I enjoy three things; Two that can’t be described publicly in polite company, and the third is when I find a really promising small cap investment opportunity that nobody else has yet spotted in the wild and juiced to the point where I can’t make money off it.
Even better, if that opportunity is on the upward trend, with growing sales every month and frequently sold out products.
Even better, if that upward trend has the company moving toward profitability. Even better, if that profitability comes from a product that is sold to a sector that is growing exponentially, and better still if the company has a growing mass of product reviews that don’t just show it’s good, but that it has established itself as best in class.
Beacon Wizardry and Magic (BECN.V) is a technology manufacturing company based out of Vancouver Island and was founded by a pair of guys that came out of the world of Big Microphone, but left their comfy jobs selling Go-XLR’s to the masses to make a better product specifically for streamers, content creators, YouTubers, and music professionals.
Their flagship product is this, and it’s the nearest thing I’ve seen to a complete reimagining of what a microphone should be.
What’s that, I hear you ask? A microphone with some buzzy nerd terminology? Big deal?
Allow me to make this a bit clearer for you – this microphone will drive the makers of several different pieces of pre-existing audio equipment into a very uncomfortable state.
THE BASICS
In a nutshell, while most microphones are essentially ‘dumb’ hardware – they take audio and pass it to your computer, sometimes via a pre-amp, where you can process the file, this one does all the processing of the sound inside the mic, controlled by software on your PC.
That’s right, you’re not just buying a hardware intake for noise, you’re buying an on-board computer that solely works to process your sound before it even gets to your desktop computer.
I love this because I have a mostly shit computer that sometimes runs loud enough to be heard by the mic right next to it, which has to be right next to it because my wires are too short and then my headphone cord gets mixed in, and the computer is loud because its processing video and audio and sending it out to a stream and THIS ISN’T AS EASY AS IT LOOKS, CHRIS, NEXT TIME DON’T BUY THE SECOND CHEAPEST MACHINE AT BEST BUY.
I also have a bar fridge under my desk that I either need to ignore or disconnect when I’m recording, and which can be heard in the back of much of my video work. Also, my office is a square and, despite some ham-fisted attempts at sound baffling, tends to echo a bit-bit-it-t.
So, I’ve got a cheap ass computer, a cheap ass mic, a middling studio set up, an under-desk fridge (I like me a Coke Zero, sue me), short cut-price cables, the hum of traffic behind me (didn’t mention that but it’s a thing), and an office full of people outside who close doors and ring phones at inopportune times. While all of that might sound a bit shit on my end, like if I tried a bit harder and spent a bit of money I could fix most of those problems, hi, have you met 99% of the people out there right now using a microphone through their computer?
At least 80% of Twitch streams are so quiet you need to turn the sound up to hear them. At least half of those get regular copyright strikes against them because background music can be heard on stream. Some pound their P’s and T”s so hard you have to turn the sound down again to not hurt your head. And all of that is before we get to the horrors of volume standardization on Zoom calls.
To negate all of that madness and to put myself forward as some sort of kick ass professional content creator, I literally employ a dude to trim all of that weirdness out of my sound. His ongoing employment may be in doubt though, because the Beacn setup takes care of a lot of his old duties one time, and then applies those settings to everything going forward.
Why is it important to do your mix ‘in the mic’ instead of after it hits your computer? If only because it means every program you use your mic with gets the SAME PRE-MIXED SIGNAL.
Check it:
The reaction to this, and other improvements by Beacn, has been pretty universally epic. They were just at Twitch Con and beset by streamers wanting to try the gear, their new creator marketing program was opened and closed inside a week after they were pounded with applications, and online reviews just keep piling up from guys who do audio for a career basically not blinking because they’re so freakin’ amped (pun intended) to tell you about it.
Don’t take it from me. Take it from the target market.
THE INVESTMENT OPPORTUNITY:
Beacn’s microphone product and the accompanying mixer products (great in their own way, but for another article) have been on sale now for less than a year and generated over $3 million in revenue in the first nine months, which took them to a $240,000 net income profit in that period. The most recent quarter has not shown a profit by itself, mostly due to the expenses involved in going public, but I’d expect the next quarter to show more growth, clearer of those expenses.
Beacn runs at a $14m market cap presently, which is fair by the numbers = about a 4x annual sales, which is right on the standard valuation formula for companies used by many. The stock chart looks fine – the usual early go-public burst, followed by a slow down as news flow gets back to normal. In the six weeks we’ve been quietly looking at the company, it’s moved up from $0.24 to $0.34 on minimal trading volume.
What we like about the target market here is, the streamers are big in investing. Streamers have been talking up investing since Dogecoin caught their attention a year back and it’s really a thing with that crowd as they move away from crypto. As streamers and content creators try this product, we imagine many will learn they can both buy the product AND the stock, and will not only do so but tell their viewers they can do same, creating a marketing self propulsion machine, as the customers invest in the stock and the investors buy the product.
It is one thing to say a company is undervalued – it is another thing entirely to say that that company is undervalued at a time when it’s showing legitimate legs on the sales front, developing a burgeoning reputation among its customer base, showing real recognition of that customer base’s needs and wants by adding new functionality every few weeks through software updates, and not paying themselves so much money that the company can’t keep up.
From October to now, we’ve seen a real increase in trading volume and none of that has come from promo – in fact, this article you’re reading is the first promo the company has done in the public markets. They’ve decided now is the right time to tell it because they can actually point to what they’ve created, rather than a promise of what’s to come.
Our take is that as more people find out about this company and take advantage of early stage nature, that stock price will move quite quickly in a parabolic direction.
THE TOTAL RETHINK:
What these guys have done for audio microphones and mixers is what Tesla did for auto manufacturing. That is, take a step back. rethink things from the start rather than simply adding to existing technology, and ponder, “if we were designing this from scratch today, how would we do it?” The answer is exactly what they’re now selling.
Ponder this: The system comes with an 11-foot mic cord. That’s more than enough length to put your computer across the room so you don’t hear the fan on stream. There’s a 6.5 foot headphone cable that PLUGS INTO THE BACK OF THE MIC ITSELF rather than the computer, so send that PC on holiday, baby, you’ll still be connected!
And the connection from the microphone to the computer itself? Not a fat microphone jack, but a straight USB connection. Bliss!
The LEDs on the mic are whatever colour you choose in the software, or all colours, or served as a visual indicator of your sound – your call. It looks fantastic on stream either way,
But the software is where this gets truly dope. Because you can hear the changes as you make them in the settings, you can literally play with everything, figure out what it all does, and just revert anything you don’t like. Sure, you could also use the tutorials to learn properly, but I’m a man and we learn things by breaking them.
All told, it’s GOOD.
Here’s another good looking white kid who was definitely in the school AV club telling you what’s up with all the features.
THE RISK:
There’s always risk with any new company designing and manufacturing a product and hoping anyone cares, but these guys have already got their deal to nigh break-even just a year in. Assuming they don’t start blowing through their bankroll, and there’s no reason to think they will, they’re doing just fine both growing a tech company but also doing so responsibly, without a Foosball budget and promo trips to Burning Man.
There is a risk that a larger company with a big sales staff will reverse engineer what they’ve built and take it for themselves, but there’s a moat here in that the large mic companies don’t put out a new model every few months – the Logitech Blue line has been a retail bestseller for about a decade now with more or less three SKUs, as an example – so for someone to come in and develop new products with Beacn tech would be a far more laborious and expensive and time intensive exercise than just… buying the company out entirely.
And that, for me, cancels out the risk. Sure, maybe the competitors will chase, but maybe they come in with a suitable takeout offer and our boys on the island need to go back to a corporate drone lifestyle for a bit. If that happens, I’ll take it.
All in all, a great local product with a great local team and a stock price that isn’t crazy and a customer base that may come in and buy the stock, that has been running upwards on low trading volume but would pop on any base level of investor interest.
If that’s not something you see on the Canadian public markets every day, I’m with you. It’s a rarity. But it won’t stay cheap forever.
— Chris Parry
FULL DISCLOSURE: Beacn Wizardry and Magic is an Equity.Guru marketing client and we own stock in the company.
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