Moj Revenue & Valuation (2024)

hello everyone my guest today is kenny hawk he joined moggio as chief executive officer and director in november 2015. he's responsible for leading the company on his mission to give every vehicle a voice he previously led three disruptive venture back companies as ceo he holds an mba from stanford where he'll net where he now guest lectures for the engineering entrepreneurship program kenny you ready to take us to the top absolutely good to see you again good to see you i was gonna say that first episode we did back in kind of mid 2016. i guess you would have been at mojo at that point for about a year and a half right yeah about a year and a half and uh he was just getting ready to launch our first customer so a lot of progress since then well i can't wait to touch on that for those of you that want to go reference that first episode it's episode 323 and forgive me kenny if i'm wrong here but right before this you had taken the company public for a different company public for what a billion dollars or something a company called i go and got close to a billion dollars market cap correct yeah and you left that for this i actually built a couple other companies in between one in switzerland doing gps chips in lugano switzerland and then it built an active antenna array company in germany backed by excel partners that was acquired by ketrine interesting okay let's talk telematics it comes into the sharing economy it comes into uber comes into the ride sharing wars help us understand what the company does and what your current revenue model is today sure so we have a cloud platform that connects cars to the internet basically ingesting data from the vehicle by plugging in a onboard diagnostic device into the obd port in the car connects over 4g lte puts a wi-fi hotspot on your car and then lets you know where your family your employees are your teen drivers and also gives you all the information that's coming off your car and puts it in plain language so you can understand and instead of just a dumb check engine light you know what's going on with your car whether it's urgent or something simple and we also now share with you the expected cost of that repair so it gives the consumer power uh when they're walking when they're driving into a repair shop and kenny back again when you're last on you were just kind of going to market so what's the model today i mean who are you selling to and is it a sas company or what absolutely it's a sas company monthly recurring revenue we sell through mobile operators and we have a um nine mobile operators live worldwide t-mobile in the us metropcs deutsche telecom in four countries uh telus up in canada and rogers and bell and we basically take a piece of their monthly fee that they're charging the consumers so typically the service costs about ten dollars in the us are ten euros in europe and for that you get high-speed wi-fi you get four free tows per year collision notification and of course all the information that's coming out of the vehicle because the device has an accelerometer we also can detect how you're driving so harsh braking harsh acceleration if you've been uh bump tower cars being stolen so it gives you a lot of visibility around your car and basically turns any car into a smart car so ten dollars uh kind of per me driver per month correct okay and that is paid directly to the the telecom and then you take a cut of that or that's your cut we that's paid to the telecom and we take a cut of that okay in the sharing economy we have a lot of uber and lyft drivers um that are putting this in their vehicle and they're getting more in tips per week than the system costs per month so people really like having wi-fi in the car especially when they're in ubers and lyfts that's so that's what i'm trying to understand here i'm trying to understand are you a genius marketer and you understand that the way to sell this to a large mod of the market is exactly that why find your car or are you coming at this from an enterprise angle going insurance companies love the data it makes premium kind of giving you know risk aversion easier or uber use this because it's going to help you drive more revenue like which side of the playing field are you on are you really bridging the gap you know we're bridging the gap and mainly but as he sparks yeah yeah for mobile operators um you know they all want new recurring revenue streams and yet it you know there's a lot of heavy lifting to get there and mobile operators are not known for developing products so what we do is provide this white label platform for a carrier like t-mobile or deutsche telecom where they could be in the iot business without having to do all the heavy lifting so we built the platform we do the mobile apps on ios and android we do all the data and analytics you can figure out the insights where you can save people time or money and we even manage the external hardware vendor that designs and produces the device we don't do the hardware but we manage that process for the carrier so it's really easy and a good example is with t-mobile we help them generate 100 million dollars of brand new revenue in the first 12 months how through the through the product that we develop for them so so you i can take 100 million in revenue divide that by 10 you help them sign up that many new customers if you also add the hardware correct you get the cost of the hardware you have the monthly fee and that's correct you can work your way back from there okay i mean there'd be like 10 million consumers signing up at 10 bucks a month to get 100 million bucks in revenue 100 million per year not 100 million per month okay got it so just okay so basically basically basically it'd be a hundred i think to take i need to take 100 million by 120 because they're paying 10 bucks a month for 12 months yes okay good so you helped them sign up called 800 000 new subscribers new new t-mobile whatever subscribers well we're not reporting the exact number but plus or minus that's the right that's the right range okay they also include the cost of the hardware and some of that revenue but it's meaningful it's you know it wasn't a blip it was a big it was a big number it moved the needle and that's why we've gone from one carrier to nine carriers since we last talked that's what i'm trying to understand is is how you're directly attributing that to you like how do they know oh wow this is kenny driving this revenue i need to do more deals with him and other carriers are probably going to sign him up quick i should invest and be a strategic investor because we're the one that did the entire product we did everything what they did is open up their channels they put it into the retail channel we did everything else we did the use cases the app we trained the sales force on how to sell it we even did the demonstration videos that run inside the store so if you go into any t-mobile or metro pcs store in the us you'll see this product in the shelves and it'll say 10 bucks a month correct okay so okay so let's go down the t-mobile pack because this is that'll be very relatable for the audience so t-mobile set up for 10 bucks a month some of that flows through you are we talking like a dollar or like nine dollars flows through to you you know the operator gets the bulk of it because they're handling the backhaul and all the selling and but we get a nice chunk of that we don't share those numbers but it's a revenue share we get a piece of that healthy uh we just closed a 40 million dollar b round and we're gonna we're going to be uh cash expect to be cash positive on that b round okay so just to be clear how much have you raised now to date we raised um let's see 40 plus 15 call it 57 million so there's a 2 million seed plus 15 plus 40. okay when when was the 40 closed what month a december okay december were you or did you build yourself to break even at that point before you raced so you had leverage or were you still burning still burning and we will still burn through the end of this year and then we'll hit break even on this amount of money that we raise so this cash should take us through the cash break even which will happen towards the end of this year early next year got it okay i want to talk more about how you're modeling that out because you've done this many times before with success so we'll get back to that in a second but first a company launch date was 2015 is that right i actually launched in 2012 i took it over in 2015. what does that mean you bought remind me you bought it no as part of the a round the investors wanted a more experienced uh ceo the four founders were all good people that hadn't built companies before so they wanted somebody experienced to take the company into a uh carrier you know into a b2b direction they were selling b to c and it wasn't working and i took the company pivoted it to b to b to c through the operators and that's when we really started taking take off and built a you know carrier-grade platform no really really really smart so and what have you scaled today in terms of total customers using using the tool and we'll ignore the operators the folks in the middle i mean the actual the c's on the end yeah i mean we're the number reporting uh publicly is over 850 000 uh cars we've connected nine carriers and we've taken the team i think we were in the 20 30 people back when we last talked we're almost 90 now so i tripled the number tripled the team i went from one carrier to nine carriers and we have a couple others we'll announce this year and then the other big thing is we wanted an automotive big brother as an investor and we looked at all the tier one suppliers and luckily the number one uh supplier uh picked us and we picked them bosch and they invented the can bus which is what the device plugs into uh they have amazing crash detection technology you know all the automotive codes on dtc codes and translations so all of this um secret sauce that they've developed over the last 20 years we now have access to since they're our investor and we're doing five different technology code developments with them it's also helping us move into the oem market where we can help oems with a better platform than the old platforms they've built over the last 10 years yeah so kenny just to make sure my audience understands these numbers accurately you went from one to nine carriers across online care uh carriers you've signed up about 850 000 end kind of customers who put your device in their car and they pay 10 bucks a month for that correct they put the uh hardware partners device because we don't do hardware but they do put the hardware partners device in that they get from the carrier they're running it on our platform and using our apps and with that they can you know save time save money help their kids drive safer no i totally get the pro i completely get the product i just understand what impact you're already having over just a very short amount of time so if you have 10 you know 850 people 850 000 folks paying 10 bucks a month that's 8.5 million bucks a month in revenue or 102 million bucks in terms of annual revenue that you have added to these nine different carriers essentially top line revenue am i reading that correct plus the cost of the hardware which is additional revenue but that's correct yeah so that's a service point on top of that you got the hardware revenue and additionally it's also building loyalty so customers that you know have a mobile plan with two or three phones and add a car or two cars it's also locking that customer even more closely to the carrier yeah and creating additional uh additional loyalty less churn and kenny where were you a year ago so 8.5 million kind of today across all these characters how much are you driven about a year ago about half of that oh wow okay so kind of 100 percent over your growth roughly okay and interesting at least i recognize as the second fastest growing company in canada by deloitte where are you guys based which part in vancouver got it so halfway through vancouver it happens silicon valley yeah that's great and then i mean look i totally understand why you don't want to say what you take out of the 8.5 million per month because it's probably different in a negotiation with every carrier but you said healthy generally i mean i i'm going to make an assumption here and say maybe it's 50 so i mean am i thinking about that right you're doing like three four five six million a month something like that we're still private and not sharing the numbers uh and you know i do i just don't want to disclose can you ignore what the number is i'm just trying to get a sense of that's how you that's how you fund your employees your space you're taking some percent of the 8.5 million per month and you said healthy and my audience can decide what healthy means perfect exactly okay got it by the way my gut would tell me uh it depends on how good of a negotiator you are i think you're probably a pretty damn good negotiator so you know my guess of health will be somewhere between like you know call it 30 and 40 percent but who knows who knows what leverage you have over the carriers um let me ask you a different question um as you continue scaling the business um what's more likely to happen first you buying bosch or one of these carriers or the distribution channels buying you the product they're putting through yeah great question we're building a company to be standalone uh profitable cash positives so we don't need to raise outside money and you'll build a healthy company and good things will happen so let me phrase that differently kenny t-mobile ceo calls you up says kenny listen you're adding too much to our revenue right now we're either gonna build this internally because we're relying too much on you right now or you're gonna sell to us for a billion dollars uh what do you do oh you're breaking up there did you hear the question kenny i should repeat it yeah i did you said you know john ledger calls me up and says uh you know you're too important we're going to buy you um you know at that point our investors would open up a uh would most naturally open up a bidding process between all the other people that are interested and they have to decide whether that is the right time to sell or a time in the future and that's you know really an investor decision as a ceo with outside investors you know my job is to maximize the value to all shareholders and it's really a shareholder decision when they sell i guess kenny my question is if if someone like john calls you up and forces you into that decision where basically it's very clear he's gonna you are this revenue room is too important to where he is going to build this internally himself because it's that much revenue or you're he's gonna buy you if you're invested or you end up saying no we're gonna stay private you then essentially lose one of your nine big carriers right so that's what i'm saying is how do you there's an advantage of being really important to their revenue stream and it's also a big disadvantage how do you balance that yeah you know it's funny i actually went through that exact scenario when i built the company in germany uh our biggest customer with our only oem was nokia siemens networks we as a as a group decided to just do one oem uh it would have been very expensive to do two oems in parallel we we proved out all the technology hit all the technical milestones did a deployment with vodafone and at the end of that uh mark rowan uh the head of nokia siemens uh radio group said you know this is so amazing so fantastic and so strategic and so core we have to own this technology he didn't say the next sentence which means which was either by you or kill you but that's what he was saying yeah and uh you know i went to my board and said you know we got two choices you know either raise a lot more money and uh tee up another oem or start a bidding process because these guys are either gonna buy us or build it uh they just the board decided not to do that and of course nokia went off and and tried to build their own and you know after many years and many millions later the company eventually sold it to trying but the uh you know for me the right thing to do at that point in time would have been to open up an auction uh get the ericsson uh alcatel loosen um huawei and zt to all be bidding against nokia siemens and make a decision at that point do you sell at that price or do you double down and raise more money to fund that next oem yeah but you know that was a sort of pre-deployment post proof of concept and at that point we hadn't uh put that much money into the company uh still had plenty of cash in reserve but there was anything a lot more money to bring up that second oem yeah exactly that that's a good story um listen because you're b to b to c i mean it's hard for you to measure typical maybe not typical sas metrics like churn retention things like that because you're going through like a provider you like have calc and churn and and you know fully weighted cac for the oem but then also for the the pass through to the consumer how do you measure these metrics internally yeah it's a great question we just went through the reforge course this uh past year i don't know if you're familiar with reforge yeah it's an amazing program up in san francisco i put myself and three of my team members through it and you know even in a b to b to c you have some metrics so you can you can determine just off your platform you can tell if people are connecting how often they're connecting you get the app analytics you don't get all the upfront cac numbers from the carrier because it's hard to tell exactly what programs they're they're spending and we do get some metrics depending on the carrier not as many metrics as we like from all carriers but we're now building uh much of that reforge you know engagement the aha moment uh reinforcing and the viral effect uh building it right into the app so we're less dependent on kind of begging for analytics from our b2b uh partners so we think that's really important and you want to get people into that habit moment make sure they're seeing the value and reinforcing it so they are a long-term customer so kenny what's your turn today we we're not reporting it's uh healthier than the churn in most of the products that the carriers better like what do you measure that's what i'm actually asking like what are you measuring the churn with the oems or the churn with the oems to their subscribers oh so we measure the actual end user churn i see so what is their typical turn on their other product lines you know it's a couple percent a month okay you know to more than that for uh the weaker products and we're doing better than that okay good so your stick your your you know call it sub whatever sub five percent uh kind of logo churn or consumer return per month yes for sure that's great okay and um and what did you what have you changed over the past two years in terms of driving that down like what do you know a new person when they put this in their car for the first time they have to do in the first session to get really sticky yeah it's a great question one of the aha moments is doing setting up a fence and geofence is a simple you know border that you put around either a location or a place or or somewhere you perhaps don't want your uh drivers to go or maybe you want to know once the driver enters that geofence a good example is teams you don't want them you know going to the other side of railroad tracks where maybe some bad things happen you want to get alerted at that or you want to know did they get to school on time or not for employees when is the next employee you know driver delivery driver entering the home zone so you know who who to assign the next delivery to so geofences are really valuable super easy to set up and once you set it up and you start getting those notifications it reinforces the value of the product why do people have to do this through your hardware not just their phone i mean every time i'm driving i have my phone why isn't this just a facebook like an app well a couple things one you know your phone does not get any information off the car so the obd port gives you all the information about dtc codes all the pids if there's anything going wrong with your car uh reads the mileage off the car reads the vin so for example with uber you want to know that that driver is actually in the car that they signed up with so is that maybe a 2018 escalator is it a 2010 chevy blazer are you selling data to uber uh not yet not yet are you selling data to anyone insurance companies we have a couple of buyers of data uh and we've done some modeling with the insurance companies that should launch later this year and basically we help the insurance companies avoid all the costs of building out their own telematics program yeah this is how you become a maybe a two three four five billion dollar kind of company if you execute that properly it's the data absolutely yeah you know what you drive where you drive how you drive you know your personality because of the way you drive and we can use that to help you and help you be safer help you save money and we're doing it very much in a consumer focused approach versus a big brother approach so the old way was insurance company markets to you convinces you to stick a black box in hopes that that you keep that black box in and if you're a good boy we give you a discount in our model the customer is doing it for their own reasons they want the wi-fi they want to know where their vehicles are they want to save money on repairs and then they choose to share the information with a bunch of insurance companies and the best uh deal wins and they're actually using the fact that they're a good driver to save money but they're in control instead of the insurance company being in control we think that's stronger yeah and then um do you have any ability to drive expansion revenue yet but or no because you don't own the contract with a consumer what do you mean by expansion so change them from a 10 a month plan to 15 a month plan if they get go from you know slow wi-fi in their car to faster wi-fi in their car or whatever your upsell is yeah the control the the operator controls that and they have built in some of the operators that built that in so there's a base plan and a higher level plan do you get a cut if they upsell uh today we do not okay so it's like a flat rate almost for the ten dollar yeah for the telematics and then you know the wi-fi piece is really their their value add so not really fair for us to take it up is anyone subsidizing the hardware like are you using your raised funds to do that to get market share faster we're not using our funds but the operators are subsidizing it and you know you look at the subsidy on a phone with a subsidy on a device like this the subsidy is much lower and yet they're they're attracting new customers what's the hardware cost all in that's about 100 bucks and how much does it do they subsidize for anywhere from uh fully subsidized to 50 25 it's all over the map oh good okay so i could walk into a t-mobile get it for maybe 50 bucks or even less and then 10 bucks a month and then go from there yeah i know even you know if they if they do have a price on it they'll actually subsidize they'll actually um uh finance it so you know three bucks a month for you know 24 months are people financing a 50 purchase these days some are yeah they just added under their to their uh bill which is a new line on your bill sas is everywhere all right all right um okay good so they control expansion okay last question here i mean how do you think of cac i mean what is your fully weighted cat to sign up a new consumer i mean ours is almost zero because the carrier is handling all of that yeah so my question should have been what's your cap to sign up a new carrier but that's like you probably don't even measure that we're starting to so we're looking at you know it is a long sales cycle you know it's a enterprise grade uh sale and a lot of diligence they go through to bang on your platform and make sure you're gdpr compliant for europe and get all the security in place etc so you look at all the people the engineers you know the amount of time it takes there's a there's a real cost there but now we have nine it's you know they're starting to fall much faster we just signed up two more very large global carriers how many are there total total carriers are oh there's there's uh you know hundreds of carriers oh wow okay you know about 20 30 big ones if you include all of asia and latin america and you look at the number of people on the planet that have a relationship with a mobile operator it's a couple billion so there's a billion cars out there a couple billion mobile users and you combine those two in the crossover and that's that's our uh target market last question here kenny before we wrap you know you just raised around i'm curious how much you're putting your pedal to the metal here in terms of kind of burn and you're not going to give me an exact number here i don't think but burning more or less than 2 million bucks a month net burn less than two oh wow okay i thought it would have been bigger no less than two because we also have some uh gross margin you know we've really driven the cost out of our platform we're in generation three of the platforms so logs on that revenue are very low so we have nice margins and that's also contributing okay and you know we want to uh go ahead next question no i was going to say so so are you amazed so you're between one and two you'd say yeah okay that's great i was gonna say so then why raise capital though like why take the dilution if you're not going to jack up burn to try and drive growth well there's some opportunities to consolidate there's a couple new things we're investing in so we we're nailing the aftermarket so you do you have an acquisition you want to announce no not yet but we've all looked at a couple and uh you know i mentioned the oem markets we've nailed the aftermarket now we're penetrating the oem market together with wash that'll take investment um we're also building a couple new capabilities on the platform including very accurate crash detection so we won't just know you've been in a crash we'll know on a scale of one to ten how severe it is and be able to connect you with the bosch uh live call center in less than 10 seconds so if you're you your family needs help it's even better than onstar and you get that for 10 bucks a month interesting okay let's wrap up with the famous five number one what's your favorite business book uh good to great by jim collins number two is there a ceo you're following or studying uh you know bezos still i think he's doing amazing things and they're an investor so uh i can't help but follow him well then it makes sense why you're an expert at driving costs out of your system i'd say jeff puts that feather in his cap too uh number three what uh what billing tool are you guys using what billing tool yeah like how are you actually that's tough for you because you're not actually billing really directly let me ask just a different question um what's your favorite online tool for building the company online tool for building a company today lit today well other than jira for engineering i have to say monday yep yep super simple visual way to look at the big picture objectives roy mann yeah they used to be called the pulse has come on a couple times incredible growth there number four how many hours of sleep to get every night i get a good six hours of sleep okay and what's your situation married single kids uh i am engaged to uh an amazing fiance uh who is currently miss arizona oh congratulations that's great so so what she bought one of your products in t-mobile and said i love this so much i'm gonna marry the founder no we actually i met on the way to ces a little over two years ago we were on the same flight they got delayed delayed delayed and finally cancelled and we looked at each other and said i really need to get there and she said i really need to get there too and you seem capable let's figure out a way to get there together and we haven't been apart since uh but more important than the beauty is she's an absolute kind sweet person and uh i couldn't be happier that's great you know what really closed the deal though i mean two years ago you also know what happened two years ago right tell me you can't you were on the podcast i mean she heard you she knew she knew that's that's actually the business i'm in i'm i'm celebrity matchmaker with you know tech people all right i'll have to look up the dates and see if the podcast came before after i met her that is funny that would have been um during february march april may uh june 6th is when you came on the show 2016. uh yeah i don't know when ces is all right okay so about to be married uh no kiddos yet i assume uh her and i are talking about it so i've got i do have uh kids from a prior part how many but uh four oh four okay wow four kids and how old are you i am 55 50 son yep it's awesome kenny all right take us home last question what do you wish your 20 year old self knew uh you know the importance of uh picking the right partner it's probably the most important decision you make and it affects everything you do and uh you know now it's later in life meeting the person i was really meant to be with i just wish i'd done that much earlier guys pick the right partner he has helped 850 000 consumers put wi-fi in their car he's not selling direct he sells directly through say a t-mobile they sell for 10 bucks a month he takes a cut of that so 850 folks paying 10 bucks a month he's added 8.5 million bucks a month in terms of revenue to these nine carriers he's working with today that's up about 100 percent year over year they raised 57 million bucks today burning between a million bucks and 2 million bucks a month right now to drive growth 90 people in vancouver in remote locations way less than 5 consumer churn per month again in their customer cohort not actually that kind of the oec's but that's it's more sticky than other products they're selling which they obviously really really like uh dialing up and trying to drive growth now looking at potentially selling data but again helping people get wi-fi in their cars and do a lot of other things related to crash detection tied directly into car metrics kenny thank you for taking us to the top great to see you nathan cheers