Now I need more data." So now it's creating that great demand.
What we think on leveraging it from our side and being able to deliver solutions is the fact that, number one, we are certainly able to glean a lot more intelligence for us now to assimilate so much of that data and truly create what our vision is: self-thinking buildings, self-thinking cities.
And maybe we'll get to a fear factor around some of that that exists as well.
Kristin Myers: No, but that's actually what I want to ask you about. I hear "self-thinking cities," and I think that sounds cool but also terrifying.
So when you are actually going out and you're talking to school boards, for example, is AI a selling point for you, or do you have to address a little bit of that fear factor about that AI integration?
Terrence DeFranco: So we believe as an organization that artificial intelligence is best in the hands of humans. It is about increasing human efficiency. We don't think of it as a job destroyer and a human replacement.
And that's really the benefit of our platform, also with that whole philosophy and approach, is that this is all about trying to put tools in the hands of humans to actually still oversee and govern, while at the same time trying to leverage data for more insights and, where we can, automation.
But all of that, particularly in the commercial realm, few businesses or towns or campuses are going to fully delegate all functionality out to automation.
But putting those tools in the hands of individuals, the same way that we do. I mean, I use it regularly, even for how old I am. You know, I still use Claude. It helps me be more efficient, but I haven't ceded control over to it. It's just a great tool for me to use to make me more productive.
And it's actually resulted in a better company for us, all of our employees. And we haven't reduced headcount because artificial intelligence is replacing jobs.
And we feel that that truly is the case in our addressable market. There's a bigger philosophical question about artificial intelligence, some of which I'm touching on, but we think it's nothing but a great thing for society.
Kristin Myers: So I only have about a minute left. So I want to ask you, as a sort of last question, because we're here on the floor of the New York Stock Exchange, bell right there behind us.
When you think about ringing that bell, what does that day look like to you? What does that feel like for you? And, of course, I'm interested to know when you think that might happen.
Terrence DeFranco: The million-dollar question. One of my shareholders reached out to you and said, "Hey, you have to ask that question."
Kristin Myers: I'm not telling you.
Terrence DeFranco: So, if in the event that happens, you know, we would like to see an event happen, some corporate event, whether it's a sale to a company or an IPO. We'd like to see that happen in the next two to three years.
So, now that I'm being recorded, I'm hedging, but we have a goal of two. But I'd say fairly within a two- to three-year period.
What an IPO particularly would mean for us is having hit a milestone that we would celebrate that day. But it's the beginning of a whole new chapter, and there's still a ton of gas in the tank and a ways to go. Like, we see it as a catalyst to drive even more value.
So our hope is that we can get two to three times in the next, you know, two to three years. But we see that IPO as a catalyst for extraordinary hockey-stick growth.
Kristin Myers: Well, we're going to have to have you back. We'll perhaps cover that bell ringing when it happens in two to three years. I'm going to mark my calendars for now.
Terrence DeFranco: And maybe sooner.
Kristin Myers: And maybe sooner.
Terrence DeFranco: And maybe sooner.
Kristin Myers: Terrence DeFranco, Founder and CEO of IotaComm. Thank you so much for joining us.
