[00:00:00] Speaker A: Foreign.
[00:00:12] Speaker B: Welcome to App Kudo's new podcast, a series where we talk to players up and down the connected device supply chain.
[00:00:19] Speaker C: My name is Allison Mitchell, I'm the VP of Sustainability at App Kudo and I'm pleased to be the host of.
[00:00:24] Speaker B: AppCudo's podcast series where we cover industry.
[00:00:26] Speaker C: Trends, customer journeys, sustainability topics and more. As always, if you have topics of.
[00:00:32] Speaker B: Interest or guests you'd like to hear from, please shoot me an email at.
[00:00:35] Speaker C: Alison Mitchell pudo.com Today's podcast will explore device processing as a service, or DPAS for short. Our guest today is Fergal Donovan, Cyclist.
[00:00:47] Speaker B: CEO and co founder.
[00:00:49] Speaker C: Welcome to the podcast, Fergal.
[00:00:51] Speaker A: Hey, thanks Alison. It's great to be here. Looking forward to the conversation.
[00:00:54] Speaker C: Virgo, you are our first podcast guest.
[00:00:56] Speaker B: That's from outside App Kudo and you.
[00:00:58] Speaker C: Have a unique relationship with App Kudo.
[00:01:01] Speaker B: So I'd love to hear a little.
[00:01:02] Speaker C: About your background and then we'll get into how you came to partner with AppCudo.
[00:01:07] Speaker A: So I've been in the mobile phone industry for a long time. In fact, the more conversations I have, I realize how long I've been in there. So I started off many, many years ago working for Motorola selling phones in Europe all through the Razer period. I moved on into distribution where I worked for some of the larger distribution companies in the world, Brightpoint, Ingram Micro, etc. Then I took over an enterprise distribution business in the UK as a CEO and moved on then into the to work for PCs Wireless, which is really where I started in the whole circularity sustainability space. I spent five years setting up PCs Wireless in Europe, looking at the facilities, the people, the processes, relationships, et cetera. And once I got to the point where my job there was done, I finished there and was looking for a new idea. That's when I came up with the D Paas idea and had discussions with colleagues of yours at appkudo. So 25 years in phones and last 5 to 7 years or so in pre owned circular sustainable space.
[00:02:05] Speaker C: That's awesome. Like other guests we've had on the podcast, you have been in this space for a long time and you have seen it from multiple angles and I think that makes your perspective very valuable in this context. I would love to hear a little bit about why you started offering device processing as a service and what does that look like for a Cyclist customer?
[00:02:24] Speaker A: A great question and one that I talk about a lot. So keen to talk about it. So when I was at PCs Wireless I had hundreds of people sitting in physical Warehouses processing phones every day as PCs Wise Global, we had a lot more than that. And it was really came to the point where there's gotta be a better way to do this, and there's gotta be, you know, we can leverage AI technology, machine learning, et cetera. And I was lucky enough to be a little bit part of the project at PCs. We looked at that. So once I'd finished at PCs and I decided that I wanted to play a particular role in this space, I quickly came up with the idea of leveraging technology, which exists already in the US but doesn't really exist in Europe. In Europe, we have a far more fragmented business landscape than we do in the US and for that reason, the DPaaS model works. DPaaS is really offering access to technology to everybody, and that's people who generally don't have the volume or the business case to be able to support that themselves. So the real modus operandi for cyclists is to set that machine up, work in parallel with AppCudo, and offer access to that machine to all in Europe effectively.
[00:03:31] Speaker C: That's amazing. That access is really unique in that you don't have to have to own the warehouse space, you don't have to own the machine, but you can still have access to the technology and the. And the process that dpaas offers.
[00:03:45] Speaker A: Yeah. And I think the landscape, as I said, I believe there's over 600 different businesses of all sizes processing phones in Europe, 28 countries. We have a far more complex environment than the US where fewer operators mean larger volume, means easier decision making, et cetera. So all in all, you know, with trading programs, with buyers, traders, people are active in the business industry. We estimate that there's above 25 million phones that need to be processed in Europe in any one year. So it's a pretty large market. And today we reckon that somewhere between 10 to 15% are being processed with some degree of robotics, Whereas in the US that number is 85% or more. So you can see the clear differences between the two regions.
[00:04:27] Speaker C: Yeah, sounds like a huge opportunity as well. And I appreciate you providing that sort of background on the market and the. Just the ecosystem and how they differ between the two continents.
[00:04:38] Speaker B: So what are those advantages of the.
[00:04:40] Speaker C: Automated solution and why did you choose to partner with AppCudo?
[00:04:44] Speaker A: Oh, how long do we have? So in terms of partnering with AppCudo, I'm lucky enough to have context into most of the organizations who are involved in the sort of the automation side, solution side. After deciding on the business model and the the route that we wanted to take with cyclists. We, we spent a long time looking at the market, the products available compared to the requirements that we had as a business. And it was relatively quick to see that, that Apkuto met our end to end automation demands, our data driven demands. You know, the requirements that we had and Appcudo had those. And after a period of discussions, negotiations, whatever you will, we arrived at this win win situation of looking at a center of excellence in Europe to really launch dpaas to the customer base in Europe. So that's really why apkudo in terms of automation and why it makes a difference. This is a, we can have a long discussion on this one. But in short, the main issues that you will see is that I think it's probably easier to split between grading and functional. So cosmetic grading and functional grading of a product in terms of functionality and the functional grading of a phone. We do a lot of tests to those phones, but there is quite a few companies out there who do it. However, they're done in a open environment, in a warehouse where there's lots of background noises, there's difference in terms of lighting, and it's very difficult to actually get a precise and consistent functional test completed on that phone. The advantage of using automation, robotics and also the RFA line from Okudo is that we can do that in a very much more of a controlled environment. You know, we take the audio cell for instance, you know, there we have dedicated microphones and speakers in a soundproof environment. Testing those phones, you cannot get that level of accuracy if you're looking at it from a, from a manual perspective. Similarly, if you're doing the same with the pictures that are taken of a phone, which is one of the highlights of the solution in that, you know, we're taking upwards of 12, 14 different images in the highest resolution of that phone. We cannot do that in a manual atmosphere. Adding AI machine learning to that. We can then really assess that down to the profile and grading that we want to have and that we want to work with our customers. So it really is a question in the functional about getting into the detail and having the right environment. And then on the grading side, you have those pictures. You can really use technology to get a far more precise reading on that phone and grade the product better. So from that perspective, automation wins hands down. And you know, people change on a Monday or Friday or Wednesday. They're different moods, you know, so it's very, very much automation is the way forward and looking at it from a manual Perspective, you have a whole lot of HR issues which I had to deal with in the past as well in terms of sickness, training, retraining, churn, all of those things that come into that too. So really it's tech versus Touch, which is a, which is a recent podcast I know that you did with your colleague internally, who very clearly and probably better than I did in terms of numbers, was able to show that the advantages of automation are many and the route that the globe is taking, and particularly Europe as well, is in direction of automation. So hopefully that answers your question.
[00:07:54] Speaker C: Yeah, and there's another aspect to it too, Fergal, that I know you like to talk about, which is that it can be very dialed in per the customers desires and the profiles that they would like to delineate.
[00:08:07] Speaker B: Can you talk a little bit about.
[00:08:09] Speaker C: How Cyclist enables that for customers?
[00:08:12] Speaker A: Yeah, that's a good point. And one of the decision criteria we had was the multi profile functionality that the AppGudo line actually delivers as a business. We will offer our benchmark grading profile, which is a profile we worked on with abcudo, based on the years of experience and the millions of units pushed through the different machines around the world. That's our standard offering, which we offer to all customers. Those customers who feel that that grading may be a little higher or lower than they would like to have based on their market and their expectations, can work with us to set up their own bespoke profile. And that's a real advantage that we have so that we can really mirror the requirements and the way that they do it in their own business. We can do that now within the Cyculist business and deliver, you know, very similar results that they're used to doing, but better because we're using the automation. So it's a good point that we offer either the benchmark or their own or a bespoke one for a customer.
[00:09:03] Speaker C: Yes, and another difference that customers might have is they may be dealing with only one type of OEM device or they may be dealing with multiple. So that's another differentiator perhaps when you talk about this bespoke customer profile is you can sort of look at their.
[00:09:22] Speaker B: Mix of devices that they typically deal.
[00:09:24] Speaker C: With and customize it that way.
[00:09:27] Speaker B: Can you talk a little bit about.
[00:09:28] Speaker C: How having that sort of broader view of all types of devices in from all different OEMs, that data set gives you the ability to do that?
[00:09:40] Speaker A: Yeah, very much so. I mean there's a shared library between the Kudo machines, which is advantage for everybody who's involved in that ecosphere. But it basically the machine will process all Apple phones and will process almost every Android phone that is out there. And if a customer comes with a sizeable volume of a phone that's not on their, then we, of course we will work with them to add that to the library and to ensure that we can process that phone then and in the future. So you really have that compatibility issue ticked off because we can put down phones in any order if it's Apple, Android, different OEMs and the machine will, driven by the QR code on the phone will drive the grading and profile for that actual phone. So a real advantage in the process. In the past I used to have teams doing Apple phones and a different team doing Android phones. I don't have to worry about that anymore.
[00:10:29] Speaker C: Yeah, the machine can know it all essentially.
[00:10:33] Speaker A: And if it doesn't know it, we can teach it. And it will also learn as we put more and more product down it too.
[00:10:39] Speaker C: That is sort of the height of technology. It sounds like a fantastic pairing of capabilities that allows for this very dynamic customer offering. Where do you see the partnership going in the future?
[00:10:49] Speaker A: As I said earlier on, it was an easier choice for me to work with Abcudo based on the technology and particularly the end to end part of it. What I do see is that we will work together with ABCUDO to look at the upcoming portfolio, but also to improve what is there today as much as we can based on the European volumes, the European products, the European choices that customers are making. And we'll work towards the future to leverage the portfolio that Abcuro is coming down. That will include polishing machines, that will include extending our products to be able to process tablets, which is something that our customers are asking for, to be able to also process foldables, which European share of foldables is actually quite high in some of the geographies that we're targeting. So we're going to need to be able to offer that and then future technology such as storage in the facility, automated picking, shipping. Honestly speaking, we want to and we will grow together with Apcudo as it grows its portfolio and as we drive this joint center of excellence that we've set up here in Europe to work together to improve the automation aspects of the market. So I see it going far, I see it growing in terms of products, technology and also in terms of geography. We're working on our first facility together. I can easily see that extending to future facilities within the region and who knows, outside the region.
[00:12:15] Speaker C: Let's See, well, when you create a center for excellence, everybody wants excellence. So I can see that that could be an idea that spreads. It sounds like those capabilities are addressing both opportunities you see in the marketplace and also maybe bottlenecks or challenges that customers may face. Especially when you think about storage and dynamic picking.
[00:12:35] Speaker B: How will this impact the environmental opportunity here?
[00:12:40] Speaker C: How will this expansion result in greater sustainability and circularity?
[00:12:45] Speaker A: I mean, I think we see ourselves as a key part of the circular supply chain and the reverse supply chain. Every product that comes back through a trade in program, be it consumer or enterprise, needs to be processed, it needs to be graded, it needs to be prepared, data deleted, everything, all of the usual aspects of processing so that that can reenter the market. So we see that we, we speed that up, we add precision, we add consistency. You know, we add more detail, we take pictures which we can supply to customers, we make reports that we can supply to customers. You know, we'll work together to make sure that we reduce the return rates, that we increase the quality of the devices that are going into the market and increase the volume so that we're doing our bit for sustainability and ensuring that customers have a choice and have more choice of more pre owned phones which of course leads to a more sustainable world and more, you know, less e waste or less use of, of vital materials and minerals that we've simply used too much, too many so far.
[00:13:47] Speaker B: Well, and I haven't visited the facility.
[00:13:48] Speaker C: Although it's on my list of places I'd like to go.
[00:13:51] Speaker B: But I hear it's a very sustainable facility. What can you tell me about how.
[00:13:55] Speaker C: It'S powered and how it's operating?
[00:13:57] Speaker A: Yeah, so it was key for us naturally, when we were looking at the options around the facility to have one that was generally sustainable also because we're involved in that sustainability side of things. So our business is fully powered by solar that is on the roof of the building. Any power and heating that's in the building is actually done through core heating coming up through heat pumps. So our facility is not only secure, but it's very sustainable and has a year long temperature of 22 degrees.
[00:14:25] Speaker C: That's awesome in our currency, especially when we're in a cold time of year like we are now. The heat pump and the solar on your roof are still chugging along and generating that power, which is great.
[00:14:39] Speaker A: As long as there's no snow on the solar. Absolutely. It's working away.
[00:14:43] Speaker C: That's awesome. You are pursuing or have achieved some certifications. What can you tell me about those.
[00:14:50] Speaker A: There are some recognizable certifications that businesses need to have and want to have when they cooperate with businesses like ours. I think we started off by looking at joining industry bodies like Eurofast, which is the European refurbished industry group, that we believe that we can not only bring extra knowledge to that business, but also work with them to improve everything from right to repair to repairability to processing phones, etc. So that's one step of the way. But we're looking at ISO which is, you know, there's several key ISO certifications that are important to businesses that are working in this space. But then more, more on the sustainability side. Ecovadis is a key for us and that is a becoming a more recognized certification around the world. And ultimately I'd like to think that this business could potentially be a B core business, which is clear the highest level of certification in the sustainability space that you can achieve today. So these are all things that we're reviewing. They're on our roadmap and as we grow we'll be identifying and addressing those aspects.
[00:15:52] Speaker C: Yeah, that's fantastic. As everyone knows in the sustainability world, it's one step at a time and setting those goals and identifying the, your roadmap, as you said, is a really key part of that. So I'm excited to continue watching that journey and being a part of it.
[00:16:07] Speaker B: As a partner with you.
[00:16:08] Speaker C: It's definitely an exciting time. What do you have your sights set on when it comes to expanding the customer base?
[00:16:15] Speaker A: I mean, if there's one thing that's been very encouraging from us for the last couple of months and more particularly the last couple of weeks, it's the amount of customers who are showing interest in the dpaas service. As I mentioned before, there are hundreds of businesses out there and a lot of those businesses don't want and never wanted to process phones. It's not their core capability. So, you know, we see customers coming from the insurance space, from the operator space potentially clearly distributors, traders, and then resellers online and offline resellers of pre owned product. There's a lot of people who are involved in the supply chain. We've had a lot of visitors over the last few weeks and we have a lot more coming. So we're confident that we're addressing all aspects and all corners of the market to grow our customer base and to of course get the volume that, that we want to push through the machine. So at the moment we're at the early stages, as you know, but we are, we're progressing very well and with A lot of hope for 2025 to be a great year.
[00:17:11] Speaker C: Yeah, for sure. And you've also got kind of on your side is the upcoming regulations in Europe around supply chain and end of life for devices. How has that impacted your goals and your trajectory that you see coming?
[00:17:28] Speaker A: There are a couple of issues where compliance are reshaping the industry and we have to reshape and react towards those. The first one is CE branded product, which CE really means that that product was initiated, initially, sold and made for resale in Europe. The fact of the matter is that today the demand for pre owned product in Europe far outstrips the supply. And in as far as almost one in every two devices comes from outside of the region, which is good for the consumers. But there are certain compliance issues which are attributed to that. So what this means is that the CE regulations are going to reduce the number of available products to go into the market, which means that we have to really move the devices through quicker, better and improve the devices to the best they can be. So part of the work is processing and grading. But as cyclists, we're also a device enhancement business. So we're looking with abcudo to do such things as screen replacement, which is an exciting new technology which we hope to sort of push here in Europe and be the first to do that in Europe. So the compliance will play a role. Also USB C is another, since 20th of December last year. This is controlling the amount of product that will enter the European market. Once again putting a real emphasis on which products are in the market and to get those to the best quality, move them through quicker, more precise and more consistent grading. And we hope that cyclists will become a benchmark for products in the future. Where people see this was really done by a precise technology that will set a benchmark for future visitors. And who knows, they may even get a higher price since they've been through the automation. So a lot happening in that space.
[00:19:08] Speaker C: Yeah, that's fairly exciting. Lots of opportunities there on that horizon.
[00:19:12] Speaker B: Is there anything else you want folks.
[00:19:13] Speaker C: To know about Cyculys or device processing as a service?
[00:19:18] Speaker A: I think we've touched on a lot of the topics today. I think people can find more about cyclists on cyclists.com or
[email protected] you know, we are an independent business. We're at a startup phase. We believe we've got the right technology in place to grow. You know, DPAs as a technology is really about to take off. We had a visit from Ben Wood from CCS Insights in The in last week where, you know, he got into real detail through the product and the opportunities and together, you know, we realized that the market is moving this way. We referenced earlier on 85% automation in the US versus 10 to 15 in Europe. There really is only one way that we can go with this. We hope that working with you and working with the market and coming from the market that we really extend the reach of cyclists and apcuto together to really launch proper automation in Europe over the next next couple of years. So it's an interesting space. Let's, let's see where it goes. Let's do a follow up in a year and see what's happened in the meantime.
[00:20:16] Speaker C: Yeah, I love it.
[00:20:17] Speaker B: I love the convergence of multiple market forces.
[00:20:21] Speaker C: Timing it right in 2025 is going to be a big year for cyclists and I'm really excited to watch your growth and to see how it progresses throughout the course of this year and beyond. Well, thank you so much for for joining our podcast and sharing what you've.
[00:20:36] Speaker B: Accomplished at Cyclist so far.
[00:20:38] Speaker C: How the partnership without Kudo and is.
[00:20:40] Speaker B: Ushering in this new era of device.
[00:20:43] Speaker C: Processing and sort of a little preview.
[00:20:46] Speaker B: Of what's to come in the year ahead and beyond. And thanks to our listeners for tuning.
[00:20:50] Speaker C: Into today's podcast session. I'm open to feedback and ideas for future sessions.
[00:20:56] Speaker B: Email me if you want to share.
[00:20:58] Speaker C: Any thoughts or ideas and hopefully you've enjoyed this session and we will see.
[00:21:02] Speaker B: You at the next one. Thanks.
[00:21:04] Speaker A: Thank you.
