VIDEO: LeoNovus CEO Michael Gaffney on Using Blockchain Tech to Secure their Cloud Software

LeoNovus Inc. (CVE:LTV) (OTCMKTS:LVNSF) (FRA:LE4) is a cloud solutions software provider that, through Blockchain technology, which CEO Michael Gaffney says is more secure than its competitors. He explains what sets them apart from competitors, as well as why hackers–if they were to steal any data–would “get nothing.”


James West:     Michael, thanks for joining me today.

Michael Gaffney:     Thanks for asking me out.

James West:     Michael, let’s start with an overview: What is it, exactly, that LeoNovus does?

Michael Gaffney:     So LeoNovus is a data storage company, a software-defined storage company. We provide a software that allows large companies with have a lot of data to be stored, in object format. Another way to put it is, it’s unstructured data. That’s the largest growing segment of the storage market; 42 percent compounded annual growth for every large entity in the world. What’s driving that are everything from video to IOT to a massive amount of regulatory records that have to be kept…

James West:     Email.

Michael Gaffney:     Email, exactly.

James West:     Okay, and so you’ve got a multi-sort of faceted offering here which seems to be winning you lots of market share relative to other incumbents in the space. What are those key differentiators between your service and, for example, say, a enterprise-class Google Drive?

Michael Gaffney:     So there’s three – our value proposition to the customers is a three-legged stool, okay? A return on investment, ultra-secure, and regulatory compliance. Every data storage provider out there, be it Google Drive, be it Amazon, be it Rogers, be it Bell, they’re happy to store your data, but they provide you no guarantees and security when the data’s at risk. That’s your problem. You have to store it with your own software on their storage devices, and that’s what we provide: we provide an ultra-secure way to do that.

We do that in a very unique way, which is very Blockchain-like, if I could put it that way. And we’re getting lots of interest from the market. In addition to that, we’re adding Blockchain technology to make that Blockchain-like piece that we have, even more secure.

James West:     Okay. So if we are to understand Blockchain in our limited ability as a distributed ledger that is decentralized online where reconciliation process is automated within the Blockchain, if I hope I’m close –

Michael Gaffney:     That’s not bad, actually!

James West:     Thank you.

Michael Gaffney:     That’s not bad.

James West:     And how does the LeoNovus offering incorporate that sort of architecture into its data storage?

Michael Gaffney:     Okay so, I’m going to talk about a smoothie for a second, a digital smoothie. We take a company’s data: imagine this, this is the company’s data, it’s the Mona Lisa. It’s worth a lot of money. If you lose your data, you lose your Mona Lisa, you’re going to lose a lot of money, and you’re going to look – your brand’s going to be hit big time.

James West:     Sure.

Michael Gaffney:     We take the data, we paint it white, we paint it black, we bleach it, we throw it in the digital blender. So we turn your data into a smoothie. We then take that data and disperse it across many storage nodes, on-prem, off-prem, multiple Clouds, okay?

To be able to take that smoothie and rebuild it back into the original Mona Lisa requires a tremendous amount of method data, which all method data means is, data about data, okay? And if somebody could figure out that methodology, then they could maybe break the smoothie, or rebuild the smoothie, which we don’t want them to do.

James West:     Steal your smoothie.

Michael Gaffney:     Exactly, that would be bad. They would get the Mona Lisa.

James West:     Right.

Michael Gaffney:     So all that method data, now we put that inside a Blockchain, and we un-bundle a Blockchain, because the Blockchain itself is distributed. So we made the smoothie-making, if you will, this digital data distribution process even safer by adding a Blockchain piece on the brains or the engine of the tool.

James West:     Okay, so you’ve got sort of a multimodal confirmation of integrity going across the chain?

Michael Gaffney:     Correct.

James West:     Interesting. All right, so then, LeoNovus has apparently demonstrated to its customer base that it’s got a great product offering, and investors seem to be picking up the story because the share price has done very well recently. What does the longer term, 12, 18 month picture look like for LeoNovus?

Michael Gaffney:     So our – we just raised 13.75 million, it closed last week, plus warrants; the potential is for another $8 million or $9 million to come into the company over the next two years. $22 million was spent previous to me joining the company a year ago, on building the core technology platform. The money we just raised right now is primarily for marketing and sales.

So at this point in time we have a hot prospect list, we’ll call it that, of about 50 customers; several installed, we’ve announced them, POCs, proof of concepts; and our goal right now is just to keep adding those, adding partners. We added a partner yesterday in St. Louis, Missouri; that was announced, and we want to continue to add marketing vehicles, be it partners, be it salespeople, over the next six months so that we can get to a point in 24 months where we have, our goal is 100 large enterprise customers that by the end of 36 months will be paying us at least $1 million a year for our software.

So the goal is to build a $100 million software company in the next 36 months.

James West:     Okay, great. What is the margin that you realize from your sort of revenue model?

Michael Gaffney:     So on a gross margin perspective, we’re a software company, so it’s very high. It’s in the 85, 90 percent range, especially if you’re selling million-dollar software packages; the only real cost of sales are commissions. Support costs are relatively small, and of course, there’s lots of professional services, but that’s in addition to the software sale.

James West:     Okay. Is the Blockchain component of your offering, or the similarity of the architecture, is that something that competitors like the other incumbent enterprise-class data storage providers are going to adopt going forward, and is there a risk that they’re going to come and cut your grass, so to speak?

Michael Gaffney:     There’s always a risk of competitors coming to cut your grass; absolutely. Where we’re different is the current suppliers of storage. IBMs, the Oracles, the Ciscos, the Amazons, every large company in the world has those installed.

James West:     Okay.

Michael Gaffney:     Equifax had those installed. The Paradise Papers guy had those installed. Everybody had that installed – they still get hacked.

James West:     Right.

Michael Gaffney:     So that’s not the solution. Our solution, this smoothie-making, if they steal a piece of the smoothie, they get nothing.

James West:     Right. Okay, well that’s great. That’s a great overview. We’re going to leave it there for now, we’re going to come back to you in a quarter’s time or so and see how you’re evolving. Thanks for joining me today.

Michael Gaffney:     Thank you very much.

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