Rob Monster, CEO of DigitalTown, talked more extensively about Digital Town, its 6 acquisitions and the plans for the future of this public company.
Here is what Rob Monster had to say:
Just following up here with a few clarifying remarks:
1. I came on board in May 2015 to run what was a pre-existing public company with a relatively underwhelming operating history. Although I was not looking for another project, I had never run a public company, and I liked the Board. My precondition for taking the job was that I would have autonomy to set the strategy. In September 2015 I presented a plan to the DigitalTown Board that would enable DigitalTown to become a global Smart City platform. By January 2016, the company was sufficiently funded to execute the first phase of that strategy.
2. In the meantime, DigitalTown has completed a total of 6 acquisitions, in addition to an accelerating pace of internal development and marketing. This was not free but in terms of actual cash cost we are talking in the range of $3 million, which is peanuts for an opportunity of this size, operating as a SEC-compliant public company. The dilution from the acquisitions has been fairly modest:
Cloud.Market, in March 2016, for $67,500.
Software Masters for a nominal sum, in July 2016.
Rezserve Technologies, in September 2016, for $1.5 million.
Appointment.com, in December 2016, for $854,000.
Comencia, in June 2017, for $1.1 million.
Congo / JustLegal in October 2017 for $1.2 million
In the case of Rezserve, Appointment.com, Comencia and JustLegal, these were all established operating businesses that were either cash flowing or were within striking range of becoming such when we acquired them. We have a 7th acquisition pending. For calibration, Comencia alone books more than $2 million per year in lodging bookings and is just getting warmed up.
3. As for management compensation, the vast majority is in the form of restricted stock. None of the current management team has petitioned the Board to have their restrictions removed, nor am I aware of any plans to do so. We are swinging for fences and along for the ride. Many of the execs log 100 hour work weeks. I don’t ask them to do that, but these are entrepreneurs who chose to trade one dream for another and see DigitalTown as a mission that can change the world for the better before it is too late to do so.
At the end of the day, I think the DigitalTown valuation is amply supported by some very simple logic. If you apply a valuation of just $1,000 per city, the 22,000 cities in the DigitalTown network is already $22 million. Cities will either license the DigitalTown platform, or ownership will be publicly syndicated via Blockchain which creates a material revenue opportunity for DigitalTown. See here:
So, sure, this is not a mature blue chip. However, there is a tipping point when it comes to new economic models. For example, if you asked the typical person 5 years ago if they would use a mobile phone to arrange to get into a car with a total stranger, they would likely have said no way. However, today we all do it, through the likes of Uber and Lyft. The same logic applies to cities. Right now, a typical city runs Parks and Recreation, Farmers Markets, and a variety of other citizen-facing services. However, they don’t run a website or mobile app that powers local commerce 24 hours a day, 7 days a week. From an Economic Development perspective, it is a no-brainer for them to do so. So, now it becomes a question of liability and political risk. I submit to you that there is far less risk in running a digital commerce platform than being responsible for kids sports, public swimming pools, or turning a blind-eye as AirBnB provides registered sex offenders with the ability to rent housing in residential communities. At some point, the switch is going to flip for cities. Just watch.
Hope that helps.