We recently interviewed Mike Papineau, CEO of RideFlag Technologies in Ontario, Canada for our Fedtrade® podcast. RideFlag has successfully partnered with highway systems across the United States to validate passenger count for purposes of high-occupancy vehicle (HOV) lane travel.
Learn more about RideFlag Technologies on their website rideflag.com or follow them on LinkedIn. Connect with Mike on LinkedIn.
Key Takeaways:
- Intellectual property is crucial for protecting innovations and increasing business valuation
- Patience and capital are essential for business success
- Continuous product improvement is necessary for market fit
[a copy of the written transcript is here]:
Hello, everyone. Welcome to the Fedtrade® Podcast. I’m your host, James Hastings of Rothwell Figg. Joining us today is Mike Papineau, CEO of RideFlag Technologies. Mike will be sharing with us RideFlag’s U.S. market entry success story, lessons learned, and how intellectual property has played a vital role in RideFlag’s go-to-market strategy. Mike, welcome to the program.
Thank you, Jamie. Looking forward to talking about two of my favorite subjects, entrepreneurship and of course, intellectual property.
You have a very interesting background. Before we get into that first, just tell us briefly about RideFlag and what it does.
RideFlag accurately counts how many people are in vehicles for the purpose of providing high-occupancy vehicle benefits to users. So it’s a really novel technology. For the first time, we can actually accurately count how many people are traveling in a vehicle, and that helps support carpooling and reduction of traffic which is really important.
It’s my understanding that you’ve achieved great success already with this program.
That’s correct. Although we first looked at building this business in 2017, and that’s when we first filed for our intellectual property, or our patents more specifically, it’s through several pilots that we’ve achieved what we’ve achieved now. And at this moment, we’re under four state contracts. And in fact, we’ve just launched a full deployment in Atlanta through a contract with the state of Georgia. So it’s very, very exciting times for us here at RideFlag.
Congratulations. We had mentioned before that you are an entrepreneur. And an interesting part of your story is not only have you had one successful business, RideFlag, but you also had a second successful business called Just Juice.
Sure, and several businesses in between. When we first looked at Just Juice and Simply Juice, that was actually with your firm. We first applied for those trademarks. And what turned out to be initially a small juice company grew and all those trademarks have since been acquired. So when we first started this, there were no “simply” or “just” products for beverages out there. And we were the innovators in that space and we’re quite proud of that.
Why don’t you share with us a little of your business background?
Well, I started my career at PepsiCo and my background is in brand management, really trying to understand what consumers are looking for in products first and foremost. Pepsi was a great school to help us learn how to launch new products. When I decided to become an entrepreneur, I didn’t have all the technical skills of entrepreneurship and the best way to learn a subject is to teach it. So I taught entrepreneurship at university while I was actually starting my businesses. So that was a great opportunity for me at the time. And that’s when I started the juice business. And then from there, I’ve had several successes with multiple other businesses. The most recent one being, of course, RideFlag, the one we’re talking about more specifically here today.
When you first dreamed up RideFlag, what was the market need that you saw that could be filled by your invention or your company?
So that’s a great question, Jamie. If you look at successful businesses, the best ones, the most successful ones, what they do is they solve a problem. I know it seems obvious that you need to do that, but so many people try to launch products that don’t really solve unique problems. And what our solution looked to do is solve two major or help solve two major problems. One is reducing traffic congestion, which most of us experience on a regular basis. And the other one is helping reduce climate change. And through reducing congestion and increasing carpooling, we can make an impact at reducing the impact of climate change as well. So that was the problem that we sought to address. And that’s why we developed this technology. And in particular, what this technology does, as I mentioned at the beginning, is that it accurately counts how many people are in vehicles with a smartphone. And what that allows policymakers to do is to use our tool to properly enforce HOV policies on lanes across America and around the world.
There are many benefits that come out of the RideFlag technology for different markets, starting with, of course, drivers and their passengers.
That’s exactly right. If we look at some of our customers, one of them, for example, the Metropolitan Transportation Commission, which is responsible for the San Francisco Bay Area transportation needs and all nine counties there, they have seven bridges. The Bay Bridge first introduced its HOV lane back in 1970. And there’s been problems with commuters cheating, in other words, stating that they are an HOV in that lane when they’re not. And even more broadly in the San Francisco area as an example, they have 375 lane miles of Bay Area express lanes in operation or under construction that all will require HOV verification. And by 2050 in the Bay Area, MTC, the Metropolitan Transportation Commission, is planning to expand their express lanes network to over 600 lane miles. So for that reason, just in that market alone, it’s very important to have a tool that can accurately verify HOVs. And that’s what we do with our technology.
Do highway systems also generate more revenue through the use of your tool?
Absolutely. So depending on the market and the price of the lane, cheat levels or misdeclarations can sometimes be as high as 30 or 40%.
By misdeclaration you mean cheating.
Yes, cheating. So how that works is many of these lanes charge a single occupancy vehicle to access them, but if you’re carpooling, there will be an exemption where you can actually access that lane for free or at a discounted rate. So the problem is many people cheat the system. The incumbent technology is what we call a switchable transponder, which is just basically a switch in your vehicle that you adjust to reflect how many people are in your vehicle and the problem is cheating is so high. So what we did is we introduced technology with a smartphone app that uses a camera and biometrics to accurately verify how many people are in your vehicle. So it’s an opt-in versus a catch-me-if-you-can technology that will significantly reduce cheating on these lanes and to answer your question, help improve fairness for those legitimate paying customers and increase revenue for the agencies that manage these lanes.
You had mentioned an additional benefit is reducing carbon emissions. Will you tell us a little about that?
Sure. So you can only add so many lanes to a city. We need to do more with what we have. And if you look at vehicles, it’s becoming more rare to see people carpool in their vehicles. We have a love for driving and most of us drive alone. If we could incentivize and increase carpooling, even by a little amount, we can make a big impact at reducing congestions on our roadways. But that starts with enforcement. And it’s with a tool like ours that we can really change behavior and enforce carpooling, thus reduce the number of vehicles on the road and make a big impact at reducing CO2 GHGs, which will ultimately help support climate change objectives from agencies, not only across America, but around the world.
So many entrepreneurs have great ideas. Few of them are able to take that idea from concept to deployment. Where did you even begin in the process with the RideFlag idea of validating passengers in high-occupancy vehicle lanes?
That’s a great question. So it started with research. Our goal as a company was to reduce congestion. So how can we take some of those cars off of the road and do that with technology available? And we looked at several approaches and we actually spoke to many agencies and we attended several conferences. And although we can’t solve the global problem of carpooling, we can’t be everything to everybody, what we can do is carve a niche and solve a problem within a certain segment. And what we decided to do is focus on HOV lanes and particularly with highway operators because this was an elephant in the room, something that wasn’t solved and there was a need in the marketplace for a solution like ours to address this challenge. So that’s when we rolled up our sleeves and we built our team. And our sole mission at RideFlag is to address this issue. And that’s why we have our own software engineers, our own user experience designers, our own engineers, and our sole focus is to solve this problem. And that’s what we’re doing right now. And it has evolved over time, the technology. But we’re very, very excited about what we have now and the deployments that we have. It’s an acknowledgement from our customers that this is, in fact, a very viable solution that will be used by commuters every single day to verify their occupancy in their vehicles.
In looking to take this idea to proof of concept and finally to deployment, intellectual property has played a vital role in that process for you and your company.
Yeah, absolutely. And going back to some of my history and, my first venture, when I was looking at the juice business, I was actually working with you when we filed for these trademarks on “just juice” and “simply juice.” And we wanted to make sure that if we were going to invest in a certain business, we would ultimately own it in the end. And it’s the same thing with RideFlag. Although we do have trademarks, it’s really the patents that are most important for RideFlag. And that’s why we file about two patents a year. And we’ve got multiple granted patents that give us the freedom to operate and also allows us to protect our investment from the innovation that we’re bringing to the marketplace.
So if you’re going to make that kind of investment in a venture like we did, it’s a very, very good investment to make sure one, you can do it legally, and two, if you can do it legally, you ultimately own it. Because if your idea is that good, theft of ideas will follow, unless of course you own it. And if you own it, you can enforce it.
I’ve also heard you with an analogy to building a house and the importance of intellectual property. Can you explain that a little bit?
Yeah, and that’s a good example, an example I like to use from time to time. Let’s just say that you wanted to build a house and you didn’t know where to build it. And there was some land by the countryside that you found very desirable and nobody would ever be on that land. It wasn’t used. You wouldn’t go ahead and build a house on that land unless you knew you had rights to that land and you owned it. Because what would happen is if you did build that house, the owner of the land would eventually take it away from you. And what you built could end up belonging to somebody else later. The alternative is to lease the land. And the equivalent in IP would be to license the intellectual property off of another firm. There’s some benefits with licensing for sure, but ultimately you don’t own the intellectual property. And when you’re designing a business like ours, you need to think about the valuation and the control of what you have. And for us, of course, we prefer to control and own the intellectual property. And that’s why not only do we have the freedom to operate, but we own the intellectual property. So for us, that’s a very, very important part of our strategy. And it also saves our customers money because we don’t have to license this technology off of another firm and pay them as well.
You’ve explained several benefits to owning your own intellectual property. And of course, not just with RideFlag, but any company who is seeking eventually to be purchased or go public, there is the exit value that intellectual property brings.
Yes, that’s exactly it. There’s the goodwill, there’s the contracts, of course, the value of your sales and your profitability, but it’s also the ownership of the invention that you have. And the opportunities to further license that ownership to other firms as well. So there is major, major value to owning the intellectual property because you’re holding all the cards because ultimately it’s like the analogy of a house. You own the house, but you also own the land and you can sell both. And my experience, especially when dealing with larger corporations looking to acquire is they want to make sure that they’re acquiring the intellectual property as well. Otherwise, why wouldn’t they just copy what you have and put it out themselves? They might save some money doing that. So, that’s critical and it’s critical for the evaluation. When you’re building your business, it’s very easy to put off filing for patents or trademarks because it’s another expense. Yet I’d argue it’s the most important because again, what you’re building you want to ultimately own in the end in order to maximize your value from your investment.
That flows nicely into my next question to you, which is, what are some of the tough lessons you’ve learned along the way in entering the U.S. marketplace?
So there are several things that you need to think about. One is, do you have the right product? And right out of the chute, you probably don’t. You need to evolve, you need to learn and not only build your product, but improve it until you get to the level that you feel comfortable with and your customers feel comfortable with. So that would be the first thing. The second is you need patience. When you look at our business, although we’ve reached great success now, it didn’t happen overnight. This has been a project that’s been in the planning since 2017. Now we have over a dozen employees working for us, but it didn’t happen overnight. The second is you need money, right? And you don’t know if and when your product is going to be successful and you certainly don’t know when. And you need to make sure that you have enough capital in order to sustain your business until you reach that success. And over time you also get more credibility with customers. If you go to a trade show and somebody meets you for the very first time, they’re probably not going to buy your product, right? They need to see you multiple times. Customers need to meet with you. They need to talk to you, especially with government agencies. They want to make sure that you’re still going to be around, right? And that takes time. So those are just a couple of lessons, of course, that you need to think about. So money, time, and improve your product in order to make the market demand.
Mike, it’s been a real valuable time here today. Thanks so much for joining the podcast.
Thank you, thank you very much. It’s been a real pleasure. I appreciate the opportunity.
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