SF Business Times: Face it, 3VR knows where you’ve been

July 15, 2011 | Coverage

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Banks, stores, spies eye video software

A robber stole some mobile telephones from a West Coast T-Mobile store and then activated one with a card from another phone.

Even though the man was wearing a mask over part of his face when the crime happened, facial recognition software from San Francisco-based 3VR Inc. helped T-Mobile quickly match his eyes and eyebrows with the image of someone who had earlier paid for service at another store in the region.

Police arrested the man, got a confession and retrieved various stolen devices.

“Instead of watching hours of video, we were able to narrow it down by saying ‘Show me faces with these characteristics,’” said Joe Davis, T-Mobile’s Oklahoma City-based director of field loss prevention.

That eerie ability to search video using visual criteria — like faces, license plates and colors — is what made Al Shipp leave a position as vice president of enterprise at Apple Inc. in late 2008 to become president and CEO of 3VR.

Photo by Spencer Brown

“I left a great job. I spotted something very, very special,” Shipp said. “We can search for a face in any of a bank’s branches in Northern California in the last 30 days … 3VR can do it in about 30 seconds.”

Founded in 2002, 3VR has been growing steadily, attracting major banking, retail and government contracts. An early investor was In-Q-Tel, the venture firm established by the U.S. Central Intelligence Agency, and major backing has also come from Kleiner Perkins Caufield and Byers.

For 2011, Shipp says revenue will be between $20 million and $30 million, up more than 100 percent for each of the last three years, and he predicts 3VR will hit profitability “within a year.”

The company, which has raised $29 million in capital, including a $17 million round led by Menlo Ventures last December, has 85 employees, about 70 of them in its headquarters at 475 Brannan St. near AT&T Park.

Headcount is slated to cross 100 by year’s end, and there are currently three openings for a software developer, signal/imaging processing scientist and a video engineer.

Shipp believes 3VR’s patented software has huge potential because it can both search and analyze video content.

“We can tell you how many blue cars went west on Brannan in the last 30 days. It’s pretty amazing what the technology can do today,” Shipp said.

Jeff Kessler, a veteran security industry financial analyst and managing director at Imperial Capital LLC. in Los Angeles, says 3VR has attracted a significant base of large customers, including San Francisco-based Wells Fargo, and major security system integrators.

Its facial recognition and license plate tracking software is used at a major border checkpoint in Texas, and the technology was recently approved for general use by the U.S. Department of Defense.

“They have a substantial, installed brand. We think they’ve kind of cracked the code,” said Kessler, whose firm has no financial tie to 3VR.

The Roseville Police Department, east of Sacramento, is installing 3VR systems at a variety of municipal properties.

Detective Sgt. Darin DeFreece said he has been impressed with the ability to search for license plates coming out of the city garage within a particular time window.

DeFreece also loves 3VR because last fall he caught a convicted felon, after the man attempted to rob a jewelry store and threatened a shopping mall security guard with a knife, by putting the man’s picture on CrimeDex, 3VR’s decade-old online community of private industry security and public law enforcement officers.

The picture of the man was not enough to justify an active investigation, but three days later a Sacramento parole officer on CrimeDex recognized the suspect as a recent Pelican Bay State Prison inmate. The suspect was arrested the following day.

“This case was an unsolvable. It would have gone into no-man’s land. Nobody would have worked it,” DeFreece said.

3VR’s technology is a natural for the security industry, particularly in retail, hotels and government.

Customers, however, are starting to see other potential ways they can mine the video they have long collected but almost never used, Shipp said.

Using facial recognition software, a business could put preferred customers on a watch list and then provide them with enhanced services, for example by greeting them and pulling them out of service lines, Shipp said.

3VR is working with T-Mobile, which has put 3VR in about 1,100 of its 2,100 stores nationwide since 2008, to analyze traffic patterns in stores to improve service and boost sales.

Questions include: Which devices get picked up the most? What is the rate of sales vs. lifts? Which clerks attend to the most customers? How long are people waiting in line?

“We want to know are our customers being taken care of,” Davis said. “Functionally, we have the ability to say, ‘Show me the top 50 stores from a customer-performance perspective.’ Maybe it’s something as simple as not opening on time.

“Video takes you from what you think you know to what is real inside the business environment,” he said.

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