Yigal Adato: 00:04 Hey everyone my name is Yigal Adato and this is the Pawn Leaders Podcast, a podcast to help you make more money, stress less, and live an epic life all while working at the pawn shop. Hey Pawn Leaders welcome back to the Pawn Leaders Podcast. Thank you so much for taking the time to listen to the podcast and thank you so much for those of you who have left a review on iTunes or on Stitcher, really, really appreciate you guys listening. My next guest is the cofounder and CEO of Entrupy and the Co inventor of Entropy's patented technology, originally from India. Vidyuth earn a degree in journalism while simultaneously designing and developing video games for Raptor Entertainment. He then embarked on a stellar career across a variety of roles including sales, business development, marketing, PR and film making. Also working for software giants such as intuit and Microsoft. Vidyuth established Entrupy in 2012 with his co-founders with mission of using scalable technology to enable trust in commerce into combat counterfeits. Falling four years of research under the auspices of New York University. Entrupy launched in September, 2016 as an instant authentication service for high value goods for the resell market. And less than a year, Entrupy has authenticated over $14 million worth of inventory for its customers welcome to the show Vidyuth how are you?
Vidyuth: 01:34 I'm good, thank you. Thanks for having me.
Yigal Adato: 01:36 No, thank you so much for being here. I saw posts by my cousin [Incomprehensible] who's the general manager for my brother Morris about this company Entrupy who saved them $10,000 because they use your technology. And I said, I gotta find out who this is, what they do, why they do it and bring them on the show. So welcome.
Vidyuth: 01:57 Well, thank you. And that's a glowing recommendation and we have to thank our customers, especially in [Incomprehensible] Cashco Pawn for it. Well, but that's really what we do, we're trying to essentially build trust in transactions. Entrupy is a company, when we started in 2012, all of us co founders, we all had backgrounds where we generally were from middle class working families and we had grown up around fakes during our childhood. Like my mom would buy two pairs of shoes every year. One of them would be the legit regular one that the school would recommend. The other one would be one of the pavements, which would cost like 10% of the original. That was because, well, that's the way it was done. And you'd always know that when the shoe that wears off first is going to be the fake. And so essentially we grew up in a world where it was okay to do it until it started hurting me. I'm an avid motorcyclist
and I used to pretty frequently take trips, long distance trips on my bike. And many times, in fact, I've had motor parts fail on me because they've turned out to be fake. And that could have easily been just a brake shoe. And if that failed, I wouldn't be here talking. So, over time we basically realized together that as an industry and across commerce and across trading in the world, there's a huge problem with counterfeits. And that problem pervades almost every single industry. You know, you make it, they'll fake it right? And fake some made by everyone. It's not just one country, one geography, anywhere where people stand to benefit, people make fakes. And because of the pervasion of it, we realize that there's a huge, huge deficit of trust. So the idea was, could you build technology that enabled trust in transactions? You know, whether people are buying and selling high value goods or whether it's pharmaceuticals or whether it's a battery for your phone, whatever it is. The idea is with the prevalence of ECOMMERCE, you don't even know who you're buying from. How do you know if the product that you're buying from is real or not? And anytime you usually spend over a hundred dollars on something, there is always a nagging question in the back of your mind, is that real or do I have to look for signs to see if it's a scam? And that's exactly what we're trying to solve.
Yigal Adato: 04:32 Got It. So, you know, being a pawn broker myself for 16 years, one of the most annoying things was when an employee or even myself, we'd buy a fake coin or a bangle that we paid out $500 for, and it ended up being fake. And I haven't seen a lot of, the handbag industry, which I think you guys are in and we'll talk about that a little bit in the past. But all of a sudden the handbag industry started blowing up within pawnshops. Like people started buying, we started getting bags back in the day before Entrupy came out and we were just like, well, we don't know if it's real or not. So we'd say no to them all the time. But now almost every pawnbroker has a handbag or shoes they're taking in different types of products. So, let's take a step back. You started Entrupy, right? Because of this place that you came from India, I believe, where there was a lot of fakes growing up and you knew you had to do something about it. How does somebody who worked in PR and business and sales go to create a technology that helps find counterfeit products? How did that happen?
Vidyuth: 05:45 Good question. Well, me and my co founders, we've always had a solid technology background. My co founders, in fact, one of them is an associate professor at NYU and he's our chief scientist. The other is our CTO and he is a computer vision expert, which basically has to deal with images. So when we got
together, we realized that, hey, is it an unsexy problem what solving that was really the question. And we basically pick this because it's a 2, $3 trillion a year problem that nobody really can solve in a scalable manner. So that was really the technology challenge we started with, but once we started and got into it, we realized that it's way bigger than we imagined. Like I said, initially I thought, Oh, you know what? Let's try fake art. We and handbags were way down the line. Then we realize that almost everything that costs, any money to buy, can be faked. So it just became bigger and bigger as we continue to explore it. And the idea of building something that gives you instantaneous results. That was an evolution where we realize that we as a company, we think in first principles, we always think in some basic hypotheses almost as an academic or research problem. And then we look at applying that if there does happen to be a solution. So, that was kind of our phase of doing the research under the hood of NYU where we wanted to build something that can scale across everything. See, you don't want 20 different types of holograms on 20 different types of products, right? That fragmentation kills the need or the the use of security. So we wanted to build something that does not add or remove anything to a product. We wanted to build something that can handle one product in the exact same way that it can handle a million products. Right? So that was scalability and versatility and when we got to all of those constraints, the simplest idea we could think of was, hey, apple makes a billion phones a year. If you and I tried to make that same iPhone in our own warehouses, there's probably going to be some small thing that's different. Right? And if you are able to map, say a portion of those billion Iphones, then you have basically the blueprint. And once you have that blueprint, then you're not really comparing, but you're teaching computers to understand what the differences in the blueprints are.
Yigal Adato: 08:15 Got It. Understood. So, tell us, let's talk about the technology. So it's, I mean the best way I can describe it as kind of like a little gun thingy with the laser, I guess I'm not technologically advance [Crosstalk] what?
Vidyuth: 08:30 An ultrasound, it looks like one.
Yigal Adato: 08:31 An ultrasound? Okay, great. So you put it against a handbag or whatever product said Entrupy does, and it kind of gives you like an instant fake or real. That's right?
Vidyuth: 08:40 Yup, that's right. And if it's, if we call it authentic, well if our algorithms call it authentic, we also issue a certificate of
authenticity that we back with money basically it's like insurance.
Yigal Adato: 08:53 Yeah. So talk about products that Entrupy can detect. What type of products are people using it for right now.
Vidyuth: 09:01 So today in the market most of our customers, and we have over 300 customers of all shapes and sizes from some of the biggest marketplace in the world to just a single mom and pop store. We don't discriminate because we understand that trust is a problem anywhere. But most of them use it to detect handbags and leather accessories from the top 15 to 16 brands today. But we're constantly adding to it. So for example, when we started in September, 2016, we literally had the support for one single type of bag. And even that got us like 20, 30 customers because that's what the market saw the most of it. We started with that and within a year and a half we now have expanded to over 40 to 45 different types of materials, styles, shapes, everything. So, today its handbags but the fact that we're versatile and scalable means that we have to be looking into expanding into either adjacent or completely horizontal verticals. So, we are looking at sneakers right now, pretty deep into it and it works really well, we are looking into watches, jewelry, shoes, apparel. We're already working with retailers in Europe to secure apparel and especially expensive Rolex watches as well. So, all of these are all the plans are afoot and we will be making an announcement soon.
Yigal Adato: 10:29 Nice. So let's talk about the pawn industry specialy. How did you guys find the pawn industry and what got you guys to put up a booth at a show and say, wait a second, this is an industry that we want to be in and that they need our service.
Vidyuth: 10:43 Oh, absolutely. So to be honest, the pawn industry was the last industry that other segment that I thought of when I was, taking this product out to the market. We didn't even have product and I was just doing basic research. But the first or the second or third people, second or third person I met, turned out to be a pawnshop owner in Vegas, he's a good friend of mine, his name is Michael Mack and he runs Max pawn.
Yigal Adato: 11:09 Oh I know Michael Mack. Yeah.
Vidyuth: 11:10 Yeah, yeah. So I bumped into him, we started talking and the next thing I knew, I realized that hey, the pawn business relies on the speed of sales, on being able to convey trust and also know if an item or a person who is selling an item to you as trustworthy or not, these are all things that you train yourself
to. But then how do you train yourself to know everything about everything. You don't. And nobody can afford that time, money, expertise, whatever it is, there's risk most importantly. So we realize that many pawnshops don't even take in handbags exactly like you said, because they don't know how to authenticate. Not because they, I mean pawn people are some of the most financial savvy people on earth. They know, they see money walking in and out the door. When they see handbag they know that stuff's going to sell them three or four days for, maybe 40, 50% margin sometimes. And I realize that that's a gap and an opportunity that we could look into. And then I got closer, build closer relationships with the pawn industry through Max Pawn. And yeah, that's kind of where it started. And then when I started talking to some prospective customers, we in our business, we look at small and medium businesses, enterprises and then large marketplaces. Even though we were talking, we got a lot of interest from all the bigger players, the people who jumped on it first because they just saw the opportunity where the folks in the pawn industry for that I have to be extremely, I am today, I will forever be extremely grateful. And fortunately we have been able to provide a lot of a new opportunity, new revenue, a lot of save times. And of course most impornantly reduced just to almost zero.
Adato: 13:07 I think one of the most important things for pawnshops right? For us being pawnbrokers, there's so much risk coming into the door every single day from jewelry to electronics, musical instruments, counterfeit so many different aspects of the industry. And you said something right, you can't know everything about everything. And pawnbrokers sometimes believe, and I believe this, that with the Internet we know it all. We can do it all. But I remember letting so much business go because I just wasn't sure or we were 85% and now all of us have the resources like the guys in Vegas like the pawn stars were an expert can come in to check every item out. But like you said, it's such a volatile market today. We can't let money walk out the door because the industry is a little bit tougher than it used to be. So having the software and a resource like you guys are hardware, I think it makes very, very big difference in the industry so that I can just use this thing and it says Yay or nay. And then explain again if it says yes, you give a certificate of authentication. For some reason Entrupy didn't work back that with insurance saying we'll pay what you paid for, how does that work?
Vidyuth: 14:23 Yeah, absolutely. So if you took in an item based on our guidance or our decision that item we believe is authentic and eventually there's some issue with it. And we have an internal
process where we can determine if we were wrong and we don't do it ourselves of course we use third parties and unbiased sources basically. And if the consensus proves that we Entrupy were wrong and whatever you paid for it, we give you that money in a hole and we take that item off of your hands because the idea is simple,
Yigal Adato: 14:55 So essentially it's a no brainer. Like if you use it and it's real, you sell it, you make the margin, you make your money back from the investment. And if you use it and for some reason it doesn't work, I'm sure that's a small margin of times, you get your money back.
Vidyuth: 15:11 Yup. Absolutely.
Yigal Adato: 15:14 Very seldom as a guarantee come into the industry like this. And
so take advantage of that. I mean, you're essentially guaranteeing your product.
Vidyuth: 15:24 Absolutely, and it's not just during intake, right? Many people use it in so many different ways. Some of the bigger players use it for scale and repeatability and the speed and the efficiency of it. But the smaller folks, it's more important to them. And because it's not just the risks that you reduced when you take in product. It's also when you have to sell that product, because a lot of them are the loans don't get, they kind of expire you, you own that inventory and then that becomes a liability. So we want to get rid of it. But why would someone on Ebay trust you versus somebody else who has a solid solid rating right? How do you convey that trustworthiness? That's why that certificate is super useful. Many of our customers, especially in the pawn and consignment business, when they put up an item that they authenticated through us with the certificate versus when they don't, the ones with a certificate end up being sold like 40 to 60% faster. Not just because of the certificate of course, I mean we can't really claim that. But the key differences when you go on a big website and you look up an item and you see a significant versus not, and that certificate also importantly comes from a third party that's super important, right? And when they see that, then they ask questions saying, what does this certificate about? Where'd you get it checked out? How do you know it's real. And then they contact us too, and when we verify that there's much more engagement, there's a much, much, much higher probability of that item selling faster. So net, net, everybody wins. That's the whole point right? Once you have trust as that bottom layer, the buyer gets a good product that's trustworthy, the seller makes extra money, faster and we make a small cut authentic of that entire transaction.
Yigal Adato: 17:15 Do you know, right now in the industry, in the pawn industry, I've seen, for example, like my brother's store and Michael Mack and some other big players in the industry doing a lot of the handbags. Would you happen to know how much of an increase they've had in these handbags after using Entrupy?
Vidyuth: 17:33 Well, across the industry, it's a little hard to say also because not all of our customers are focusing that core on handbags. But what I do know is everyday we have at least three to four inquiries from pawnshops, not just in the U.S but around the world. And we already have customers on a global level and we either find people saying, hey, we're thinking of getting into it, help us through it. Or we see people saying, we get one or two, we know something about this one brand, but you know, almost everything about everything. But we don't, it's really data right?. Data can know everything about everything. Humans, it's much harder. That's really the point. So, when they come to us, what we are hearing from the industry is everyone wants to get in to bags also because everyone, almost every pawnshop bar one or two, are physical stores, they all have a geography and an audience that they cater to and they see people walking around that store, they see women with expensive handbags. So what people end up doing actually is they get our service, they also make money off of it and we're very happy that they do by offering an offline authentication service. So they use our technology and they say, hey, get your bags in and get them checked out. And we conduct and we help them conduct events. What that helps is A it gives them more walk-ins and B now they're able to, how some handbags get in more people. And also the other aspect is cross selling and upselling with jewelry. Women wouldn't walk in easily today they walk in because they see bags and it looks better for them to walk into looks less unsafe.
Yigal Adato: 19:17 Yeah. I follow a couple of pawnshops on Instagram and Beth who was a guest on the show has capital pawn, she does like sipping in sales. So she's got like women who come in and they drink wine purse, [Incomprehensible] created a whole event around the handbag.
Vidyuth: 19:35 Exactly, exactly. And it works, it just works because most people who live in these neighborhoods, they always sync of buying handbags, either from their friends or some no name party on some website. But if you're able to give them that entire experience and the experience of, hey, this has never existed, you always started me in some shady guy behind the counter. But then now look, we are opening it up to ensure that we build a longterm sustainable relationship and that really works. And
that's what we're so happy to see our customers go through. Like the event that you spoke about, one of them conducted a similar event where we got some media and we help them get media and they had a two day free authentication event. People walk in and get your items checked out for free, get a certificate right. And the next couple of months after that, their business grew by like 150% just in the bag sector alone.
Yigal Adato: 20:30 That's amazing. So let's do this, man. I want to see, you've done a lot of research in counterfeits and what it takes, right? Obviously there's some people listening who don't own Entrupy and I want to talk about like the three biggest tails for counterfeits today. Even if you don't have Entrupy, I want to really give some value on the show. What are the three of the biggest tails when someone walks in and we're talking about handbags mostly, that you know that because you've done the research that it could be a counterfeit.
Vidyuth: 21:06 I mean there's some basic red flags to be honest, the folks in the pawn industry they are like they should all be like detectors. They're just so good at detecting BS. It's amazing. Like they just look at you and they know, but from what we've heard, so here's one that's pretty common. Oh, I got this as a gift. When it's a gift, why are you getting rid of it? So I mean, something doesn't add up. Second is when people come in with the idea of being in a hurry, that's also never, never a good thing. Everyone, sure, everyone would like to get things done quicker. But there's some people who would come in and we just want to get rid of it. There's a little bit of anxiety around it. When there's anxiety around it usually when someone walks in, they are looking to get the best price, right? They're not looking to get [Incomprehensible] or something. So that's number two. Number three of course, the item itself, many people would come to you and so counterfeits, have gotten so good that you don't just look for red flags that prove the negative. You also need to look for red flags that put the positive, which is if the item and the deal is too good to be true in some cases, in most cases, well almost all cases it is too good to be true, its how you see it with the item itself. People walk in with receipts nowadays. That doesn't mean anything if you're looking to buy, let me put it this way, if you're looking to buy a suit, right and two piece suit, if someone gives you a belt along with it saying this comes with it and they give you, and they say the belt is real too. There's absolutely no basis for that. It's an associated an extra piece. So when people come to you with a Chanel bag and they say, hey, I have this authenticity card or I have a receipt, it doesn't mean anything. Those things are so, they're easier to copy than the bag itself.
Yigal Adato: 22:58 Yeah, yeah. I saw a post of the day where people are walking in
with counterfeit receipts.
Vidyuth: 23:04 Oh yeah. And that happened so much with sneakers. It's ridiculous. And they always keep coming up with these new addresses that are fictitious, which is amazing. Like they just pick a random address and, I'd say it's an Oklahoma or something who would have a footlocker store in Oklahoma in the middle of nowhere. But that's part of the problem. So all of these are designed to do people who aren't paying attention.
Yigal Adato: 23:33 So you got to pay attention.
Vidyuth: 23:35 Always.
Yigal Adato: 23:35 Got to focus. So give us really quickly man, like a 30 second synopsis of how the Technology Works. Obviously you're not going to give away your patented secret, but how does the technology work?
Vidyuth: 23:51 Sure. So, this just four big components. One is a device which is essentially a piece of a handheld digital microscope right?. What our users do is they take images, image samples of different parts of an item any question if it's a sneaker that it's different components, if it's bags it's different. And they take these image samples and they use our handheld mobile APP, which connects to this device. The images go to the the APP and the APP sends it to our computers and then the computers come back and instantly give you a result with a very, very high degree of accuracy like in the very high nineties. And the reason it works is because those computers have been trained that you understand the minute microscopic differences and other metadata, you know, it could be a serial number, it could be many other associated factors that allow the computer to decide with a high degree of accuracy whether it belongs to the [Incomprehensible] objects or whether it's the fake class. That's it.
Yigal Adato: 24:55 Got It. Well, I'm sure, I'm sure it sounds really easy, but it was years of research and development. Well, Vidyuth I want to thank you for coming on the show, man. I think that what you guys are doing for other industries, but especially the pawn industry is very, very, very important. Especially, like I said before with margins getting smaller in the industry, with all these online sellers, places where people are buying online, you're giving the opportunity to the pawn industry to make a couple of bucks with an item that he might have feared taken in before. So I applaud you for it and I thank you for that.
Vidyuth: 25:31 Thank you. Thank you so much for having me on and thank you to everyone who's listening. A lot of the industry has really adopted us and given us a place to start and grow. So we thank you for your dedication and hope we can make you more money, save you more time and reduce risk.
Yigal Adato: 25:50 Awesome. So if you want to find Entrupy, it's www.entrupy.com
and that's E, N, T, R, U, P, Y correct?
Vidyuth: 25:59 That's it.
Yigal Adato: 25:59 So go to entrupy.com check out the product. I'm sure if you guys have questions, you guys can call the support number and ask as many questions as you want. If you do have a question for Vidyuth, please let me know in the Facebook group. If you're not in the Facebook group, you got to jump into the Facebook group. It's Pawn Leaders Podcasts Community. Where we talk about the episodes and things are going on in the industry. Thank you so much for listening. Everybody have an incredible day. And we'll see you guys on the next episode.
Vidyuth Srinivasan, co-founder and CEO of Entrupy and co-inventor of Entrupy’s patented technology, earned a degree in Journalism while designing and developing video games for Raptor Entertainment. He embarked on a career across a variety of roles including Sales, Business Development, Marketing, PR and filmmaking while working for software giants; Intuit and Microsoft. Entrupy was established in 2012 with co-founders, with a mission of using scalable technologies to enable trust and commerce to combat counterfeits. Entrupy launched in 2016 as an instant authentication service for high valued goods for the resale market. In 1 year, Entrupy has authenticated over 14 million dollars’ worth of inventory for its customers.
[02:08] Entrupy aims to build trust in transactions
[03:21] “Over time, we realized together that, as an industry and across commerce and across trading in the world, there’s a huge problem with counterfeits and that problem pervades almost every single industry.”
[05:48] The co-founders of Entrupy have a solid technology background and realized that they needed to solve the problem of getting instantaneous results regarding imitation products.
[08:21] The technology allows you to scan a product to see if it is authentic
[09:01] Most customers use Entrupy to detect handbags and leather accessories
[09:57] “The fact that we are versatile and scalable means that we have to be looking into expanding into either adjacent or completely horizontal/verticals.”
[10:11] Entrupy is looking to expand their business to compare watches, jewelry, shoes and are working with retailers in Europe
[10:46] Vidyuth never planned to enter the pawn industry until meeting Michael Mack of Max Pawn and then realizing that the pawn business relies on the speed of sales and being able to know if persons selling an item are trustworthy.
[11:46] Most pawnbrokers don’t take handbags because they are unsure of the authenticity of the products
[12:41] “The people who jumped on at first were the folks in the pawn industry”
[14:24] If you take in an item that has been certified as authentic, by Entrupy, and it is confirmed otherwise, Entrupy will give you money for the cost of the item as well as take the item off your hands.
[16:08] Many persons in the pawn consignment business, get their products sold 40-60% faster when they advertise a product with the authentication certificate
[17:02] “Once you have trust as that bottom layer, the buyer gets a good product that’s trustworthy, the seller makes extra money faster, and we make a small cut off that entire transaction”
[17:34] How much of an increase, in the sale of handbags, do pawnbrokers have after using Entrupy? Not all customers focus on handbags, but everyday there are at least 3 to 4 enquiries regarding handbags.
[21:19] What are the biggest tells of counterfeit?
- “Oh, I got this as a gift.” – Why would someone get rid of a gift?
- When people go into a pawn shop acting like they are in a hurry
- If the item or deal is too good to be true, it might be counterfeit
- Coming up with a fake address where they bought the product
[23:52] There are 4 components of the Entrupy technology;
- A handheld microscope is used to take image samples of varying parts of an item
- The images are sent to the handheld mobile app
- Images from the app go to the computers
- And the computer gives a result
[25:01] Visit Entrupy