Bluedrop Performance Learning Inc. (TSXV: BPL)
October 1, 2012 Issue
The Most Powerful Name In Corporate News and Information
In their Cloud-Based CoursePark® Learning Management Solution for Enterprise and Individuals and their Defense and Aerospace Group Providing Online Courser Development and Low Cost Simulation, Bluedrop Performance Learning Inc. has that Rare Combination of a Stable Steady Growing Business to go with One that has Multimillion-Dollar Contracts
CoursePark® (www.coursepark.com) is Bluedrop's cloud-based learning management solution for enterprise and individual learning and contains over 5000 third party online courses from the world's leading publishers and the expert down the street. The CoursePark platform was launched in 2011 and is growing quickly with registered users in 100 countries. It aims to transform workplace learning globally, especially for multinationals training their clients or supply chains, small businesses, professionals (such as nurses and teachers), and governments interested in improving economic productivity.
The Bluedrop Defence and
Aerospace group is a recognized leader in producing mission critical
training solutions for Defence and Aerospace. It provides custom online
courseware, virtual training devices and virtual reality simulation for
international military and commercial aviation clients.
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – October 1, 2012
Mr. Rizkalla: The impetus for Bluedrop was in 1992 when I decided to commercialize an engineering class project—before I had even graduated. However, the real vision for Bluedrop started about five or six years ago when we divested of all parts of that original company that were not involved in advanced learning technology. At that point, we became essentially a new start up with only 2 customers, less than $500K in backlog revenue and 11 employees. Our vision was to simplify the way that people learned in the workplace. As we built custom learning for Fortune 500 clients over the years, we had witnessed an enormous disconnect between the promise and reality of online learning. We found, almost universally, that companies disliked their learning platforms and their employees hated them even more so. The adoption of learning in the workplace was low. Everyone in the industry thought there must be a better way, but they had too must vested in the old ways. We saw the social media revolution happening and we wanted to develop a new approach to the way that people access their learning for their entire careers. We had also been quietly pursuing the growth of a practice in Defence and Aerospace because we felt we had a strong competitive advantage in the Canadian market. We wanted to pursue those lines of businesses and spin off everything else. One line of business became CoursePark Learning Services. The other line of business became our Defence and Aerospace group.
Mr. Rizkalla: In our Defence and Aerospace line of business, Bluedrop provides a full continuum of services from online courseware development and CAI (Computer Aided Instruction) to advanced low cost simulation. We help our clients find the right balance and mix of advanced learning technologies that reduce overall costs, accelerate time to competency, and improve effectiveness of training for the operation and maintenance of military and aviation equipment. To that end, we have developed a strategic partnership with an Australian firm to access and build upon some of the world’s most advanced virtual reality simulation technology. It is so advanced; for me it feels like pure science fiction. This technology is now used to complete various rear crew training in aviation. It also simulates missions and maintenance that can tie into a host of Army and Naval equipment. We provide remarkable simulation capabilities at a price that makes them accessible for a vast part of the market that is not serviced right now. Since the technology is software based, it provides a great cost savings, and can be customized, configured and implemented in a few months.
Similarly, our CoursePark cloud-based platform is disruptive while also targeting large groups which are poorly serviced by the learning industry. Fundamentally, CoursePark delivers workforce transformation.
Not only is CoursePark unique, our business model is also disruptive. We have found innovative ways to target the vast small business and professional markets that are virtually untouched by the industry. For example, we have been working with governments that are very keen on improving their small business productivity. CoursePark is the first learning platform that allows governments to successfully “intervene” with online training that improves the productivity of their small businesses and workers. Because CoursePark allows individuals to keep their learning record for life and allows small businesses to quickly set up their own secure learning platforms, it is a logical place for governments to invest in workforce transformation initiatives. We already have two Canadian provinces that have adopted CoursePark as their standard to provide online training for small businesses. In the next year, I fully expect that half of Canadian provinces will have standardized on CoursePark! We are also in discussion with several US states, have pilot projects in Chile and Peru and initiatives under exploration in other regions. The Toronto Stock Exchange has also just exclusively adopted CoursePark to deliver their online compliance courses to all 4500 public companies they list. Our expectation is that once small businesses, teachers, nurses, NGO, etc. are onboard, they will keep purchasing new courses because they need to adapt to ever changing skills. The potential is enormous—and we have had enormous success where we have already launched initiatives.
They are starting to come to us at this point because the first projects
that we have done have been overwhelmingly successful and far surpassed
expectations. The first Provincial project was one of only two projects
highlighted in an independent study as excellent investments for assisting
businesses during 2011. The good news is governments talk to each other.
Some of the opportunities are coming from word of mouth and others are being cultivated through partners with relationships with governments in the US, Canada, or internationally. For Fiscal 2013, we are planning on tripling our sales and marketing investment to capitalize on the opportunity.
Because of our 20 years of helping multinationals adopt online learning, we have been able to develop a full program management experience to offer technology, implementation and change management support for governments, professional groups and multinationals with product training needs. We deliver results—not technology.
Mr. Rizkalla: We recently bought a nursing company that has a few hundred nursing continuing education credits that are approved for CE in the US, so we do have to keep those updated and get them approved every year. However, the vast majority of the 5,000 courses in our library are from the world’s top publishers, companies like Skillsoft or Mind Leaders. They constantly keep them updated. We are a key aggregator of the world’s best content—and our vision is to have the learning come to individual versus the other way around. So the bigger we get, the more clients and users we have, the more content comes to us.
Mr. Rizkalla: That is tough because both are growing very quickly and have enormous sales funnels. However, I think CoursePark has the biggest upside. The product has only been out of beta for about a little over a year. However, it already has organically secured users in over one hundred countries. It is growing very quickly on its own, independently of the initiatives that we are doing with nursing, teacher groups, the Toronto Stock Exchange or provincial and state governments. Our short-term goal is to have half of all Canadian provinces using it exclusively as their platform for workforce development. There are many great opportunities going on in the US and elsewhere. We see all this activity leading to more growth and an eventual ‘tipping point’ for the product. One of the interesting statistics we cite, is that every three years, 50% of the skills that people use on the job changes, so there is always a demand for online learning and constant learning. Our long-term vision is very ambitious. We want to become the world’s learning platform and obviously, we are early in the process. However, I think we have a very unique approach to making that happen and a very interesting model of how we acquire, keep and monetize the users.
Most firms with revolutionary products would have already raised millions of dollars from investors by now. This dilutes their shareholders prematurely. We have been getting paid as we build eyeballs, saving millions of marketing dollars in the process. So, it is a very different approach. We will have achieved our potential when the world uses LinkedIn for business connectivity, Salesforce.com for sales management, and CoursePark for their lifelong learning. That is my dream for CoursePark.
Mr. Rizkalla: I have been CEO of Bluedrop and its predecessors now for over twenty years before completing this acquisition. People thought I would not enjoy leading a public company, because for twenty years I have not had a boss. I have experience running small successful private companies. I spun off two other companies, acquired two small companies and helped create hundreds of jobs that exist today. However, I was not satisfied. What people underestimate about me… is my ambition. I could not rest until I built a team and a company that changed the world in some small, or not so small, way. That is what excites me and has for most of my 44 years. The shedding of our IT businesses a few years ago was a significant and risky move to realize this goal. At that time, I essentially started again at the very bottom of the ladder. Completing this transaction and becoming an issuer was another step in the ladder.
I like the discipline and the rigor of being publicly traded. I like having a highly experienced and demanding Board. The debate and added scrutiny of being public has been fantastic. Being an issuer forces that rigor, accountability and discipline. What I am surprised about is how much I enjoyed that after 20 years of free reign. I am also fortunate to have a working chair, Derrick Rowe, who has built a highly successful global publicly traded company from the ground up and ran another major public company. It is great to have his wisdom and experience day in day out.
Mr. Rizkalla: That project just shows the power of online learning. We are helping a small group of researchers down there… a few thousand people. They are American researchers. Lockheed Martin (NYSE: LMT) has the contract to support them with all kinds of logistics, and when people are there in the middle of the temperatures that go down forever, learning is a big part of what they do and it is core to their success and safety. This contract provides many online courses to these individuals while they are there so they can keep developing and advancing their skills. The neat thing is we now have customers in all seven continents.
Mr. Rizkalla: About two years ago, we were about a $3.5M company. Last fiscal year we recognized almost $7 million in revenues and this year we should exceed 50% revenue growth…we are having another good year. My goal is to maintain a very aggressive pace of organic growth over the next two years. We have also begun the process of identifying complimentary firms that can accelerate our ambitions. Regarding profits, we have a strong story building there. Our Gross Profits consistently range between 45% to 50%. This year that Gross Profit did not fall out to our bottom line due to very strong investment we have made to build an infrastructure for rapid growth. This year, we have invested a great amount of money in the Serebra acquisition, legal and accounting costs, ERPs, ISO 9001 new IT systems, getting a Board in place, etc. etc. Accordingly, our corporate expenses have risen quite significantly, from under $500,000 a few years ago to over $2.5 million this year. The good news is, there will be very modest growth in that corporate expense even as we add significant new revenues. We now have the base, team and infrastructure ready to accommodate significant growth. Going forward, I see healthy returns going to the bottom line. Future growth will fall mainly to the bottom line, which is good news because for 2013 we are expecting a rate of growth that is consistent with the past few years.
Right now, we are a company with enormous potential but not one that has
been telling its story to investors. That was deliberate, as I will explain
shortly. To be honest, this interview is one of the very first activities in
which I tell our story to investors. This will soon increase and change the
dynamic of the stock. I believe Bluedrop’s combination of tremendous
potential with little hype or knowledge of the company is a perfect
combination for investors looking for both significant and immediate value
and a formidable potential upside. We are a company with strong technology
that has the potential to change the world. On the CoursePark side,
potentially half of Canadian provinces, several states and the Toronto Stock
Exchange have already (or will likely adopt) the platfom. And we have only
just begun. CoursePark represents product and business models that are
disruptive by nature. Obviously, there is high risk in delivering on that
kind of very ambitious strategy and that is mitigated for investors through
our very stable and successful Defence and Aerospace practice. What it means
is that investors have the opportunity to hit a homerun with CoursePark if
it achieves a fraction of our objectives. On the other side in our Defence
and Aerospace line of business, you have multiyear and multimillion dollar
contracts. We are doing very well in execution. There are several other
large deals always in the pipe with a very strong backlog and pipeline. That
is a very good mix for investors. It is an amazing opportunity for
substantial appreciation and growth on the CoursePark side and a stable
steady growing business with multimillion-dollar contracts on the Defence
Most firms with revolutionary products would have already raised millions of dollars from investors by now. This dilutes their shareholders prematurely. We have been getting paid as we build eyeballs, saving millions of marketing dollars in the process. So, it is a very different approach. We will have achieved our potential when the world uses LinkedIn for business connectivity, Salesforce.com for sales management, and CoursePark for their lifelong learning. That is my dream for CoursePark. - Emad Rizkalla
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