What Verbit Investors Need To Know

I had touched pretty gently on Verbit when its series A funding came in at $23 million. The series B funding is in at about $31 million earlier this year. Now Verbit’s announced a strategic partnership with the STI and professional flip flopper, Jim Cudahy. Migliore & Associates already came out with the hard truth of what this means: ASR doesn’t make the cut for the production of legal transcripts without a qualified court reporter no matter what you name it, NLP, ASR, AI, computer magic, automated transcription.

Do I come off as angry? I am angry. I’m angry that investors are being led down a path of burning capital where there’s just not a bright future. When the series A funding was happening, Verbit used words like automated, “save an enormous amount of manual labor.” “Adaptive speech recognition” with over 99 percent accuracy. Series B is out. They “would not take the human transcriber out,” “the AI will enhance the human.” So investors are fundamentally paying millions of dollars so that they can be another Rev. I doubt very much that that’s what was sold to investors. I don’t think anybody would be putting down millions on that.

Then the partnership with STI? A complete joke. I have already gone into how, without any doubt, stenographers and NCRA are by far the best equipped to deal with the court reporter shortage. AAERT and the STI just don’t have the funding, infrastructure, or experience to tackle the problem, and it shows in their data. By their estimates, court reporting companies stand to save $250,000 over the next decade by adopting digital tools. First, I would love to know if this is individual savings or cumulative. We don’t know because there are no sources linked or cited. If this is cumulative, it’s embarrassing that they would even post that. That would mean 25,000 in savings a year across all companies. If that’s the projected individual savings per company, only slightly less embarrassing. That’s less than the average annual salary of a single court reporter. This may come as a shock to Jim Cudahy, but court reporting companies adopted digital tools throughout digital’s birth in the 70s and into the 80s and 90s. Stenographers are already a part of the Information Age, utilize AI, and produce quality records daily. The idea that investors are going to dump $50 million into “technology” expected to save $250,000 over 10 years and expect a return is terrifying. “Most courts are digital,” again, assuming everything they have to say is true, and yet judicial candidates show a preference for stenographic court reporters and returning them to courtrooms. The growth here is in stenographers, stenography jobs, and stenography schools, and Verbit’s current leadership is missing this boat completely.

Let’s just tell it like it is. When a grassroots-funded stenography blog can give you some pretty solid reasons you’re backing the wrong horse, it’s time to give investors nothing less than what they deserve. Open up a Steno Department, throw down some money on us, and we will make sure you’ve got real and steady returns. Verbit, with proper leadership from Tom Livne, can still save the day. Just not with this bait and switch technology-to-transcription model that amounts to little more than a repackaging of old tech. The only other viable alternative I see is buying this blog for a good $8 million and hoping investors don’t see it before then. Not a difficult decision. Come on over to the winning team. Vote for sten!

July 18, 2021 Addendum:

I reread this article for the first time in a while and I feel I did an inadequate job of explaining just how pathetic the cost savings promoted were. I took to social media to spread the word, and I am copying and pasting what I had to say below.

“I’m slowly reconstructing the table of contents on my blog, and I came across an old article I did on Verbit. In that article, it mentioned a blurb by STTI that, using AAERT info, estimated $250,000 in savings over a decade for companies that switched to digital tools.
The reason I’m bringing it up again is this is a time where a lot of court reporters are kind of concerned. “Is this stuff better than I am?” And I pointed out in the article how I think some $50 million was sunk into Verbit at that point. $250,000 over a decade breaks down to $25,000 a year. So even if it’s assumed that that information is completely factual and that the savings is for every individual company in the field and NOT cumulative across the industry, they were advertising savings equivalent to less than the average salary of a single court reporter.
Is this stuff better than you? They need to sink millions of dollars into it to “maybe perhaps” save $25,000 a year. Remember, these are companies that boast millions in revenue. I think you have your answer.
And for anybody that doesn’t, I have a handy chart here.
If they make $1 million, they save 2.50%
If they make $2 million, they save 1.25%
If they make $3 million, they save 0.83%
If they make $4 million, they save 0.63%
If they make $5 million, they save 0.50%
If they make $6 million, they save 0.42%
If they make $7 million, they save 0.36%
If they make $8 million, they save 0.31%
To put this into perspective, a company like VIQ Solutions, parent of Net Transcripts, that posts something like $8 million a quarter (not profitable), would save 0.08%.
A company like Veritext, which Owler claims has revenue in the $400 million ballpark, would save 0.007%
Just to put some more perspective on that, if Stenograph were to offer you 0.007% savings on the purchase of approximately $4,000 CaseCAT, you would save $0.28. ($100 at 2.50%)
Would you pay anyone millions of dollars to “maybe perhaps” save 0.007% to 2.50%?
This situation is very good for us, but we do need more reporters, so in this coming school year, if you can make a visit to your local high school, please do.”

7 thoughts on “What Verbit Investors Need To Know

  1. Excellent article – 54 million to work on a product that’s less efficient and accurate than the technology stenographers are using right now is a terrible investment. With a renewed interest in stenography, new schools opening, and teaching and recruiting methods that are now seeing good results in getting new steno reporters through school and into the workplace, this seems an especially poor investment.

  2. No doubt there are issues with every method of capturing the record. Stenography is not without issue either. Stenographers miss things just as ASR gets things wrong. Can’t tell you how many depos I’ve been in where a reporter stops writing and tells the room to slow down or that they can’t take 2 or 3 people talking over one-another.
    I get it but let’s not make stenographers the be-all-end-all, only accurate method of capturing the record because that’s simply not true. Stenographers rely on audio recordings to help them fill in the gaps and transcribers do the same to correct. Neither method is perfect when it comes to creating a text transcript and until the actual audio recording becomes the source of truth leaving the text as the back up and index source, this debate will continue. To be completely fair, the $250,000 number was without any citation and I took it to be a misquote however many of the links provided in this post are based on opinion. For example; “yet judicial candidates show a preference for stenographic court reporters and returning them to courtrooms.” had a citation from a single attorney looking to become a judge. Really?

    Let’s get real here: Stenographers need to wake up to reality. The stenographic profession is in serious decline and the reasons for it are not because the NCRA has done a bad job in promoting the profession. Who in their right mind and having done any due diligence wants to spend the time and money to have a less than 20 per cent chance of getting into the profession? Went looking at the alternative methods (digital recording) and the technology today, who (outside of stenographers) thinks stenography is the future? The accuracy argument doesn’t hold weight given that reporters either rely on their own audio recording as backup or the video taken during the deposition. The argument is scale and cost. Stenography can’t keep up with the increasing demand and the pressures to decrease cost. I had no problem taking a cab until Uber came along.

    Good stenographers have no reason to fear losing their jobs but if you seriously think that Stenographic machines will be around in 20 years then you’ve got your head in the sand. The only argument here is how long will it take and 20 years is probably generous. It’s happening already in courts and in the deposition market and it will continue to grow, it will continue to get better, faster and less expensive. Digital recording is already filling the stenographic void and that cat is out of the bag.

    1. There are errors in every methodology, but please remember that it is not we stenographers claiming 99 percent accuracy with real numbers like 80 to 90 percent. We are the most honest choice on the market today. By that alone, we should be the preferred choice.

      The 250,000 number is actually straight out of the “strategic partnership” link at the top. I clipped it to avoid copyright issues and to avoid it being scrubbed from the internet completely when they realize how embarrassing that number is.

      In my capacity as a blogger I’ve had a chance to speak to judges on this issue, and they have preferred the live reporter every time. It’s refreshing to see it in print.

      Quite frankly, the only people who do not believe stenography to be the future are those that are not paying attention. We have the best chance of covering the reporter shortage with over 20 NCRA-approved schools. Transcribers have 4.

      I’m happy you took the time out to write, but I suggest you take a real good look at the numbers. The 5,500 shortage forecast is a statistic that is 7 years old, predating all of the recruitment efforts such as Open Steno, Steno Project, NCRA A to Z and Steno Key.

      Digital’s only hope on this front is stenographers giving up and failing to bring new people in. Could happen, but I wouldn’t bet money on it.

      1. Hmm….the same could be said for the same people who go to law school, knowing that the field is highly over saturated and will be for many years to come.

  3. I am a court reporter hired by Veritext in 2012 because of my client base. I was asked to join their staff of court reporters. So I did. I brought in huge amounts of business so much so that a VP named Jeff Tobias stole one client and in 2020 the RVP named Tom Esposito paid people in my office to sneak him him. Tiffany Strohman snuck Tom Esposito during COVID when my clients were asking how to do remote depositions. With an email as my proof, she sent Tom Esposito who I thought was in technical support. No, he is in sales! Tiffany Strohman is now a Director at Veritext. Because I told their CFO/President Rich Antoneck and their “general counsel” Judith Kunreuther I have been retaliated against for a year now. I have proof of every single thing I am saying. I have been bullied, Blacklisted throughout the US and retaliated against because I spoke up about what happened to me while I was employed at the greediest unethical company definitely in the country. And I am not going to be quiet until I get justice for what these thugs are all taking credit for and the harm they continue to do to me to this very day

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