Category: UNCATEGORIZED

Geocoding startup what3words — which chunks the world into 3mx3m squares, giving each a unique three-word label to simplify location sharing — has nabbed another in-vehicle integration, via a partnership with Here Technologies.

The pair said today that OEMs using Here’s navigation platform can include what3words as an in-car nav feature directly through the Here Search API, instead of needing to integrate itself. Existing users of the platform will be able to be given access to what3word’s addressing tech via an update.

Here says its map data services can be found in 150 million vehicles worldwide at this point.

It’s by no means the first such integration for what3words which has found cars to be a natural fit for its simplified, ‘rolls-off-the-tongue’ addressing system. The 2013-founded startup inked a partnership with Ford last year, for example. It also counts Daimler as an investor.

Letting drivers speak or type three words to input a location into their car’s GPS system has clear benefits vs requiring they correctly specify a full address. what3words also pinpoints a more specific location than a typical postcode — and works for destinations that don’t have a street address (the start of a hiking trial or specific lay-by; a particular entrance for a campus etc).

what3words further notes that its tech has been adopted by global car companies, logistics providers and mobility apps, including Mercedes-Benz, Tata Motors, DB Schenker, Hermes and Cabify.

In recent years the novel addressing system has also found favor with Airbnb as a way of simplifying location sharing for less traditional types of stays.

Commenting on its latest partnership in a statement, what3words CEO and co-founder, Chris Sheldrick, said: “We are seeing increasing demand from automakers and mobility services. Now that we are embedded in Here, we can enable our address system simply and easily in both new and legacy vehicles.”

“Automotive OEMs and Tier 1 suppliers can now provide the what3words service to their customers through the Here Search API instead of having to integrate it themselves,” added Jørgen Behrens, SVP and chief product officer at Here Technologies in another supporting statement. “This will allow drivers to navigate easily in dense, urban environments with non-standard addressing schemes or seamlessly get to any location, be it a local pub or a trailhead.”

Geocoding startup what3words — which chunks the world into 3mx3m squares, giving each a unique three-word label to simplify location sharing — has nabbed another in-vehicle integration, via a partnership with Here Technologies.

The pair said today that OEMs using Here’s navigation platform can include what3words as an in-car nav feature directly through the Here Search API, instead of needing to integrate itself. Existing users of the platform will be able to be given access to what3word’s addressing tech via an update.

Here says its map data services can be found in 150 million vehicles worldwide at this point.

It’s by no means the first such integration for what3words which has found cars to be a natural fit for its simplified, ‘rolls-off-the-tongue’ addressing system. The 2013-founded startup inked a partnership with Ford last year, for example. It also counts Daimler as an investor.

Letting drivers speak or type three words to input a location into their car’s GPS system has clear benefits vs requiring they correctly specify a full address. what3words also pinpoints a more specific location than a typical postcode — and works for destinations that don’t have a street address (the start of a hiking trial or specific lay-by; a particular entrance for a campus etc).

what3words further notes that its tech has been adopted by global car companies, logistics providers and mobility apps, including Mercedes-Benz, Tata Motors, DB Schenker, Hermes and Cabify.

In recent years the novel addressing system has also found favor with Airbnb as a way of simplifying location sharing for less traditional types of stays.

Commenting on its latest partnership in a statement, what3words CEO and co-founder, Chris Sheldrick, said: “We are seeing increasing demand from automakers and mobility services. Now that we are embedded in Here, we can enable our address system simply and easily in both new and legacy vehicles.”

“Automotive OEMs and Tier 1 suppliers can now provide the what3words service to their customers through the Here Search API instead of having to integrate it themselves,” added Jørgen Behrens, SVP and chief product officer at Here Technologies in another supporting statement. “This will allow drivers to navigate easily in dense, urban environments with non-standard addressing schemes or seamlessly get to any location, be it a local pub or a trailhead.”

The trial of Samsung leader Jay Y. Lee, who is accused of accounting fraud and stock price manipulating, held its first hearing today at the Seoul Central District Court.

The Seoul Central District Court denied prosecutors’ arrest warrant request for Lee in June, stating that even though they had secured a “considerable amount of evidence,” it was still not enough to detain Lee.

Lee was not present for the hearing. Vietnamese state media reported that he was in Vietnam earlier this week to discuss investments with Prime Minister Nguyen Xuan Phuc.

Prosecutors allege that the value of electronics materials provider Cheil Industries was artificially inflated before its merger with Samsung’s holding company five years ago to create a more favorable rate for Lee, who was then Cheil’s largest shareholder.

Lee is also one of eleven current and former Samsung Executives indicted by South Korean prosecutors last month over charges that they inflated the assets of Samsung BioLogics, which Cheil held a major stake in.

During the hearing today, Lee’s attorney said that the merger and accounting process were part of normal management activities, reported Channel News Asia.

If found guilty, Lee may face a jail sentence. Lee has already spent time in jail, after he was charged with bribing former President Park Geun-hye to secure support for the merger. Lee was released from prison in 2018 after serving almost a year.

Park was impeached in 2017 and sentenced to a 25-year prison term for bribery, abuse of power and embezzlement.

Silverflow, a Dutch startup founded by Adyen alumni, is breaking cover and announcing seed funding.

The pre-launch company has spent the last two years building what it describes as a “cloud-native” online card processor that directly connects to card networks. The aim is to offer a modern replacement for the 20 to 40-year-old payments card processing tech that is mostly in use today.

Backing Silverflow’s €2.6 million seed round is U.K.-based VC Crane Venture Partners, with participation from Inkef Capital and unnamed angel investors and industry leaders from Pay.On, First Data, Booking.com and Adyen. It brings the fintech startup’s total funding to date to ~€3 million.

Bootstrapped while in development and launching in 2021, Silverflow’s founders are CEO Anne-Willem de Vries (who was focused on card acquiring and processing at Adyen), CBDO Robert Kraal (former Adyen COO and EVP global card acquiring & processing of Adyen) and CTO Paul Buying (founder of acquired translation startup Livewords).

“The payments tech stack needs an upgrade,” Kraal tells me. “Today’s card payment infrastructure based on 30 to 40-year-old technology is still in use across the global payment landscape. This legacy infrastructure is costing everyone time and money: consumers, merchants, payment-service-providers and banks. The legacy platforms require a lengthy on-boarding process and are expensive to maintain, [and] they also aren’t fit for purpose today because they don’t support data use”.

In addition, Kraal says that adding new functionality is a lengthy and expensive process, requiring the effort of specialised engineers which ultimately slows down innovation “for the whole card payments system”.

“Finally, every acquirer provides its customer with a different processing platform, which for a typical payment service provider (PSP) means they have to deal with multiple legacy platforms — and all the costs and specialised support each entails,” adds de Vries.

To solve this, Silverflow claims it has built the first payments processor with a “cloud-native platform” built for today’s technology stack. This includes offering simple APIs and “streamlined data flows” directly integrated into the card networks.

Continues de Vries: “Instead of managing a complex network of acquirers across markets with dozens of bank and card network connections to maintain, Silverflow provides card-acquiring processing as a service that connects to card networks directly through a simple API”.

Target customers are PSPs, acquirers and “global top-market merchants” that are seeing €500 million to 10 billion in annual transactions.

“As a managed service, Silverflow provides the maintenance for connections and new product innovation that users have typically had to support in-house or work on long-term product road maps with suppliers,” explains Kraal. “Based in the cloud, Silverflow is infinitely scalable for peak flows and also provides robust data insights that users haven’t previously been able to access”.

With regards to competitors, Kraal says there are no other companies at the moment doing something similar, “as far as we are aware”. Currently, acquirers use traditional third-party processors, such as SIA, Omnipay, Cybersource or MIGS. Some companies, like Adyen, have built their own in-house processing platform.

So, why hasn’t a cloud-native card processing platform like Silverflow been done before and why now? A lack of awareness of the problem might be one reason, says de Vries.

“Unless you have built several integrations to acquirers during your career, you are not aware that the 30 to 40-years-old infrastructure is still in use. This is not typically a problem some bright college graduates would tackle,” he posits.

“Second, to build this successfully, you need to have prior knowledge of the card payments industry to navigate all the legal, regulatory and technical requirements.

“Thirdly, any large corporate currently active in card payment processing will be aware of the problem and have the relevant industry knowledge. However, building a new processing platform would require them to allocate their most talented staff to this project for two-three years, taking away resources from their existing projects. In addition, they would also need to manage a complex migration project to move their existing customers from their current system to the new one and risk losing some of the customers along the way”.

Facebook’s dating bolt-on to its eponymous social networking service has finally launched in Europe, more than nine months after an earlier launch plan was derailed at the last minute over privacy concerns.

From today, European Facebook users in Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Croatia, Hungary, Ireland, Italy, Lithuania, Luxembourg, Latvia, Malta, Netherlands, Poland, Portugal, Romania, Sweden, Slovenia, Slovakia, Iceland, Liechtenstein, Norway, Spain, Switzerland and the UK can opt into Facebook Dating by creating a profile at facebook.com/dating.

Among the dating product’s main features are the ability to share Stories on your profile; a Secret Crush feature that lets you select up to nine of your Facebook friends or Instagram followers who you’d like to date (without them knowing unless they also add you — when you then get a match notification); the ability to see people with similar interests if you add your Facebook Events and Groups to your Dating profile; and a video chat feature called Virtual Dates.

Of course if you opt in to Facebook Dating you’re going to be plugging even more of your personal data into Facebook’s people profiling machine. And it was concerns about how the dating product would be processing European users’ information that led to a regulatory intervention by the company’s lead data regulator in the EU, the Irish Data Protection Commission (DPC).

Back in February Facebook agreed to postpone the regional launch of Facebook Dating after the DPC’s agents paid a visit to its Dublin office — saying Facebook had not provided it with enough advanced warning of the product launch, nor adequate documentation about how it would work.

More than nine months later the regulator seems satisfied it now understands how Facebook Dating is processing people’s personal data — although it also says it will be monitoring the EU launch.

Additionally, the DPC says Facebook has made some changes to the product in light of concerns it raised (full details below).

Deputy commissioner, Graham Doyle, told TechCrunch: “As you will recall, the DPC became aware of Facebook’s plans to launch Facebook Dating a number of days prior to its planned launch in February of this year. Further to the action taken by the DPC at the time (which included an on-site inspection and a number of queries and concerns being put to Facebook), Facebook has provided detailed clarifications on the processing of personal data in the context of the Dating feature. Facebook has also provided details of changes that they have made to the product to take account of the issues raised by the DPC. We will continue to monitor the product as it launches across the EU this week.”

“Much earlier engagement on such projects is imperative going forward,” he added.

Since the launch of Facebook’s dating product in 20 countries around the world — including the US and a number of markets in Asia and LatAm — the company says more than 1.5 billion matches have been “created”.

In a press release about the European launch, Facebook writes that it has “built Dating with safety, security and privacy at the forefront”, adding: “We worked with experts in these areas to provide easy access to safety tips and build protections into Facebook Dating, including the ability to report and block anyone, as well as stopping people from sending photos, links, payments or videos in messages.”

It also links to an update about Facebook Dating’s privacy which emphasizes the product is an “opt-in experience”. This document includes a section explaining how use of the product impacts Facebook’s data collection and the ads users see across its suite of products.

“Facebook Dating may suggest matches for you based on your activities, preferences and information in Dating and other Facebook Products,” it writes. “We may also use your activity in Dating to personalize your experience, including ads you may see, across Facebook Products. The exception to this is your religious views and the gender(s) you are interested in dating, which will not be used to personalize your experience on other Facebook Products.”

One key privacy-related change flowing from the DPC intervention looks to be that Facebook has committed to excluding the use of Dating users’ religious and sexual orientation information for ad targeting purposes.

Under EU law this type of personal information is classed as ‘special category’ data — and consent to process it requires a higher bar of explicit consent from the user. (And Facebook probably didn’t want to harsh Dating users’ vibe with pop-ups asking them to agree to ads targeting them for being gay or Christian, for example.)

Asked about the product changes, the DPC confirmed a number of changes related to special category data, along with some additional clarifications.

Here’s the full list of “changes and clarifications”:

• Changes to the user interface around a user’s selection of religious belief. Under the original proposal, the “prefer not to say” option was buried in the choices;
• Updated sign-up flow within the Dating feature to bring to the user’s attention that Dating is a Facebook product and that it is covered by FB’s terms of service and data policy, as particularised by the Supplemental Facebook Dating Terms.
• Clarification on the uses of special category data (no advertising using special category data and special category data collected in the dating feature will not be used by the core FB service);
• Clarification that all other information will be used by Facebook in the normal manner across the Facebook platform in accordance with the FB terms of service;
• Clarification on the processing of location data (location services has to be turned on for onboarding for safety and verification purpose but can then be turned off. Dating does not automatically update users’ Dating location in their Dating profile, even if the user chooses to have their location turned on for the wider Facebook service. Dating location does not use the user’s exact location, and is shown at a city level on the user’s Dating profile.).

French startup Alan is building health insurance products. And 100,000 people are now covered through Alan . I caught up with the company’s co-founder and CEO Jean-Charles Samuelian-Werve so that he could give us an update on the product.

Alan has obtained its own health insurance license and is a proper insurance company. It doesn’t partner with existing insurance companies. The company primarily sells its insurance product to other companies.

In France, employees are covered by both the national health care system and private insurance companies. So Alan convinces other companies to use its product for all employees.

Over the years, Alan has diversified its offering with high-end coverage, partnerships with CNP Assurances, Livi and Petit Bambou, a focus on new verticals, such as companies in the hospitality industry or retired individuals.

“We’ve kept shipping, and I even think that our pace has increased. We’ve released some exciting stuff in recent months, for our members, for companies and for us internally,” Samuelian-Werve told me.

The biggest change isn’t visible to the end user. The company has built a service that lets them generate a new insurance package on demand. It uses historical data to figure out pricing on the fly. And it opens up some market opportunities as big companies want a custom insurance product depending on their needs.

The biggest Alan customer is a company with 1,000 to 1,500 employees. But the startup is currently selling its product to bigger companies. The idea is that companies above 100 employees can get a custom insurance package.

For the customer, pricing remains transparent as Alan shows you how much it costs to cover your medical needs depending on what you’re asking for. Alan adds a membership fee on top of that to access the platform and related services.

Alan is also introducing a new messaging feature. You can start a text discussion with a doctor whenever you have a question about your health — it’s included in your insurance package. Alan doesn’t want to replace your general practitioner. But having a doctor that you can text is always helpful when you’re not sure what to do next.

On the other side of the screen, there are actual doctors answering your questions. “We’ve hired a full-time doctor and we’re working with a bit under 10 doctors on a part-time basis,” Samuelian-Werve told me.

Alan’s app has been redesigned with a bigger emphasis on your health instead of your insurance. The company shows you all your interactions with health professionals. You can add documents and notes to consolidate information in the same place.

It sounds a bit like France’s DMP, which acts as a personal repository for all your health-related documents. And Alan doesn’t want to replace the public initiative. The startup would like to take advantage of the service to upload and download data at some point down the road.

If you give your consent, Alan can also proactively nudge you about your health. For instance, given your child’s age, Alan can notify you when they’re supposed to get vaccinated. Or if you haven’t been to the dentist in a year, Alan can tell you that it’s time to get a routine checkup.

Finally, the company has improved efficiency when it comes to reimbursements. “74% of reimbursements are issued within an hour. And we’re using instant transfers to send money to your bank account,” Samuelian-Werve told me.

As you can see, Alan is releasing incremental updates. They slowly add up and change the product. In the coming years, the company plans to offer its product in multiple European countries.

Acapela, a new startup co-founded by Dubsmash founder Roland Grenke, is breaking cover today in a bid to re-imagine online meetings for remote teams.

Hoping to put an end to video meeting fatigue, the product is described as an “asynchronous meeting platform,” which Grenke and Acapela’s other co-founder, ex-Googler Heiki Riesenkampf (who has a deep learning computer science background), believe could be the key to unlock better and more efficient collaboration. In some ways the product can be thought of as the antithesis to Zoom and Slack’s real-time and attention-hogging downsides.

To launch, the Berlin-based and “remote friendly” company has raised €2.5 million in funding. The round is led by Visionaries Club with participation from various angel investors, including Christian Reber (founder of Pitch and Wunderlist) and Taavet Hinrikus (founder of TransferWise). I also understand Entrepreneur First is a backer and has assigned EF venture partner Benedict Evans to work on the problem. If you’ve seen the ex-Andreessen Horowitz analyst writing about a post-Zoom world lately, now you know why.

Specifically, Acapela says it will use the injection of cash to expand the core team, focusing on product, design and engineering as it continues to build out its offering.

“Our mission is to make remote teams work together more effectively by having fewer but better meetings,” Grenke tells me. “With Acapela, we aim to define a new category of team collaboration that provides more structure and personality than written messages (Slack or email) and more flexibility than video conferencing (Zoom or Google Meet)”.

Grenke believes some form of asynchronous meetings is the answer, where participants don’t have to interact in real-time but the meeting still has an agenda, goals, a deadline and — if successfully run — actionable outcomes.

“Instead of sitting through hours of video calls on a daily basis, users can connect their calendars and select meetings they would like to discuss asynchronously,” he says. “So, as an alternative to everyone being in the same call at the same time, team members contribute to conversations more flexibly over time. Like communication apps in the consumer space, Acapela allows rich media formats to be used to express your opinion with voice or video messages while integrating deeply with existing productivity tools (like GSuite, Atlassian, Asana, Trello, Notion, etc.)”.

In addition, Acapela will utilise what Grenke says is the latest machine learning techniques to help automate repetitive meeting tasks as well as to summarise the contents of a meeting and any decisions taken. If made to work, that in itself could be significant.

“Initially, we are targeting high-growth tech companies which have a high willingness to try out new tools while having an increasing need for better processes as their teams grow,” adds the Acapela founder. “In addition to that, they tend to have a technical global workforce across multiple time zones which makes synchronous communication much more costly. In the long run we see a great potential tapping into the space of SMEs and larger enterprises, since COVID has been a significant driver of the decentralization of work also in the more traditional industrial sectors. Those companies make up more than 90% of our European market and many of them have not switched to new communication tools yet”.

European entrepreneurs who want to launch startups could do worse than Switzerland.

In a report analyzing Europe’s general economic health, cost of doing business, business environment and labor force quality, analysts looked for highly educated populations, strong economies, healthy business environments and relatively low costs for conducting business. Switzerland ended up ranking third out of 31 European nations, according to Nimblefins. (Germany and the UK came out first and second, respectively).

According to official estimates, the number of new Swiss startups has skyrocketed by 700% since 1996. Zurich tends to take the lion’s share, as the city’s embrace of startups has jump-started development, although Geneva and Lausanne are also hotspots.

As well as traditional software engineering startups, Switzerland’s largest city boasts a startup culture that emphasizes life sciences, mechanical engineering and robotics. Compared to other European countries, Switzerland has a low regulatory burden and a well-educated, highly qualified workforce. Google’s largest R&D center outside of the United States is in Zurich.

But it’s also one of the more expensive places to start a business, due to its high cost of living, salary expectations and relatively small labor market. Native startups will need 25,000 Swiss Francs to open an LLC and 50,000 more to incorporate. While they can withdraw those funds from the business the next day, local founders must still secure decent backing to even begin the work.

This means Switzerland has gained a reputation as a place to startup — and a place to relocate, which is something quite different. It’s one reason why the region is home to many fintech businesses born elsewhere that need proximity to a large banking ecosystem, as well as the blockchain/crypto crowd, which have found a highly amenable regulatory environment in Zug, right next door to Zurich. Zurich/Zug’s “Crypto Valley” is a global blockchain hotspot and is home to, among others, the Ethereum Foundation.

Lawyers and accountants tend to err on the conservative side, leading to a low failure rate of businesses but less “moonshot innovation,” shall we say.

But in recent years, corporate docs are being drawn up in English to facilitate communication both inside Switzerland’s various language regions and foreign capital, and investment documentation is modeled after the U.S.

Ten years ago startups were unusual. Today, pitch competitions, incubators, accelerators, VCs and angel groups proliferate.

The country’s Federal Commission for Technology and Innovation (KTI) supports CTI-Startup and CTI-Invest, providing startups with investment and support. Venture Kick was launched in 2007 with the vision to double the number of spin-offs from Swiss universities and draws from a jury of more than 150 leading startup experts in Switzerland. It grants up to CHF 130,000 per company. Fundraising platforms such as Investiere have boosted the angel community support of early funding rounds.

Swiss companies, like almost all European companies, tend to raise lower early-stage rounds than U.S. ones. A CHF 1-2 million Series A or a CHF 5 million Series B investment is common. This has meant smaller exits, and thus less development for the ecosystem.

These are the investors we interviewed:

• Jasmin Heimann, partner, Ringier Digital Ventures
• Katrin Siebenbuerger Hacki, founder, Medows
• Philipp Stauffer, partner, FYRFLY Venture Partners
• Claude Donzé, partner, Tomahawk.VC
• Lucian Wagner, partner, Privilège Ventures
• Maximilian Spelmeyer, partner, SIX Fintech Ventures
• Olaf Hannemann, partner, CV VC AG
• Andreas Iten, partner, F10
• Michael Blank, partner, investiere
• Ninja Struye de Swielande, partner, Lakestar

 

Jasmin Heimann, partner, Ringier Digital Ventures

What trends are you most excited about investing in, generally?
Consumer-facing startups with first revenues.

What’s your latest, most exciting investment?
AirConsole — a cloud-gaming platform where you don’t need a console and can play with all your friends and family.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
I really wish that the business case for social and ecological startups will finally be proven (kind of like Oatly showed with the Blackstone investment). I also think that femtech is a hyped category but funding as well as renown exits are still missing.

What are you looking for in your next investment, in general?
I am looking for easy, scalable solutions with a great team.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
I think the whole scooter/mobility space is super hyped but also super capital intensive so I think to compete in this market at this stage is hard. I also think that the whole edtech space is an important area of investment, but there are already quite a lot of players and it oftentimes requires cooperation with governments and schools, which makes it much more difficult to operate in. Lastly, I don’t get why people still start fitness startups as I feel like the market has reached its limits.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Switzerland makes — maximum — half of our investments. We are also interested in Germany and Austria as well as the Nordics.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Zurich and Lausanne are for sure the most exciting cities, just because they host great engineering universities. Berne is still lagging behind but I am hoping to see some more startups emerging from there, especially in the medtech industry.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Overall, Switzerland is a great market for a startup to be in — although small, buying power is huge! So investors should always keep this in mind when thinking about coming to Switzerland. The startup scene is pretty small and well connected, so it helps to get access through somebody already familiar with the space. Unfortunately for us, typical B2C cases are rather scarce.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I think it is hard to make any kind of predictions. But on the one hand, I could see this happening. On the other hand, I also think that the magic of cities is that there are serendipity moments where you can find your co-founder at a random networking dinner or come across an idea for a new venture while talking to a stranger. These moments will most likely be much harder to encounter now and in the next couple of months.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
I think travel is a big question mark still. The same goes for luxury goods, as people are more worried about the economic situation they are in. On the other hand, remote work has seen a surge in investments. Also sustainability will hopefully be put back on the agenda.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Not much. I think we allocated a bit more for the existing portfolio but otherwise we continue to look at and discuss the best cases. The biggest worries are the uncertainties about [what] the future might look like and the related planning. We tell them to first and foremost secure cash flow.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Totally! Some portfolio companies have really profited from the crisis, especially our subscription-based models that offer a variety of different options to spend time at home. The challenge now is to keep up the momentum after the lockdown.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
What gives me hope is to see that people find ways to still work together — the amount of online events, office hours, etc. is incredible. I see the pandemic also as a big opportunity to make changes in the way we worked and the way things were without ever questioning them.

 

Katrin Siebenbuerger Hacki, founder, Medows

“I have to choose my words carefully,” says Joe Castelino of Stevens Creek Volkswagen in San Jose, California, when asked about the software on which most car dealerships rely for inventory information, to manage marketing, to handle customer relationships and to otherwise help sell cars.

Castelino, the dealership’s service director, laughs as he says this. But the joke has apparently been on car dealers, most of whom have largely relied on a few frustratingly antiquated vendors for their dealer management systems over the years — along with many more sophisticated point solutions.

It’s the precise opportunity that former Tesla CIO, Jay Vijayan, concluded he was well-positioned to address while still in the employ of the electric vehicle giant.

As Vijayan tells it, he knew nothing about cars until joining Tesla in 2011, following a dozen years of working in product development at Oracle, then VMware. Yet he learned plenty over the subsequent four years. Specifically, he says he helped to build with Elon Musk a central analysis system inside Tesla, a kind of brain that could see all of the company’s internal systems, from what was happening in the supply chain to its factory systems to its retail platform.

Tesla had to build it itself, says Vijayan; after evaluating the existing software of third-company providers, the team “realized that none of them had anything close to what we needed to provide a frictionless modern consumer experience.”

It was around then that a lightbulb turned on. If Tesla could transform the experience for its own customers, maybe Vijayan could transform the buying and selling experience for the much bigger, broader automotive industry. Enter Tekion, a now four-year-old, San Carlos, California company that now employs 470 people and has come far enough along that just attracted $150 million in fresh funding led by the private equity investor Advent International.

With the Series C round — which also included checks from Index Ventures, Airbus Ventures, FM Capital and Exor, the holding company of Fiat-Chrysler and Ferrari — the company has now raised $185 million altogether. It’s also valued at north of $1 billion. (The automakers General Motors, BMW, and the Nissan-Renault-Mitsubishi Alliance are also investors.)

Eric Wei, a managing director at Advent, says that over the last decade, his team had been eager to seize on what’s approaching a $10 billion market annually. Instead, they found themselves tracking incumbents Reynolds & Reynolds, CDKGlobal and Dealertrack, which is owned by Cox Automotive, and waiting for a better player to emerge.

Then Wei was connected to Tekion through Jon McNeill, a former Tesla president and an advisory partner to Advent.

Says Wei of seeing its tech compared with its more established rivals: “It was like comparing a flip phone to an iPhone.”

Perhaps unsurprisingly, McNeill, who worked at Tesla with Vijayan, also sings the company’s praises, noting that Tekion even bought a dealership in Gilroy — the “garlic capital” of California — to use as a kind of lab while it was building its technology from scratch.

Such praise is nice, but more importantly, Tekion is attracting the attention of dealers. Though citing competitive reasons, Vijayan declined to share how many have bought its cloud software —  which connects dealers with both manufacturers and car buyers and is powered by machine learning algorithms — he says it’s already being used across 28 states.

One of these dealerships is the national chain Serra Automotive, whose founder, Joseph Serra, is now an investor in Tekion.

Another is that Volkswagen dealership in San Jose, where Castelino — who doesn’t have a financial interest in Tekion — speaks enthusiastically about the time and expenses his team is saving because of Tekion’s platform.

For example, he says a customers need only log-in now to flag a particular issue. After that, with the help of an RFID tag, Stevens Creek knows exactly when that customer pulls into the dealership and what kind of help they need, enabling people to greet him or her on arrival. Tekion can also make recommendations based on a car’s history. It might, for instance, suggest to a customer a brake fluid flush “without an advisor having to look through a customer’s history,” he says.

As important, he says, the dealership has been able to cut ties with a lot of other software vendors, while also making more productive use of its time. Says Castelino, “As soon as a [repair order] is live, it’s in a dispatcher’s hand and a technician can grab the car.”

It’s like that with every step, he insists. “You’re saving 15 minutes again and again, and suddenly, you have three hours where your intake can be higher.”

Today during a call with investors and journalists, Tesla CEO Elon Musk was asked to expand a tweet from yesterday. In it, he stated: “Tesla should really be thought of as roughly a dozen technology startups, many of which have little to no correlation with traditional automotive companies.”

In short, he explained there are over a dozen startups in Tesla, and he views every product line and plant as a startup. It’s an interesting point of view from the top of Tesla, a car manufacturing company that also builds batteries, home solar panels, and among other things, is looking to offer car insurance, too.

Outside of vehicle manufacturing, Musk points to insurance when asked about the growth potential. He says the insurance business could grow into 30-40% of Tesla’s car business.

This strategy seemingly works well for Tesla, which constantly rolls out updates to existing products at an unusual pace. New features arrive without much warning, and it makes sense when Tesla is treating different vehicle component divisions as a collection of companies instead of a collection of divisions.

According to Musk, some of the so-called startups include autonomy, chip design, vehicle service, sales, designing a drive unit, motors, supercharger network, and soon insurance.

“The thing people don’t understand about Tesla is [the company] is a whole chain of startups,” Musk said. “And then people say, ‘well, you didn’t do that before.’ Yeah, well, we’re doing it now. I think we may have been a bit slower than other startups, but I don’t think we’ve really had anything fail.”

He concluded there are no plans to spin out any business, noting there’s no need to add complexity.