After the break, CEO Brian Ziebart presented NavPrescience, a CMU spin-off. Brian says that current GPS systems are “stupid” in that they are, by definition, “slow to learn or understand”. NavPrescience is taking navigation to the next level by predicting and personalizing your routes. Their technology has roots in training automated military vehicles, and they eventually hope to “be the Intel Inside of GPS systems”.
I just experienced this problem myself: Every time I drive from my home in Brooklyn to Pittsburgh (or NJ), it wants to take me through Manhattan because it is technically shorter and faster. Anyone who has ever driven through the Holland Tunnel at all, let alone on a Friday or Saturday evening, knows full well that will never be the fastest route (and certainly not the least stressful).
NavPrescience has an exclusive license for patent-pending predictive and personalized navigation technology. The first part is predictive location-based services. If you’re currently on the highway but haven’t put your destination in, it will suggest locations such as coffee shops where you typically go from here, not where you are here. The personalization understands the types of routes you prefer such as avoiding highways or certain types of roads. It can weigh a route based on the stress, skill, cost and time. (And I’m sure everyone wants their GPS to remember their reference for not driving through the ghetto).
Obviously, if they can penetrate the market there is a big opportunity here. Brian says that they can achieve $36m in revenue by being adopted by just 2.5% of the current GPS-enabled mobile devices. Their model is to be a value-added part of the technology stack. They are hoping that users will be willing to pay a nominal fee on a monthly basis for these features, of which they will see $1. There are also opportunities to improve advertising relevancy based on the predictive features, thus opening up new revenue streams there.
I may not be the typical user here, but I’ve always preferred to pay a premium for features up-front as opposed to paying on a monthly basis. In fact, I recently purchased a GPS that was $40 more than the comparable model but included lifetime traffic services – and I’ve noticed that many of the new systems seem headed in this direction. Some psychology comes into play here – we’re prepared to spend money at the time of purchase, particularly for a consumer electronics purchase – but we’re perhaps becoming more reluctant to sign up for new recurring costs. If NavPrescience were to pursue this pricing model, it may hurt their long-term revenues somewhat but it might also bring in an influx of cash which would help them scale the business quicker and reduce the need for dilutive fundraising.
They are planning to enter the market with a two-phase strategy: to build a smaller scale, “proof of product” solution and then scale the technologies to a higher-level platform. For phase one, they are seeking $300k to build a freemium application which can be delivered to mobile phones and doesn’t necessarily require partnerships with the big GPS makers. They will use this money to hire two additional developers and to cover their infrastructural costs.
Phase two is about integrating the technology in consumer products. They are in the process of bringing in former GPS executives to help them build the partnerships necessary to gain market share. They may need a Series A round at that point to help scale the business, but based on currently revenue projections that will not be required.