November 22, 2021 – On today’s podcast we welcome special guest, Wejo CEO Richard Barlow. Wejo is a leader in connected vehicle data.
On the show, Richard discusses:
- Lessons learned through the founding of several successful new ventures
- The opportunity in the monetization of connected vehicle data
- Wejo’s roadmap to profitability
- Key growth initiatives as a newly public company
- And more
Welcome investors to The Absolute Return Podcast. Your source for stock market analysis, global macro musings and hedge fund investment strategies, your hosts, Julian Klymochko, and Michael Kesslering aim to bring you the knowledge and analysis you need to become a more intelligent and wealthier investor. This episode is brought to you by Accelerate Financial Technologies. Accelerate because performance matters. Find out more at accelerateshares.com.
Start of Podcast
Julian Klymochko: Welcome folks to The Absolute Return Podcast. I’m your host, Julian Klymochko. I am joined by my co-host Michael Kesslering, and on today’s podcast, we welcome special guests Wejo CEO, Richard Barlow. Wejo is a leader in connected vehicle data. On the show Richard discusses lessons learned to the founding of several successful new ventures, the opportunity and the monetization of connected vehicle data. Wejo roadmap to profitability, key growth initiatives as a newly public company, and more. So, with no further ado. Here’s our discussion with Wejo CEO, Richard Barlow.
So, we are live with Richard from Wejo. He’s CEO, and prior to getting into that, Richard, I did want to touch on your previous entrepreneurial journey. You started Wejo 2014, but prior to that, the founder of LeadX.com, can you talk about what that was all about? In more specifically, the lessons you learned from that experience that carried over to the founding and the evolution growth of Wejo?
Richard Barlow: Yeah, so back in 2005, this is very much at the start of the explosion of pay-per-click campaigns and ultimately new sales inquiry has been generated online. But the filtering, the sophistication of CRM systems at that point was in its early stages. And I saw an opportunity for insurance and this was a UK proposition, but sure enough it’s an opportunity for insurers, for consumer credit issuers, for banks, for all sorts of lenders, where they were somethings commits significant digital, less than 10% of the inquiries they receiving were within their own underwriting criteria. So, you know, an insurer, a carrier would want save drivers, age between the ages of 35 and 55. And yet they were getting 18-year-olds or eight-year-olds. They were getting DUIs. They were getting were getting what you’d call uncompetitive risk to quote on. There be lenders where they’d be super primed, but they may be getting a mid-time prime type inquiry. So, I saw an opportunity. My background was the internet sector, saw an opportunity to build a platform, to take live inquiries from multiple industries. I raised three hundred and fifty thousand pounds from friends and family back in 2005. And they then raised a small amount of capital from a fund called European Founders Fund. And what LeadX became was a clearing house for all unconverted sales inquiries. And we received hundreds of millions of leads from over 2000 vendors. And we built a single customer view of the majority of households in the UK where we understood their exact requirements. And that business went from year one roughly a million pounds of turnover, then three million, then six, then eight, then twelve. Then by 2014 that business turned over around 60 million pounds. Only ever raised the initial two sets of capital from friends and family and then European Founders Fund.
But I took that business from me and myself and I, then I built a small exact team. We took a small Regis office and that business Scouts were over 600 people. You know, we went through the 2008 crash. We went through, I think, seven pivots on the way, to finding and building and being the leader in that business. Last year was just going to run off now, but that business last year turnover, I believe over a hundred million pounds. So, Wejo successful, hugely profitable, gave me a great grounding and, you know, in the ups and downs, you know, so I can tell you the point when we had a we had a debtor who owed us millions and we had to make some harsh decisions. We went through 2008 where lenders were just not paying their bills.
I remember the scene where we have two office blocks and we have to close one of the office blocks because our clients were not paying as we were profitable on a paper basis, but we weren’t seeing the cash flows. So, we went through all those pains, but again, great grounding, put me in a strong position, helped me understand about the intricacies of building a real-time platform. And took those learnings to what became Wejo where Wejo is arguably was leading, clearing house for connected vehicle data. But beyond that, I’ve learned to be, you know, qualified technical director where we’ve also built incredible technical products, we know licensed [Inaudible 00:04:11] as well, so great, great grounding for where we’ve got too.
Julian Klymochko: So, you picked up a lot of learnings, significant momentum from the success that LeadX.com, which brings us to the founding of Wejo. What was the ultimate principle or thesis behind starting that new venture?
Richard Barlow: So, one of the lessons I learned from my previous business was compliance, you know, back in 2005 you know, there wasn’t the CCPA act in the U.S. GDPR in Europe didn’t exist. There was very much an opt-out approach to data role than an opt-in. And, you know, sort of sort seismic change in the early 2010s where industries were waking up to the idea that actually they need to be a more robust approach to data. So, when I retired from my previous business and then I decided, you know, I wanted to get going again. I thought, well, actually, you know, almost my new business needs to be the antipathy of what my last business was. What other businesses could be accused of is actually, you need to have an open dialogue with consumers around data.
There needs to be clear opt-ins, there needs to be a clear debate, there need to be a clear conversation, there needs to be a clear value exchange with data. So, the shower moment, so to speak was, I want to build a plague from an automotive, which I have a strong passion. I want to have an open approach with consumers, with drivers around the fact that they’ve got data in that car. So, Wejo means we journey, this idea of actually we’re all creating journeys. Every time we have any form of mobility, whether we’re getting into a car rental, a car share, an Uber, driving your own vehicle, there is journey data being created, and that has value, but that value should be used for good. So, Wejo means, we journey, we have what we call data for good as an overall DNA. Actually, we won’t sell data to bad actors or insures to penalize you on your premiums. We will make sure the data is used to have safer cities, have safe safer roads, reduce congestion, reduce emissions. And, you know, I’m beyond that now, where are now recognizing that connected vehicle data is not just in the vehicles we recognize now, but actually what autonomous vehicles are going to become, we’re now becoming very clear as a business that Wejo has become the go-to data ecosystem in the industry of automotive, otherwise known as OEMs, but it’s also for EVs as well, autonomous vehicles.
Julian Klymochko: So, you’re involved in collecting billions of data points from connected vehicles and becoming a leader in that huge growth market. But can you explain the business model and monetization strategy? How do you turn that data collection and analysis into a profitable business?
Richard Barlow: Yeah, so we’ve got a supply base of over 50 million vehicles where there’s clear consent from every one of those vehicles. We don’t [Inaudible 00:07:12] data, we don’t buy data end from third parties, we don’t buy mobile data and it implies it’s coming from a vehicle. This is direct data from connected vehicles of around 11.8 million vehicles send live data to Wejo platform. We process at peak over 450,000 data points a second. And every one of those data points, we have a clear consent pattern. We understand the clear consent from every one of those data points and we’re processing around 17 billion data points a day, we’ve received over 477 billion miles of data, which is around 20 times more than Tesla. So, we’ve got a huge volume of data and you know, that that data is broad. So yeah, we have live location on a trend basis, but we also know, for example localized weather conditions. So, you know, imagine the power in multiple industries and knowing the local weather from 150,000 weather notes so to speak, driving around, picking up live temperatures, or identifying black ice on roads. So, our goal is data end, there’s no standard in industry, so we have become the standard, we are standardizing for multiple OEMs. In fact, we’ve got 17 OEMs and tier ones we’re contracted too, but, you know, there’s not even a standard inside some OEM organizations, we standardize that data. We keep the data in single tenanted environment. So, there’s never a risk of cross-contamination between multiple OEMs we work with. And then we appraise use cases where there’s value in the data. So, for example, we provide data to smart cities. We have a product of Wejo Studio, where a smart city can log into a visualization and they can see that we’ve machine learn almost every intersection of every road in America.
So, in near real time, a city planner can understand how the city is performing. You know, where are the dangerous hotspots? Where are our vehicles doing illegal turns in a road? Is that causing a safety issue? What do the emissions look like based on a profile of vehicles? Can we better plan about where EV charging points should be installed. All really relevant points, which we then paid for, and we pay on average, 65% of those receivables back to the OEM. So that’s part of our model, and so marketplaces are substantial part of our offering at the moment. But then what OEMs are saying to us is that saying, you know, you’re processing huge volumes of data. can you now provide insights back?
So, for example, we’ve built a live visualization for Hyundai in Korea, but we’ve got multiple OEMs now, where in fact will be introduced by cloud providers to provide a middleware set of tools that enables OEMs to have a better view that data come out of vehicles so they can better appraise parts of performance, they can better appraise their warranty provisions they’ve got on their own balance sheet, those there’s just two examples. On that side, we charge transaction fees based on data volumes, and we charge subscription fees as well. So, we’re a conventional SAS business with subscription fees and transaction fees and a marketplace business, which is, you know, a subset of SAS where we rep share 65% of receivables back to the OEM.
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Michael Kesslering: And then as well, can you give our listeners a little bit of context as to the total size of the market that you’re working with in terms of connected vehicle data?
Richard Barlow: Yeah, so by 2030, there’ll be over 600 million vehicles. So just under half of the potential connected car park will have embedded connectivity scaling from 125 million now. Now vehicles are not just cars, they’re also trucks, they are two wheelers. So, the vast majority of new cars sold and new trucks sold, and some bikes have now embedded connectivity this year and next year. So, and the OEMs need to choose a platform if they wish to appraise data, place to sell the vehicle, to actually receive that live data.
Julian Klymochko: And why would OEMs and tier ones engage with Wejo? Is it just another opportunity to incrementally increase revenue?
Richard Barlow: That’s a small part of it now, why are OEMs? And no one else can claim to work with OEMs one, two, and three by market share in the U.S. You know, we’ve positioned ourselves and we’re proven, you know, that where we’re getting shoestrings data, we’ve shown got a capability of understanding the value in data. You know what I mean, when we’re processing 450,000 data points a second. So, when we are, we’re doing all the time, with real time. But I can see a visualization now on the screen what’s going on our platform, but we’re identifying the needles in the haystack, right. We’re identifying the values. So, you know, so in the platform we built for Hyundai in Korea, we identified parking availability, multi-story parking, parking lots. That’s a difficult job to do.
You know, we weren’t calling a third-party data asset to identify the location, parking lots. We actually built a routine to identify parameters or outcomes from the vehicle that would indicate the vehicle was parking. And there wasn’t a preset routine, running that routine and every one of the data points that comes through our platform for that particular OEM. So, the vehicles normally could just be driving on the road, but we run all these routines. And these routines are patent pending as well. And we’re running hundreds of routines on every one of the hundreds of thousands of data points we’re processing every second. That’s a big heavy lift, that’s tough, that’s not something that can easily be done. And that’s why we’re trusted by so many OEMs with our data assets.
Julian Klymochko: And speaking of the competitive environment, there are some other companies focused on connected vehicle data, what sets Wejo apart?
Richard Barlow: Yeah, I mean, there are hundreds of providers who provide micro products and connected vehicle data. Where the leader, whether on data processing and volume, whether on revenues, whether on OEM engagement. So, there’s room for hundreds of others to come in and offer a small subset of products. Where the only ones that offer a complete data ecosystem for the OEMs, where the only ones building a comstac, to enable them to communicate with each other. And, you know, the space for others and actually you argue, some people are competitors, but actually work [Inaudible 00:13:59] already.
Michael Kesslering: And then one thing that you mentioned earlier was data for good. How are you able to ensure that the users of your data are in fact using as you intend?
Richard Barlow: I mean, it’s the DNA of our business, but it’s not just the DNA of our business. It’s the 300-page InfoSec agreements that we agree with, our OEM partners, you know, on a commercial basis, we have an incredibly robust approach to how we treat data. But it’s a mindset, you know, if you go in saying I’m going to sell data to the highest payer. Well, you will be selling data to gambling companies. You will be selling data to all sorts of digital outlets that the OEMs would not necessarily approve of. So, it’s the mindset of who we will sell data too. So, it’s a very clearly documented approach for how we do these things, but actually we ask ourselves, we sense check constantly, is this right for the driver? Is this doing good for society? Is this going to reduce emissions? Is this going to improve safety on the road? Is this going to actually add value to the driver? So, it’s document. I think there’s over 900 documented procedures in the business. We’ve had the data advisory councils since the start, we will maintain that when we complete our deSPAC over the next couple of weeks, it’s very much how we behave and [Inaudible 00:15:25-28]. We’re doing something for good.
Julian Klymochko: So, you mentioned the reduction of emissions. I was wondering, can you explain how you incorporate that and how that would work?
15:37 Yes. I mean, I mean, also if you want to reduce emissions, then you need to improve flows of traffic. What you don’t want is you don’t want vehicles. Sat, sat, sat idle where their engines running at traffic lights for example, or second congestion. So for example, we’ve got some Aguilar TTI, which has real-time traffic. Now, the traffic light analysis, we can tell cities about what their trapping lights are doing. We we’ve got the data. So as well as scanning the majority of intersections on every road in America, we’ve also scammed the majority of traffic lights now. And we were so, you know, so, so we can help the city understand about, they can see where we’re tracking to building up. We’ve, we’ve advised sports sports grounds on the day of games. So we can say, Hey, we can see the engine starts to move in a car park. You need to change that type of light at this intersection to grieve the next 15 minutes, to get the engines, to get the, get the combustion engines out of the city. So that’s, you know, and that’s just, you know, and that’s part of our ESG mantra now is we’re actually, that’s an important part of that beyond that with we weren’t like the Texas Georgia during the hurricanes. So very much, you know, where we’re focused on our ESG credentials, we’re focused on reducing emissions. We’re focused on safety widget, we’re focused on congestion.
That makes a lot of sense. And one major initiative that you announced a few months ago is this going public transaction through a merger with virtuoso acquisition, $800 million enterprise value, and includes as much as $330 million in cash to the balance sheet. What I found really interesting about your SPAC merger deal announcement is within the pipe financing. I believe it got increased from a hundred million to 125 million, but notable investors participating there was a Microsoft, for example, Palantir, which you mentioned and general motors, can you discuss, you know, what do these companies see in Regio?
I mean, I I’m, I’m very lucky that I, you know, I I’m that we, that we, that we went through an incredible DD process and you know, pounds appraised a lot of automotive, a lot of cancer medical data platform. And so they chose which ours has their preferred channel. You know, we’ve, we’ve had, we’ve already had hackathons with them where we’ve built incredible products. So it was a meeting of minds with Palantir and pound set themselves as sad. You know, we chose a clear leader. We drove built 17 incredible OEM relationships. Beyond that, we’ve, we’ve built an incredible relationship with Microsoft. It’s not just a, and it’s not just an as your cloud partnership where, where, where, where we’re doing some interesting things with them. But beyond that, they’re also commercial partner where, you know, being maps is used by hundreds of thousands of developers to, to power your mobile apps in your phone.
You know, you think of ways you think of Google maps. What you don’t think of is, is that, you know, the ride share businesses, the, that the hunter sounds, the developers who’ve built mobility apps that you’ve been mapped behind the, behind the scenes. Well, we ended up providing data to Ben maps to actually, or is your map, sorry, to actually provide a better experience to identify those roads that are closed now, because we process data in real time, we can tell you in real time, if a road is closed, we can tell you if an intersection is closed, we can tell you if a lane on the highway is closed or is not performing at peak levels. So work with Microsoft where they’re both a commercial partner and a strategic partner was, was, was a great example. And then GM GM had been consistent in their investments since they split to the three years ago. That we’re, we’re, we’re super proud of our relationship with GM. And yet it hasn’t stopped working with any other areas to say, no one else can claim the work that we had was one, two and three by market share and connected vehicle space. So, you know, so CGM once is proud of their relationship with BJ, but, but it’s, but it’s, you know, so we’ve a bunch of work with every other OEM as well.
And in addition to the headline grabbing investors, participating this point, public transaction does include a significant investment and capital onto the balance sheet. Can you discuss what the use of proceeds of this capital raise will be?
Yeah, so we’ve, so we’re raising it to 355 now with it, with a pipe extension and, you know, we, what, what we’re not short of, we’re not, we’re not sure the Lem demand, you know one of our Achilles heels is that we’ve got OEM saying, you know, when are you going to be open and LATAM when you’re going to be, when, when, when are you going to broaden your, your APAC ambitions? So, you know, so, and actually we brought forward our Japanese ambitions with, with one of our other pipe ambassadors song coming on board, some power, $110 billion Japanese insurer. So as, as we go, so in terms of the fringe and 55 million were focusing 125 million on accelerating the OEM onboarding. So this is demand from OEMs who just want us to be more countries, you know, and that sound, you know, at a digital point, that sounds quite simple.
You know, it should be just pointing a pipe, but actually it’s the people on the ground. It’s actually defining that this is building the marketplaces, it’s building the broader SAS solutions. You know, what, what we’re building in terms of SAS for, in Japan is different to what we’re building in the S for example not the 125 million is to accelerate new products. We’ve got this live visualization platform called Wego studio. It enables us to re-audit, we’ve already built products and traffic management and mapping. We’re now introducing audience measurement into that platform shortly. And we’ll be introducing new, new art form over the coming years in multiple territories. Again, say Latin a path brought more broadly into Europe and obviously further expansion to NAFTA. And then the balance is more is, is for, is, is, is, is for the regional growth around, around, you know, and that’s that, but that gives us the perfect opportunity to, to, to to capitalize on, on some of the other opportunities we’ve been offered by OEMs
And at the current stage of we Joe’s business raising capital growing rapidly, still relatively early stage of key question on investor’s mind is what is the roadmap to profitability?
So, so we, so one of our key measurements is life equals on platform, and that’s important measurement. You know, it’s not a theoretical or, or what we’d like it to be is live vehicle sending us data that we can monetize on this. And we disclosed last year, live vehicles on platform and we’re forecasting 14 million live vehicles on platform, but on this year, that’s important metric. It’s a metric we’ll be measured with, we’ll be measuring and disclosing and our 10 Ks, 10 QS. And then the other side of that, and then the other side is actually a unit economics on a per marketplace basis. We we closed at the end of last year, 20 20 20 at 40 cents per bit, a light vehicle per year. We’ll close this year at more than 71 cents or forecasting to go to $11 65 by 2025, when we have more markets open with more buyers.
So in terms of tracking our performance our revenues were just shy of $4 million gross last year, and we’re forecasting $9.8 million of revenue this year. If you, you know, and we showed in our first two quarters scales of revenue and we’ve shown throughout the year scaling vehicles coming on platform. So in terms of how, how, how investors analysts kind of praise wetu, they will see a transparent approach to reporting and transparent approach to live vehicles on platform, a transparent approach to unit economics per marketplace, life and transplant approach to the number of sys SAS licenses we’ve sold to OEMs, so that, so anyone, anyone looking at business can kind of have an kind of conform a view as to how they see our business scaling over time.
Just back to your going public transaction. Had you looked at other methods of going public and how, how did the spec structure really uniquely Fit the Needs of your company versus some of those other options?
Yeah, I mean, we’ve been, we’ve been successful in the private markets. We’d raise over $150 million you know a primary from the high net worth community. So we were lucky to be backed by some incredible supporters who were long investors. But, but we, but but at the same point, we were then getting more and more demand from OEMs who wanted us to be in more markets and more territories quicker than, than, than the private markets could support us. And so we considered the options late last year. And we, and we w we appraised a couple of sparks that approached us. And one of things that was key for me was, was, was not just acts as a capitalist backpack back off it, but also the, the operators behind the scenes and some Handel is joining us.
He’s, he’s on the board of virtuoso. So he’s joining VJ’s board and we complete this, the spot, he, he founded data miner an incredible social media data business. And, you know, we saw great parallels with what’s with what data has done in the social media sector to what we do is doing in the, in the automotive data sector, tend to vehicle data sector. So an incredible operator in Sam and then Jack Warshaw, the CEO of Virtuoso. So he’s got incredible major experiences is important, sort of over a hundred media assets over time. He’s helped us mature our audience measurement product and he’s, and he’s, he’s bringing some great sort of thought around sort of a part of our MNA strategy, which we’ll be implementing in the coming years.
So prior ticketing letting you go, I do have one more fun question. So looking out over the next few decades, what is the coolest potential application that doesn’t yet exist that could be enabled by connected BL vehicle data? Like any wild ideas that you hope come to fruition?
Yeah, I mean, at the moment, and this is, and this is not a wild idea. We, we, we aren’t doing this. We will be doing this here’s that is that, you know, there’s, there’s, there’s hundreds of proprietary stacks running around AB autonomous vehicles. And at some point they can need to communicate with each other. Otherwise you’re only ever going to get effective AVS. And in certain cities in California, parts of our zone, and a little bit of New York, little bit over Europe, but there’s not gonna be nationwide or core global coverage. There needs to be a plump form that translates these hundreds of protective proprietary approach to Avi, but enable Waymo to communicate with the crews. For example, we will enable that. So what excites me is that where we’re building the global leader in data as a data ecosystem, but we’re also investing heavily in the comstac. We’re investing heavily that beyond V2 acts, there needs to be a sub-millisecond approach to vehicles communicate with each other. So eventually one day there will never be a crash. They’ll never be a safety incident. They’ll never be congestion. There’ll be obviously no, no emissions. And that’s only when all vehicles are facts, we communicate with each other. We will enable that to happen.
Well, it sounds like a wonderful future, no accidents, talking cars it doesn’t get any better than that. So Richard, I’d like to thank you for coming on to the podcast today, talking about we Jo we journey business model, the potential behind the company and this going public transaction. We wish you the best of luck, and I’ll be monitoring the story as it progresses. It’s exciting stuff. All right, bye. Everybody. Take care.
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