Kevin Dagenais 0:00

I know our sales guys are very excited about the ability to provide a guarantee. And I think the guarantee only works if we can first analyze their refueling practice. And what I like about that is it's going to make it so that my sales guys have more reason to actually pull data out of the customer presale, do more analysis pre-sale, because that's not always how they want to work. They they they want to sell.

Angela Robertson 0:18

Our next guest, he was the very deserving recipient of the innovation award last night. And I know that all of our listeners are very excited to know how this business took a step back, designed something that allows you to be able to deliver on your brand promise. So Kevin Dagonese is here from Cascadia Scientific. Kevin, welcome to the Stormy Stories show.

Kevin Dagenais 0:44

Thank you very much.

Angela Robertson 0:45

So, Kevin, you have built Cascadia Scientific over the years. And what got you to this point where you went, huh? I've got to figure out how to design this product or get something new out there to help my customers to solve a problem.

Kevin Dagenais 1:04

Sure. Um, so the the business started in 2018. Um, and what we provide is a energy and work intelligence platform for load hole mining. So the idea is that we look for patterns between energy use and and work outcomes and identify situations where that where that model is out of balance and those imbalances lead us to to mindset interventions that that create value. The challenge we had um was that our most valuable use case was really around roads. Uh, and and the challenge there was that you didn't need to instrument the entirety of the of the fleet to get that value. So you could do a 10% or a 20% install, have those machines running around, find those opportunities uh and and collect that value. So the the pricing model was really driven by how many assets you've installed. And so we had this mismatch here. The second challenge that we had is that not all mining companies or all miners really care about efficiency. So it sounds counterintuitive. And certainly with what's going on in the news right now, it's it's a bit more of a hot topic because of the price of oil. But in in general, it's it's pretty rare to find a mining professional that's that's going to be bonused or incentivized based on PL. It's gonna be based on productivity. And the assumption is that that the PL is is the the result of kind of macroeconomic factors that are out of their control. So you really have situations where people don't care to be efficient. So the the opportunity that we were looking for was a way to use to stay on brand, to stay on mission. So that meant the intelligence or the opportunity had to had to be coming out of an energy measurement or an energy analysis. But the value that we wanted to provide instead of being an energy savings had to be a productivity uplift. So that was that was the big difference because so there was really what we wanted was a product that could be on mission, on brand. So energy related, required a full fleet installation, not just a partial installation. Um, and then was going to provide an uplift in terms of productivity and production, not just a savings in fuel. And so that's how we landed on Refuel Coach because it it solved all three of those problems.

Angela Robertson 3:03

So tell us a little bit more about Refuel Coach.

Kevin Dagenais 3:07

So the the product uh is designed to help mining equipment run longer safely uh deeper into their fuel tanks before coming down for refuel. So it sounds, it doesn't sound like a big win, but if you look at how many hours a day, so let's say, for example, if you're losing 45 minutes a day or 50 minutes a day to refuel, or maybe it's 45 minutes a shift to refuel, if you can improve that, if you can extend that time between refueling by say 25% or 20%, every five or six refuels, you're going to eliminate a refuel and you're gonna recapture 45 minutes of productive operation. Um, and so if you look at how mines will value productive operation, uh, you know, typically a number around $1,000 an hour is pretty, pretty typical kind of middle of the road. It might not be conservative, but it's it's a pretty reasonable number to use. So if you can recapture an hour of productive operation once every four or five days, or whatever the number is, I mean, for most mines, when we do the math, it works out to about 45 hours recovered per year. So that's roughly a $45,000 value per asset. So that's that's the idea. And so the way that we do it, um, so and so why is there an opportunity here at all?

Angela Robertson 4:10

Yeah.

Kevin Dagenais 4:11

Uh you guys probably all drive cars and you probably just go to the gas station when the needle goes low. So the challenge with mining companies is things on these trucks break endlessly. And if you have a broken fuel level sensor in operation, which will happen, that truck will very likely run empty. If you run a 200, 300, 400 ton haul truck empty, particularly loaded, particularly on a ramp, it causes a whole lot of safety challenges. It takes down the hall road, creates lots of logistical and operational challenges. So the idea was it means for the practice at MindSides was okay, we can't rely on the level sensor. So what we'll do is we'll use time as our proxy for how much fuel has been used. And we'll have to assume, if we're going to use time, that the machine has been maximally utilized. So it's burning as much fuel as it can. And so the net result of that is is on average highly conservative refueling and a pretty wide standard deviation. So instead of what we're trying to do, which is always refuel with, say, 15% left, what they would do is they would refuel with an average of say 35% left, sometimes going as low as 5%, sometimes refueling with half a take. Um, so that's where the opportunity came from.

Angela Robertson 5:11

Was this described already by your customers, or was this something that you came up with with the team? Like how did the sort of product ideation come about?

Kevin Dagenais 5:20

Yeah, I definitely there was one customer that was asking us to help them. So that that was definitely a strong indication. Obviously, if if you don't have a customer that's raising the need, then you should really be asking yourself, you know, do I want to make a bet on this? Um, I I think, you know, with me typically it's I need to hear things or see things coming from a few different angles. And I think when I put the pieces together that, you know, A, a customer wanted it, and B, it solves these three strategic problems that I'm facing with a product we already had. That was when I said, okay, this is this is the way that I think we can move the company forward.

Angela Robertson 5:50

And then what did it look like rallying the team around this? Did you already have the resources you need? Did you have to go out and find folks? What how were you uniquely capable of getting this to market? Yeah.

Kevin Dagenais 6:03

And actually, I should probably mention. So to answer your question directly, no, we I think we had the team we needed. Um, again, it was very much on brand. It was very much on mission for our team. And so the way that we solve this problem, by the way, uh, is so we have fuel measurement sensors that are actually measuring consumption in real time on these haul trucks. So we use our sensors and connection to the vehicle computers to detect refueling events. Right. And then we can measure the burn down with our meters and we can triangulate the remaining fuel in the tank by comparing what our meters are saying, what the ECM is saying, and what the fuel level sensor is saying when it's working and when it's broken, we can, you know, we can default to ignoring that signal. Um, so in terms of the team, no, we had we had the people, we had the firmware guys, we had the UX guys, we had, we had the pieces in place. The the the other big thing that we needed to do that we've done since is it became really important to integrate with the leaders in the fleet management space. So there's really three main leaders. Um, they're all tightly coupled to OEMs. So modular mining is owned by Komatsu, Mine Store is owned by Caterpillar and Wenko, a local Vancouver business based in Richmond, they're owned by Hitachi. The dispatch people, the guys that decide what truck goes where and who gets fuel and who takes a break and all these things, they use these tools as their like their all-day operating system, and they don't want to have a cascading of scientific screen sitting to the side. So for most of our customers, the other part of it was going to Hitachi and or going to Wenko, going to Modular, saying, guys, we need to push this valuable data into your system because the customers want to consume it from you, not from me. So that was the piece that we had to develop. But we've got those arrangements and agreements now in place with both Modular and Wenco. Um and hopefully Mindstar with Cat will be the last piece to fall.

Angela Robertson 7:37

That's amazing. That's a that's no small feat to pull that off with all those different competing OEMs, it sounds like.

Kevin Dagenais 7:45

Yeah, and I think I think that that comes back to why being on brand is so important. So the reason I think that we've survived and what we have we have positive relationships with these OEMs. So Michelin's another one we've got good relationships with, is because we kind of stay in our lane. If if we try to, you know, so the energy, the energy efficiency, the energy intelligence space is really quite open for us and we've had room to run. When we start to move off brand, so looking at at productivity problems from a productivity lens or availability or maintenance or safety, those spaces are far more crowded and they're far more competitive. But when we've stayed on the energy side of things, um, what ends up happening is customers will go to those big OE players, Komatsu, Cat, Michelin, whoever, and say, I need energy intelligence or I need an efficiency solution. Um, but these big mining companies, they say, I don't want to go looking around the world for 50-person companies like Cascadia. I really just want one throat to choke. I want to buy it from you. So you bring me something. And so I think that's so those relationships were kind of in in development to solve that problem. But it certainly made it a lot easier to have the conversation around how can we provide our value through your interface. And then obviously, you know, thinking about exit, because obviously I think, you know, I've always I've I've I've got to hand it to, you know, our our you know, your previous guest and and all the times I've come before, like last year we had Brian and we've had Kyle before that. And um, so definitely that's I I do wanna like this is a great award, and thank you very much. But I really want to be back uh sitting on this table for the other awards.

Angela Robertson 9:08

Of course. When did you launch Refuel Coach?

Kevin Dagenais 9:11

Uh we went live with kind of eight units. So our biggest customer has about 230 operating machines. Um we went live first with like a hand-picked set of eight machines. That was the first thing that was back in December. In January, we we switched from those eight machines to one full pit. So the mine in question has kind of five unique pits that that each of them on their own could operate like a like a very large mine to itself. Um so we're effectively live in one pit, which you can think of as one full operating mine. Uh, and then in the last month, we've been just kind of rolling across the rest of that mine. So that'll be 200 machines kind of live uh on the on the platform, hopefully in the next couple of weeks. Wow. Um I was laughing with John yesterday. So yesterday we had a call with a customer who started a project, and and they, you know, so uh there's another problem that Refuel Coach solves, which is that historically we've always had to rely on customers taking our advice and taking action. And that's actually not a guarantee, right? So will they listen to us? Will they do the things we recommend? Will they decide that it's too expensive, too difficult?

Angela Robertson 10:12

Will they do it in time?

Kevin Dagenais 10:13

Will they do it and will they do it well?

Angela Robertson 10:15

Yeah.

Kevin Dagenais 10:15

And so when those things don't all happen, then the then the benefits captured by the products don't really materialize. Uh and so what that's meant is we've never been able to be in a position to kind of give a guarantee because our success is highly dependent on the customer's behavior. So the other nice thing about this product is that as long as you know, if if we do the work ahead of time and we understand their data and we know what their dispatch tool is and they agree to very basic things, like they agree to change their dispatch setting to let's say 20% tank remaining and use this integration, we don't need them to do anything different. And so, because we now have a situation where the customer can redeem value without changing the way they operate, it now gives us some flexibility to make a guarantee and say if you do this, we guarantee that you'll have this benefit. And if you don't, you can leave the contract early or you know, whatever remedy we want to come up with. But that's completely new. So yesterday I had a customer that started before Refuel Coach was was available, kind of at their decision point, and we were pretty sure they were about to get fired. And I was actually dreading coming up yesterday and receiving an award after being fired because this product didn't get it done. But fortunately, on the call yesterday, it seems like it carried the day and we'll be sticking around and growing with them. So that was that was a good positive early indication of the results of this product.

Angela Robertson 11:25

And so they made the decision to stay because of what you've done with Refuel Coach.

Kevin Dagenais 11:30

I think with Refuel Coach, we were able to give them a guarantee and say, if we stay, we guarantee if you use Refuel Coach, you will have at least this benefit. And I think that was the the confidence that they needed to make sure that the investment wasn't going to be a bad investment.

Angela Robertson 11:43

That's huge.

Kevin Dagenais 11:44

Yeah, I mean it's still got to be signed. And it's but yeah, it's uh my my looking like a true CEO.

Angela Robertson 11:50

It's not done until it's done.

Kevin Dagenais 11:52

But it absolutely could have been over yesterday at 130. And so I was really happy that I didn't get fired at 130.

Angela Robertson 11:57

That's amazing. What else do you think this guarantee will unlock for you and your team and the business?

Kevin Dagenais 12:02

I I know our sales guys are very excited about the ability to provide a guarantee. And I think what it the guarantee only works if we can first analyze their their refueling practice. And what I like about that is it's going to make it so that my sales guys have more reason to actually pull data out of the customer pre-sale, do more analysis pre-sale because that's not always how they want to work. They they they want to sell. Um, but actually being able to say to a customer, hey, we've we've you know, we've got your data. It's it's we we I've often been at talks here where people say you're not really advancing a sale if the customer's not doing something, not giving you something back. Like if it's all I'm gonna give you this proposal, I'm gonna give you this update.

Angela Robertson 12:38

It has to be customer driven. The action comes from the customer, and that's what dictates where you are in the sale boat.

Kevin Dagenais 12:43

So so this is a good ballast. Yeah, exactly. So this is a great opportunity for that for us to ask the customer something tangible and say, hey, listen, I need to have all your refueling data so I can understand it. Um, and then it gives our sales guys a very clear mission to say, okay, this is the data that I have, and with this I can I can scope the guarantee. So there are situations where this product won't work. For example, some companies do mobile refueling where they'll send refuel trucks into the pit. So that significantly would diminish the value. That's not a lot of mines or all mines. Um really small mines might bring all their trucks back to uh to the maintenance shop for shift change and they'll just top them all off in a in a line. But for large operations that are dynamically dispatching, um, this should just should work. But again, so the guarantee requires understanding the customer better. And I think that's great for my sales team to have to have that understanding.

Angela Robertson 13:28

Which is great. But I'm also curious about your operations team. How do they feel about the guarantee coming into place?

Kevin Dagenais 13:34

Uh on the on the op side, I don't think, I mean, I think fulfillment doesn't really change. Um, I I think I think the finance guys might have some might have some concerns about it. Because obviously, I mean, you know, I think we'll know a lot more the first time a guarantee doesn't pan out. But I I think we can be fairly confident about um about success as long as we do the homework up front. And I I think also the the devil's in the details. And so um we're gonna have to turn this guarantee into something that's a bit more legally binding that can be included in a in a sales contract. Or, you know, the one of the challenges with my being, we're we're a 50-person or 45-person business, and our counterparties all have tens or or you know, many tens of thousands of employees and huge legal teams and procurement teams, and their contracts are 50 pages long. And um, so you know, anything we do contractually is very challenging for us, and we're always so outgunned. Um, but I think you know, the the next piece that we've got to work on is making the guarantee make sense in the context of that supply agreement. Um, and then have the right, the right requirement, even though the the customers' requirements are fairly straightforward and limited, just to make sure that that it's actually got some some teeth that they can't just say, you know, go away. We didn't get what we wanted.

Angela Robertson 14:41

And so what what gets you so excited about the next chapter with Cascadia and with Refuel Coach?

Kevin Dagenais 14:47

Yeah, I mean, I I think for the first time with this product, I I I see a way past that that kind of block. Like that block of, okay, so either we're going to have a few trucks at a lot of mine sites and we're gonna have to fight and fight and and and work super hard for every one of those contracts because every it's it doesn't matter if you're selling a five-truck contract or a 50-truck contract, that the work required seems to be the same. It doesn't really seem to matter that the ticket is smaller. I didn't love a universe where we had to win in that many more places to hit a revenue number. Um, and I think this this is gonna help us get better fleet coverage um across existing customers and even even customers that have AB stall. So we've got a lot of, well, I'll not say a lot, but I'd say, you know, we've got customers that are that are happy to stay and pay, but never grow. And the reason is they said, we love your roads products, but we don't want to do operator performance management. We don't want to do asset health. So we're just gonna stay put. Um, and so you know, this this will be another way to go back to those customers and say, well, something new that's gonna support production.

Angela Robertson 15:46

So it allows you to grow your existing customer base.

Kevin Dagenais 15:48

That's certainly the goal. Yeah.

Angela Robertson 15:50

Amazing. That's incredible. Anything else that listeners should know about what it takes to launch a new product, maybe in a competitive space?

Kevin Dagenais 15:58

No, I mean, I I guess I guess what I'd say is, you know, people talk a lot about the the difficult things. I think what's hard for our business is, you know, you've got I've got a company that, you know, we're based in Vancouver, but our customers are in nine countries. I've got staff in eight countries, I've got subsidiaries in two, and we're not big. So like these are just like these are just crazy things that you would never design on purpose. Um, but when you're selling into mining, you have to sell where the mines are, and the mines are in Australia and Africa and Peru and Colombia and Chile. Um, so there's all kinds of challenges. And I just uh yeah, I mean that that would be the big thing is is um I'm just very jealous of people that can like set up an English language technology product to have people come and buy it. That sounds like a lovely, a lovely thing. But I'm sure they all have their own unique problems that I guess.

Angela Robertson 16:39

So Well, thank you, Kevin, and congratulations again on the Innovation Award. And I too hope that we'll have you on again with another award in the future, maybe for an exit event.

Kevin Dagenais 16:49

So that's awesome. Thanks so much, thanks everyone. Um it's great, and congratulations on the podcast.

Angela Robertson 16:53

Thank you. Thanks.