The company recently raised a $16M round from Mark Cuban, JetBlue and Will Smith's Dreamer FundRead more...
Lead investor Zack Rinat has also joined the company as co-founder and board chairman
The American relationship to their car is changing rapidly. While the automobile was once a symbol not only of freedom but also American ingenuity, more recently, thanks to ridesharing services like Uber and Lyft, as well as emerging technologies like self-driving cars, people are fewer people are actually buying their own vehicles. That doesn't mean there will be any fewer cars on the road, though; in fact, there may actually be more thanks to large delivery fleets from companies like Amazon.
All of these changes are bound to shake up the industry, and one issue that these fleets of vehicles often run into are problems with maintenance and inspection.
"Safety has been an on the side, paper-based and disjointed process. So, every single fleet, every single repair shop has their own way of doing the same thing," Leo Sigal, co-founder and CEO of Driveroo, told me in an interview. Driveroo is an automotive network that allows fleets to conduct specific and AI guided vehicle inspections.
"Running inspections and running maintenance programs, it’s very difficult for businesses that are not really equipped to do that, so the vehicle side of it gets left behind."
Driveroo makes it easy for drivers to diagnose any potential problems for their vehicles, and then directs those drivers to pre-qualified repair shop that are in the Driveroo on-demand shop network, allowing for a streamlined approach for vehicle maintenance.
On Monday, the company announced that it raised $3.1 million in a seed funding round led by Zack Rinat, former founder and chairman of Model N and NetDynamics. Other institutional investors also participated as well, including WS Investments.
"When you look at business opportunities, you look at three things: you look at the market opportunity, you look at the fit that you have from a technology and product, and you look at the team. I believe that Driveroo has all three criteria here shining in a big way," Rinat told me.
In terms of the market opportunity, he believed that the automotive industry, "is one of the very large market opportunities that still exists."
"The industry is right now going through a major reorganization. When you think about what’s happening right now with e-commerce, when you think about driverless cars and other phenomenon, there are major changes that are happening in this industry. The way that new entrants started to work in this market was basically to create something that is proprietary, that is not integrated, and costs a lot of money," Rinat said.
"So, when I look at the size of the industry, and the fact that this industry is going right now through a transition, that gives you a market size that is humongous and there is a big opportunity there."
In terms of Driveroo's technology, he said, the company is trying to work with the industry, in contrast to companies like Uber and Lyft, and take it digital, "which is much more effective, much more cost efficient and much more productive."
"When you look at the technologies that are underpining the Driveroo, platform from an AI and big data and mobile and social and a variety of others, it’s a very complete set of technologies that enable this industry, not just come up to par with others, but is going to enable them to leapfrog. When you think about doing tests that are very unique to this specific vehicle, to this specific batch, to this specific manufacturer, to this specific facility that they were produced, it’s able to give you a very powerful technology."
Finally, there is a personal connection to this investment: Rinat and Sigal had worked together previously, when Sigal was Chief Technical Officer and a VP of Engineering at Model N.
"I have the utmost belief and respect and trust in him and I am excited to join the ride with him and Driveroo," said Rinat.
A new co-founder
In addition to leading the funding, it was also announced that Rinat will be joining Driveroo as its co-founder and Executive Chairman, where he will be helping to grow the board and to support Sigal in his duties as CEO.
"First, I’m going to manage the board and we are going to increase the size of the board; we are going to create a world class organization, that’s one aspect that is very important. The second one is I’m going to work very closely with Leo on the broader company strategy and driving strategy together. The third is that I’m going to support Leo in whatever he needs in running the company," said Rinat.
"I’m bringing to this 24 years of being a CEO and a founder and a chairman and board member in four successful companies. I hope that we can leverage this expertise to support Leo as he grows and run the company."
For Sigal, having Rinat on board means having an experienced entrepreneur and CEO who can help him in a role that is new to him, as Sigal has never run a company before.
"As Zack said earlier, we worked together for a few years and during those years there were a couple of moments in which I got a lot of mentorship from Zack, but I also saw a way to bounce ideas off of Zack and get to a better strategy," said Sigal.
"My experience the last 20 years has been in building technology, building products, building teams and really applying technology to get companies and industries to a better space. One of the things that Zack’s involvement brings to the company is that experience of a mature CEO with a lot of experience that can actually help me with the parts I’m just stepping into. Being an executive running technologies is definitely different than running an entire company."
One other thing that Zack brings to Driveroo is experience with bringing an old fashioned industry that has resisted technology into the digital world.
"Zack saw the same opportunity in a different industry, the life sciences industry, and he was able to actually bring digital transformation in a big way to that industry," Sigal told me.
"While the industries are really, really different due to the fact that they're comprised of different sized players and one is a dirt under the fingernails business and the other is a white lab coat business, the reality is they both have challenges in digital transformation and with things not being done in the best way they could be done. So, Zack will bring both leadership and strategy experience, as well as experience taking an under-digitized industry and bringing digitization to it."
Changing the way fleet vehicles are repaired
Driveroo is a two-sided marketplace, working with both fleets and fleet managers, which are typically short-haul and mid-haul delivery, while also managing a network of auto repair shops that those fleets can use to get their vehicles fixed.
Drivers on the platform can use the app to inspect their vehicles on a daily basis, and, if there's a problem, they will be directed to one of those network shops.
"If you think about the repair aspect of Driveroo, we’re competing with guys that come out to your lot, meaning mobile mechanics. It’s really not comparable, though, since Driveroo can do any automotive repair since it’s in a shop that is equipped to do everything, while a mobile mechanic can only do more simple service and it’s not scalable. Driveroo can work with any small business, any shop, to enable them, within an hour, to start servicing fleets, while a mobile mechanic has to be in that market in order to do that."
On the inspection side, while are a few apps that provide that service, the difference between Driveroo and others is that what Driveroo uses technology to, as Sigal put it, "dynamically show what is relevant to this specific vehicle at this period of time." That means using its Turbographics technology to show repair shops what is wrong with that specific make and model, making it easier for them to repair issues.
For example, with Turbographics, instead of asking the repair shop, "Is the traction control light on?," Driveroo will actually show them the dashboard for that specific vehicle, rather than a generic dashboard, so they know which light to look for and where.
"We use machine learning to figure out what is likely going to be a problem area with this vehicle based on a whole bunch of data, and when we display that for the people checking the vehicle," Sigal explained. "Because of the way we’re constructed, we’re not a static app; we’re a very dynamic software suite which operates based on a lot of data."
Ultimately, what Driveroo is really doing is completely overhauling the way that fleet vehicles are maintained and repaired, making it vehicle specific and streamlined.
"Basically, a lot of fleet maintenance right now is meter based and odometer-based. There’s rules that basically say, 'Every 10,000 miles we’re going to the change oil,' so there’s software that says, 'Punch in the mileage' and it triggers an event that says, 'You’ve got to take this car in for maintenance.' What really happens in the real world is that vehicles are exploited differently. It depends on what type of fleet you are, how you’re using the vehicle, what terrain the vehicles are used on, which state the vehicles are used in," Sigal said.
For example, if a vehicle is doing package deliveries, and that package route is optimized for right turns, the right front suspension is going to be wearing out a lot more often. If a vehicle is delivering in a hilly area, its brakes are going to be worn out a lot more often than a vehicle that’s delivering in a flat area.
"What our customers are seeing is a big reduction in maintenance costs because we’re allowing and enabling them to do a daily assessment of the actual condition of the vehicle and allowing them to make a maintenance decision based on that condition. Not only are we allowing them to make that maintenance decision, we’re also providing them with the means to take their vehicle in for service into a pre-determined, per-approved, pre-priced scenario which is super convenient for them and on demand."
Driveroo currently works with more than 60 auto service shops, and has completed over 8,000 vehicle inspections for technicians and fleet managers. Since its Bay Area pilot launch last year, Driveroo has increased its customer base, adding customers like Amazon last mile fleet provider Delivery Guys, and Chevron auto service shops.
According to Sigal, Delivery Guys was able to increase their inspection compliance by 90 percent in the first week of rolling out Driveroo, and they were also able to reduce inspection time by 99 percent, thereby reducing their cost.
Now that is has its product, the company plans to use the new funding to scale the company and to implement its go-to-market strategy, which means expanding its 25 person team, adding another 10 people.
"When you look at what the company has done over the last two years, we took very a measurable process and really worked to develop the product into something that we believe is world class. The company has also built an infrastructure and we have a good technical team. The single most important aspect for the company right now is to scale it and to go-to-market and, in particular, go and get more fleets and expand the shops network that we have," said Rinat.
"Now we feel comfortable about the product and the offering, so it’s about go-to-market and scaling."
The future of Driveroo
While, in the short term, Driveroo is focused on helping with vehicle maintenance and repairs, the vision for what the platform can be is much larger than that; eventually, Sigal and Rinat told me that they want every aspect of the auto industry to flow through the Driveroo platform.
"People don't really think about it but there's a less than 200,000 small business repair shops that service these 250 million vehicles that are out on the road today, but, in some people's visions of the future, these shops somehow disappear. They're all making money, they're all surviving and they have been for a long time so they're needed, but somehow they go away all of the sudden and some other version of the future and these mobile mechanics replace them. Well, in our version of the future, all of these businesses, and not only the mechanics, but finance businesses, insurance businesses, all of these become a part of a network where the communication within it is digitized and the network can work on this data," said Sigal.
For example, when a car goes into service today and they find that something has to be done on the vehicle, the car owners either gets a call, or they get a form or a PDF with a bunch of part numbers. What Driveroo wants to turn that into is a shopping cart that the car owner can actually understand.
"There are huge, huge disruptive changes that can be made to the industry," Sigal said. "All of these things are disjointed, all paper-based, they don't talk to each other, and we are working to make sure that Driveroo can connect all of these things together. "
Rinat echoed Sigal's sentiments about the future of the automotive industry.
"We are starting with fleets and shops, and we are planning to add other stakeholders in the industry. Our vision is every transaction in the industry, every part, every financial, every test is going to go on this digital network and we are going to create a very efficient industry that is going to benefit consumers and users. hat is going result in safer, cheaper and more effective industry. We believe in five years we are going to be there."
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Driveroo is the 1st auto care service platform to provide predictive analysis of potential maintenance issues for each vehicle. The company uses Artificial Intelligence and Machine Learning to examine millions of data points about a specific car and others like it and determine the likelihood of specific maintenance issues, based on the type of car and its specific history. The Driveroo mobile app, in combination with partnerships with professional auto service providers, offers more visibility and convenience into the process of automotive care, maintenance, and inspections and can accurately predict potential service issues before they arise. Driverooprovides a full range of services, available instantly on-demand, from pre-purchase inspections to fleet care services. Driveroo is privately held and headquartered in Burlingame, CA. For more information, please visit https://www.driveroo.com/