Verb Technology Company Inc (VERB)

[tedpeele]

A REDBULL RETROSPECTIVE - long post:

A look back at the EXPECTATIONS vs REALITY for VERB from 2018 onward.


I was going to continue to minimize my posting on VERB until and unless something major changed, but a little birdie whispered something into my ear today.....

So pop some corn, grab a coke, and enjoy the show!

TedFlix, Series I, Sep 24, 2019


March, 2018: "We are getting this stock over $3..and soon... we are 'grossly undervalued'" here


Did you drink the Koolaid, or as Rory prefers - Redbull?

Did or do you share in Rory's GRAND VISION?

Did you too get energized?

How do you feel about that now?



THE BACKSTORY

In 16 months prior to the Great Rise to $3 in 2018, I followed this stock closely.

I drank the koolaid and I was very excited, writing many positive posts during the period. An early one in Oct 2016 I gushed over the realization that Bbooth was about to change the world of VIDEO forever:

"What's the business model here? I'm beginning to see it as simply this:

More engaging video.

That's a wallop though! ...That's huge. " here

But I too PAID THE PRICE for believing too much. Over the 16 months preceding the 'Great Rise to $3' GREAT EXPECTATIONS were raised and missed - over and over, and I paid a big price. That's what happens when the reality doesn't match the expectations. As time passed, I questioned how so many very near term expectations could be missed -- and by so much.

First I just doubted the execution.

Increasingly though, I started to doubt the validity of the Holy Grail itself - Rory's VISION...{audience gasps, shudders, and jaw drops...}


NOW YOU HOLD IT RIGHT THERE TED -- ISN'T THIS THE NEXT AMAZON, FACEBOOK, or APPLE?

You may ask - "If in the end they really have something PROPRIETARY AND DISRUPTIVE then isn't Rory's vision - his GRAND PLAN - still valid? And won't I still get my money back and far more?"

Well, the current price would have to rise by 40 times to break even at the 'grossly undervalued' pre-split $3 level. Some had no extra funds to use as the price dropped to average down..

If it was 'grossly undervalued' at $3, is it possible it's 'grossly, grossly, grossly' undervalued now?

That's the thing -- after all this time there is no way to know if they really do have something that is either proprietary OR disruptive, because IT'S ALL BASED ON FAITH IN THINGS THAT TO DATE WE HAVE POOR EVIDENCE FOR:

1. Faith that the code can't be duplicated easily. We don't really know how true this is. With all the rewrites from scratch, years of Qubeey dev replaced with simpler open source, v1 gone,v2 limbo, and library and hosting changes who really knows how many of the millions of lines are active and meaningful? The fact is that the arguments for it such as "Oracle would have duplicated it if they could have" are driven by assumptions that may or may not be true.

2. Faith that interactive buttons increase conversion rates. We again don't really know how true it is. Having the ability to click on and during a video probably DOES increase conversion rates, but so too might having the ability to click on the entire video or underneath it at any time - which doesn't require VERB's interactivity at all. The detail needed to evaluate is simply not there on these claims.

3. Faith that large companies are excitedly embracing the technology because they know it's a winner. We do know people get excited when the see the tech, but we don't know if it is because it is a winner, or because they simply think it is a winner. And if they 'get it' why is it that so many end up either not getting it, or dropping it? Why don't we have a single large client contract after all this time? And why is the product an add-on for the large CRMs, including -to date - MSN? And why has no large company in the business taken a stake in VERB?
Until we have a large company pay large money - million dollar contracts, then this claim remains unsubstantiated

4. Faith that millions of individuals will pay $10 a month to use it. Until they pay it, this remains another assumption with poor evidence.


Time will tell if the claims for being the next Amazon, Facebook, or Apple will be realized..the jury is still out, but who can legitimately blame the skeptics at this point?



THE NEXT 18 MONTHS: IT'S TIME FOR SOME REDBULL RETROSPECTION:

Let's take a look back at the GREAT RISE AND FALL OF VERB, AND THE JOURNEY TO NASDAQ.

Maybe some RETROSPECTION on what has happened during the last year and a half can help us in deciding if our original assumptions should be adjusted, or if we should stay the course and...
KEEP ON KEEPING ON

Many think that we have blown it

But they too will soon admit

That there's still a lot of love among us

And there's still a lot of faith, warmth, and trust

When we keep on keeping on

Keep on keeping on, y'all

Keep on, keep on, keep on, keep on
Keep on, keeping on
(Keep on, keeping on)

Were all the GREAT EXPECTATIONS realized and the believers right all along, or does the REALITY tell a different story?

And maybe too it can help us decide if we were right all along about this being the next Amazon, Facebook, or Apple, or whether that was just crazy. Either way it's great to know there are folks out there willing to help us with our Google searches..and for free!


You may be right

I may be crazy

But it just may be a lunatic you're looking for

Turn out the light

Don't try to save me

You may be wrong for all I know

You may be right
You may be wrong but you may be right
You may be wrong but you may be right
You may be wrong but you may be right
You may be wrong but you may be right
You may be wrong but you may be right
You may be wrong but you may be right
You may be wrong but you may be right
You may be wrong but you may be right
You may be wrong but you may be right

Are you ready yet? The early reviews are already coming in:

"It's got everything - greed, love, heartbreak, blood, and suspense. 4 Thumbs up!" Siskel & Ebert revived

"The insights really got my legal juices flowing!" Alan Dershowitz

"I was on the edge of my seat the whole time. I got a booty dimple...Waaaaa!" Kim Kardashian

"HOT HOT HOT" Rich Bohn, whoever he is...


AND NOW, WITHOUT FURTHER ADO -- CAMERA, LIGHTS --->> ACTION!


GREAT EXPECTATIONS! - A REDBULL RETROSPECTIVE

SCENE INDEX:

1. ORACLE and MARKETO - THE STAR OF THE SHOWS!

2. ENTOURAGE - YOU'RE GOING TO HAWAII!

3. MARKETO AND ORACLE SALES RAMP UP!

4. ACQUISITION AND GOING TO NASDAQ - REALLY SOON!

5. ACQUISITION PRICING: 1 + 1 = 7!

6. THE INSTITUTIONS WILL LOVE VERB!

7. HOPE FOR THE FUTURE: SAAS GROWTH WILL MOVE THE PRICE!




1. ORACLE and MARKETO - THE STAR OF THE SHOWS!

THE EXPECTATIONS:

"What types of startup companies does Oracle do deals with?

Not ones with low potential..." here

"The 4 weeks that ROCKED the WORLD nFUSZ TOUR" here

"Too close now to the Oracle and Marketo conference so you'll have back to back major PR's that will propel the sp." here


I questioned these assumptions:

"Oracle has plenty of other partners too." here

and

"For me it would be a PR in which Oracle clearly shows that it views this partnership differently than a typical add-on. One that shows genuine excitement and commitment to selling the product because it sees the product as the future of CRM and a 'must have' feature for many if not all of their big customers. Gushing statements in the PR by top executives at Oracle. Exclusive joint PR (ie not one that includes 4 other partners, for example), and not typical boiler plate comments.

I know this won't be a popular comment but the fact that NFUSZ initially did not even have their own booth seems to be counter to the idea that Oracle sees this as a significant new technology worthy of highlighting in a big way at NetSuite. I want to see some evidence that in fact they do see this as a significant new technology and will be pushing it hard to their customers." here


THE REALITY? Well, I wasn't there, but the 'big announcement at Netsuite' that was predicted by Rory AFAIK didn't happen, and we know the Joint PR didn't happen. So, it seems at least reasonable to say that while the booth at Oracle may well have been busy, NFUSZ was one booth among many others, and certainly wasn't highlighted as a star partner -- like the next Amazon, Facebook, or Apple. Marketo seemed to like NFUSZ more, but there is no evidence they were the star of the show there either.

The price dropped dramatically during those 2 weeks as expectations were not met.

Remember - "don't get your DD from a message board".


2. ENTOURAGE - YOU'RE GOING TO HAWAII!

THE EXPECTATIONS:

When Rory said in early March that employees were picking out Hawaii shirts and watching their diets, and that he thought they would blow past the 20k signup goal, nobody can be blamed for believing that the 20k goal for the quarter was going to be met.

I believed it too.

But, Rory failed to confirm it when the quarter ended, and indicated that he wouldn't confirm because it could give up important leverage with a potential full MLM signup to reveal their subscriber numbers.

People kept the faith:

"If subscribers were say 5,000 like some here would like to believe, the company wouldn't be planning to uplist ASAP, let alone this year or next." here

and

"Same group will likely go to Hawaii too." here


I expressed doubts here:


Then a few weeks later Rory explained FOR THE FIRST TIME that they switched versions, and put people on for free, and also that for strategic reasons he didn't want to give up the subscriber numbers. That was followed by fins that showed very low revs. Then after Q2 numbers came out and AGAIN showed low revs it was clear that not only did they fail to reach 20k, they didn't even get close.

Many by then realized it wasn't met, but a few held on:

"Subscription numbers of 20K or over would be a good PR. Rory did state back in March or April that they would blow those numbers away & his employees were dieting for Hawaii trip. Release the numbers!!! Aloha" here


But most who previously were sure it was met, simply didn't say a word...although one did put up this comment just recently, which clearly misses the whole point of a Q1 2018 prediction:

"They said VERB would never have 20,000 users...Wrong" here



THE REALITY? Obviously they got very few signups. Less than 5% of the 20k was reached.

The price dropped significantly with each new disappointment regarding the 20k goal

Remember - "don't get your DD from a message board".



3. MARKETO AND ORACLE SALES RAMP UP!

THE EXPECTATIONS:

"With a sales force of 2,000 people, this one deal alone can send $FUSZ to the moon." here

Early on and when the price was high, I warned about what could happen IF there was a much slower adoption rate than what was anticipated:

"Adoption by end users is all that matter though and that will depend a lot on how well the product is marketed. Rory hasn't spoken to all 2000 sales reps, and Oracle hasn't spoken yet at all about this deal. That's all I'm saying. It's great IF the product is marketed hard and IF it is seen as value-added by those that use it. For whatever reasons we have not yet seen fast adoption through the OTHER deals and means, which does give me some pause, but I'm very much looking forward to seeing just HOW COMMITTED Oracle is to it" here

"large growth is going to be necessary from MLM and/or CRM to justify prices in the dollars per share." here
oh Ted, concerns, concerns, why oh why do you concern yourself so much? :( Don't worry, be happy!


THE REALITY? Zero large company sales reported, virtually no sales from what appeared to be extensive Marketo efforts, and none from Oracle either.

The stock dramatically dropped with Q2 and then again with Q3 reports confirming that high expectations for ramping sales were not even close. People then were very unhappy.

Remember - "don't get your DD from a message board".


4. ACQUISITION AND GOING TO NASDAQ - REALLY SOON!

THE EXPECTATIONS:

The long period of silence was filled with lots of speculation: Would Rory announce a flurry of CRM signups? Was FUSZ getting bought out? Was Rory just waiting for revs to unleash onto the market along with a bunch of news?

Once announced, many people expected it to happen quickly:

In Aug a poster wrote: "It generally takes 4-6 weeks to process a listing application. This time frame is variable and may be shortened considerably," here



THE REALITY? The company uplisted in early April, 2019, 6 months later than some expected.

The stock price suffered from long delays, but was punctuated with some spikes along the way, especially leading into the listing, as optimism abounded!

Remember - "don't get your DD from a message board".



5. ACQUISITION PRICING: 1 + 1 = 7!

THE EXPECTATIONS:

"IPO coming and I have a feeling a new cusip." here

Lots of talk about reverse triangular mergers, and how FUSZ would be getting a new cusip which would make them the first company in the history of stocks to do an IPO from the OTC, but the biggest expectation was that the IPO would involve a 'fair' price that would be far above what the market had 'beaten down' the price to.

A corrolary to the pricing question was that of a RS. Many expected and were ADAMANT that there would be no RS based on Rory's prior strong comments against doing one.

Others, like the poster below, thought that there would be no way a RS would done without the 'goods' to support it:

"nFusz fact:
Company has never talked about a RS.

We all know RS don't work if you don't have the good to back it up.

The cuspid change will give a temporary NOX rocket thrust.

..I believe nFusz has the goods.

I've probably done more DD than most.

I am good with others that believe they don't.

That's what make the world go round and makes my investment even better.

...We'll see who's DD is closer to right." here

"You may be wrong, but you may be right
You may be wrong, but you may be right".


When Rory said "1 + 1 = 7" people took that very seriously. Expectations were raised for a much higher price than the $25m valuation given to SC.

People were giddy with excitement, as Rory seemed to signal that the price would be high, and clearly said major "TIER 1" institutions were showing great interest. The price made an impressive moved to $18 as there were many excited posters with such mindsets of "We are getting this stock over $45...It's worth $2 Billion NOW! As the big day approached and the price was hovering around $13 a share one poster wrote":

"Last attempt to shake shares." here

and

"Keep in mind the Acquisition, VERB/SC's revenue, PO and uplist are not factored into the share price...Would hate to be short right about now" here

and

"Lets say 10 of the institutional investors buy in. Wonder what happens to the other 50 that wanted in?" here


"You may be wrong, but you may be right
You may be wrong, but you may be right
You may be wrong, but you may be right"



My view was different, shockingly below what anyone was thinking. On 3/19 when I was asked I said:

"Sub $10 almost for sure, but I'd guess between $6 and $8." here. The truth be told I was really thinking that it SHOULD BE more like $3-4, but just didn't want to say that.



THE REALITY? FAR WORSE --> $3.13 NOT PER SHARE, BUT PER UNIT! DEVASTATING!

The price? Of course is quickly moved to a similar valuation, in the mid 2s..

Remember - "don't get your DD from a message board".

Turn out the lights, don't try to save me....



6. THE INSTITUTIONS WILL LOVE VERB!

THE EXPECTATIONS:

The expectation was that institutions on the Nasdaq would recognize the value of the company, and pay handsomely for it, boosting the value of the company up from it's 'ridiculously undervalued' status to a fair value. Who can blame them? After all, that's what Rory had always seemed to think would happen, so it must be a realistic expectation, right?

When the acquisition price shocked everybody very quickly a rationale was given, by those same people who expected 1 + 1 = 7:

COLLUSION BY THE INSTITUTIONS

"Here's my thoughts...
If I was going to invest $10M into any company, I would want the deal of a lifetime. After all, I'd have some risk. No guarantees in life.

If you are selling, you want the deal of a lifetime too, but only you know how much it's worth.

Now if you buy a car and get a decent deal, maybe you could resell it if you didn't like it and break even or take a little hit...Institutions are not doing it to break even. They want the warrants to go positive..There are $53M reasons why an institution or institutions will want VERB to succeed.

Money is not the issue nor valuation in my opinion. It's how fast can you take over the world." here


You just can't make this kind of stuff up! What happened to supply and demand? What happened to all the institutions that were left out, dying to get in? And had anybody really been paying attention to all of the FAILED EXPECTATIONS raised by the company and others throughout the year? Not just missed, but badly missed?

The air was thick with smell of denial. Nope - we made it to Nasdaq just as Rory said we would! All is good! Proprietary and Disruptive. Serenity now, Serenity now..

Collusion..Collusion..Collusion.. A very interesting word, indeed....

Hmmm, reminds me of "We are getting this stock over $3". Any thoughts on that Alan, my friend?

But, I digress....



Well, collusion by the institutions is POSSIBLE. It IS more than a zero percent chance.

SO, what's the test? Very simple. Just see what those institutions did. Are they holding the 'deal of a lifetime' for life, or not?

Rory very clearly said the demand was outstanding, and word was that some 40 had signed in, TIER 1s, with long term objectives. Over the next few months there was great anticipation in hopes of finding validation of the strong institutional ownership despite the devastating and relentless daily selling as the day they went to Nasdaq and the in the weeks following.

Some support was found for institutions buying in, but it was one here, one there, and hints of possible HUGE ownership..The new theory just HAD TO be right, right? After all the price was continuing to slide and we needed our faith...



So, finally when the reports came out I looked, and unfortunately after a ironic error that showed CitiCorp having a large ownership -- in error as if there wasn't already enough happening to taunt and haunt the poor shareholders -- what I found wasn't pretty:

"1,810,546 shares or roughly 8% ownership

It appears that the original 6,389,776 shares is now 1,810,546, a reduction of 72% apparently sold already." here and much of the remaining ownership is from index funds that buy hundreds or thousands of stocks.

See also here



THE REALITY? There was no collusion. There just isn't much interest by large institutions. What? Rory misread the institutional interest? Is anyone surprised yet?

Seriously, "don't get your DD off of a message board"!




7. HOPE FOR THE FUTURE: SAAS GROWTH WILL MOVE THE PRICE!

THE EXPECTATIONS:

"SaaS Revenue grew 37% Q over Q

That is Q over Q BTW

I invested in a SaaS company

Could someone calculate the CAGR on that now that we've had a few quarters?" here


The SAAS revenue growth is good. And finally, people just this quarter started looking at the fact that most of SC's revenues were from the legacy business, and the the large multiples previously being applied by some to the entire $13-$14 million were in gross error, and realize now how critical it is that the SAAS revenue continue to grow, because that's where the high valuation potential is.

Almost nobody was talking about the revenue split between legacy and digital other then me until this report. Last November I posted: "It's just really hard to know how much those users are paying but it seems pretty clear that (annual) digital revenue is around $3-4m" here


REALITY CHECK:

SO, should we 'calculate the CAGR on that (37% Saas Rev) now that we've had a few quarters?

Let's not. Really.

Rory isn't even willing to do that anymore. Maybe he finally has learned not to set people up to have such GREAT EXPECTATIONS until the reality is clearer.

Maybe Rory has finally set down the RedBull and only will say "it will happen when it happens".

...... And If he can do that, CAN WE DO THE SAME?


GET OFF THE REDBULL AND WAKE UP PEOPLE!

Once one gets off the redbull one may see that....


The movie wasn't so hot

It didn't have much of a plot

We fell asleep

Our goose is cooked

Our reputation is shot

Wake up, little Susie

Wake up, little Susie

Well, what are we gonna tell your mama

What are we gonna tell your pa?

What are we gonna tell our friends

When they say, "Ooh la la!"