Conversation 168:
Houston We Have - A deep dive into the recently listed AI prescribed analytics business.
Finding patterns is what data science is all about.
To do this, data scientists use computer algorithms, which are essentially a process or set of rules that are followed to get a result.
A cooking recipe is an algorithm, which when followed, achieves a specific outcome.
Hopefully a cake.
But just as you can tweak a basic cake recipe to create a masterpiece rather than just a sponge cake, (I am getting hungry now), you can tweak a computer algorithm.
That is what Houston We Have [ASX:HWH] claims to have done and in doing so says it can solve problems by identifying the likelihood of future outcomes.
The company has gone through a re-branding and re-engineering of the structure and style of its business, which was previously known as Veriluma.
“I have presented to dozens of analysts over the years and all of them tell me they have never seen anything quite like ours”, said Elizabeth Whitelock CEO of Houston We Have.
The “ours” she refers to is the company’s patented AI driven Prescribed Analytics process.
According to Whitelock prescribed analytics, and in particular their version of it, is a different ball game to traditional data science.
HERE IS WHY COMPANIES AND GOVERNMENTS ARE PAYING FOR PRESCRIBED ANALYTICS.
At the age of 21 I snared a reporting role with the highest rating current affairs television show in Australia at the time, Willesee at Seven.
I once asked the Supervising Producer of the show why it was so successful?
“We have no idea and we’ll be stuffed if it stops working because we wont know what to fix.”
Me at Channel 9 Adelaide prior to my move to 7
If the predictive analytics company Houston We Have [ASX:HWH] had been around then, they could have possibly helped with this problem.
“Houston We Have looks at the problem first, rather than going straight to the available data” explained Whitelock.
HWH then breaks down the key components of the problem and looks for where the data is lacking.
“In doing so we find out what we don’t have and that’s where our process allows us to bring in other things like academic observations, professional opinions and industry analysis in multiple formats from text to video.”
Using the ‘special patented sauce’ of Houston We Have, their algorithm takes all that information and predicts not only what might happen, but as was needed in my Willesee example, gives an equally important understanding of why it might happen.
This provides the opportunity to take preventative action, if required. More here on how it works.
COOL TECH IS GREAT BUT SHOW ME THE MONEY
HWH’s Augmented Intelligence was developed for the Australian Defence Intelligence Organisation to run war scenarios.
According to the company this work has “trained our algorithm to accept human response and predict any outcome from the most likely probability, without bias and excluding emotion.
According to Whitelock, “You’d be blown away by how accurate this stuff can be.”
There’s certainly no shortage of corporate confidence at Houston We Have, which claims “Our patented software delivers insights beyond any AI in the universe.“
But the real test will come as the business tries to turn itself from a small private project-driven model, to a publicly listed off the shelf product business that can scale.
TTHE HOUSTON WE HAVE BUSINESS STRATEGY
HWH is turning itself into a Software as a Service business by selling its access to its algorithm as an off the shelf software.
A customer can then slightly tweak the industry suited SaaS just as you might fine tune the fit of a suit purchased at a department store, rather than making it from scratch each time you get a customer.
The company is applying this new approach in three ways.
The first is to partner up with re-sellers.
They recently got into bed with Accenture Australia which is now promoting the HWH product to local clients. Another reseller is Potentiate.
The second part of the HWH strategy is to acquire businesses that give them access to specific verticals.
They did this in 2019 by buying Prometheus and this got them access to the insurance industry.
Finally, they also have their own internal sales staff, albeit a small team, and place great emphasis on their ability to grow organically.
On paper it is a good strategy and Whitelock told me there is a new vertical they’re close to gaining access to in finance.
See what you make of the interview and let me know your thoughts?
[IMPORTANT: THIS ARTICLE AND INTERVIEW IS BY NO MEANS A DEFINITIVE EXPLORATION OF THE BUSINESS FEATURED AND NO INVESTMENT DECISIONS SHOULD BE MADE BASED ON THIE INFORMATION FOUND ANYWHERE ON THIS WEBSITE. PLEASE READ OUR FULL DISCLAIMER BEFORE MAKING ANY INVESTMENT DECISIONS ABOUT ANY COMPANIES MENTIONED ON THIS WEBSITE AND SEEK THE ADVICE OF A PROFESSIONAL ADVISOR.]
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SHARE PRICE TREND OVER 200/100/9 DAYS l ANALYSTS VIEWS l TECH AND COMMERCIAL READINESS INDEX
HOW THE TECH WORKS AS DESCRIBED BY THE COMPANY
Using the past to predict the future is the approach we take. Houston We Have software allows the user to hypothesise and test future situations before going on to implement them in the real world. Or, in the case of intelligence failures, considers all possibilities to lay down the foundations to identify Black Swan events
Houston We Have Human-Centred AI. Houston We Have Military-grade software, originally designed and built for the intelligence community, our patented software delivers insights beyond any AI in the universe. We utilise Bayesian Reasoning and Subjective Logic to give humans the ability to predict the future at speed and without bias. Houston We Have Augmented Intelligence so solutions are accessible at all stages of the decision-making process.
Houston We Have website
TECHNOLOGY AND COMMERCIAL READINESS.
Based on the Technology Readiness Level [TRL] developed by NASA and the Commercial Readiness Index [CRI] that grew out of it. HOUSTON WE HAVE would fit somewhere around on the 4 on the TRL for its finance vertical and 4 on the CRI for health vertical.
SOME OF THE RECENT MARKET ANNOUNCEMENTS BY ELSIGHT:
HWH CONFIRMS $400,000 IN ANNUAL CONTRACT RENEWALS
SOME RATINGS FOR HOUSTON WE HAVE [ASX:HWH]
[CURRENT ON THURSDAY 27TH AUGUST 2020]
Morningstar Quantitative [algorithmic] Rating *
Valuation Rating: Undervalued Fair Value Estimate: 0.065 Fair Value Percentage Diff: 38.70% Liquidity: High
DISCLOSURE
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* The Morningstar rating uses a machine-learning model to rate 22 times more funds than are rated by Morningstar analysts in EMEA and Asia.
The Quantitative Rating is an extension of the recently enhanced Morningstar Analyst RatingTM for funds (Analyst Rating), which provides an analyst's forward-looking assessment of a fund's ability to outperform its peer group or a relevant benchmark on a risk-adjusted basis over a full market cycle. Morningstar EMEA and Asia manager research analysts assign Analyst Ratings to approximately 1,260 open-end and exchange-traded funds and together with the Quantitative Rating, cover approximately 29,200 funds, representing nearly 105,000 share classes in EMEA and Asia.