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New AutoGravity CEO Tries to Avoid Potholes

AutoGravity Corp., the Irvine fintech recently embroiled in management turmoil, is for sure keeping one thing: a wooden slide employees use to spirit themselves from the second floor to the first.

“Absolutely,” said new Chief Executive Alexandre Mallmann, 47, in an interview last week when asked about the popular perk. “I go down the slide myself.”

It’s otherwise been no playground in the past three months for the high-flying Irvine firm whose app connects car buyers with lenders.

Former Chief Executive Andy Hinrichs abruptly left the company in May, eventually followed out the door by two other co-founders, Chief Operating Officer Nicholas Stellman and Chief Evangelist Serve Vartanov, aka marketing officer. Also departing was Chief Technology Officer Sheng Wang, who joined a few months after the firm’s founding.

Mallmann said he’s postponed the company’s earlier-stated goal of doubling employment this year to nearly 200 as he analyzes staff structure. At the same time, he’s studying its revenue model.

Despite the departure of the company’s four top executives, he said AutoGravity is “not at all” in disarray, and that a new executive team is in place, sans a chief marketing officer, which he’s working on filling.

Mallmann, who was in charge of Mercedes-Benz’s financial services unit in China, where he oversaw 800 employees, said he wouldn’t have taken the position if he didn’t think AutoGravity had a bright future.

Daimler AG’s Mercedes-Benz unit backed the company with a $50 million investment in 2016, followed by a $30 million investment in 2017 from VW Credit Inc. and appointed directors to its board who butted heads with Hinrichs.

“I see a lot of opportunities,” Mallmann said. The company has “very strong shareholders who believe in what we are trying to do.”

Upheaval

The departure of the original executive team was a surprising turn of events for the widely praised company.

AutoGravity, created in 2016, has taken the car financing world by storm. Its website has attracted more than 2 million visitors, and it’s arranged $3 billion in financing requests to date.

It signed partnerships with lenders that include Audi Financial Services, Hyundai Capital America and Nissan Motor Acceptance Corp.

AutoGravity impressed Orange County judges who honored it with an Excellence in Entrepreneurship Award at the Business Journal’s 17th annual event in March. In November, Automotive News named Hinrichs its 2017 All Star in the finance and insurance category. CTO Wang was one of five honored in May with a Business Journal Women of the Year award.

All that wasn’t enough for AutoGravity’s board of directors. When asked why Hinrichs left and whether he was fired, Mallmann declined to say. Hinrichs didn’t respond for a request for comment.

“From our perspective, it was a mutual decision,” Mallmann said. “Things evolved. This organization isn’t a startup anymore. We now have 135 employees. It’s a new phase. I was invited to come, and said, ‘Why not?’”

Brazilian Connection

A native of Brazil, Mallmann moved to Austria as a college student when his father was transferred there to manage a bank.

After getting a business administration and management degree from the International University of Vienna, he began a 20-year management career with Daimler at its truck manufacturing facility in Brazil. He’s since worked in a variety of locations, including Chicago, Detroit, Mexico City, Berlin, Puerto Rico and Spain.

It was in Portugal that he first became the chief executive of a Mercedes financial services unit.

“The company wasn’t doing very well. My job was either to make it or close it,” said Mallmann, who speaks in a German-tinged accent with a hint of Brazilian flavor. “Happy to say it’s still profitable and doing very well.”

Asian Connection

He arrived in China in early 2014, when Mercedes was struggling in a “super important” market. He took over its financial services and became a member of the Daimler Greater China board.

The company rebuilt its sales, marketing and finance units, and he said Mercedes’ annual China sales rose from about 200,000 when he arrived to about 600,000 by the time he left.

“Chinese consumers are digitally savvy; everything is done on their phones,” Mallman said. “If you do things on a typical computer monitor, you lose them.”

Earlier this year, he was offered the AutoGravity position by Klaus Entenmann, chairman of the board of management of Daimler Financial Services AG.

“I’m very entrepreneurial. I’m always looking for the future,” Mallmann said. To top it off, “California is not a bad place to live.”

In fact, Mallmann used to work on a leadership team with prior Chief Executive Hinrichs, who was previously at Mercedes’ units in Asian countries, including Singapore.

“I have a lot of respect for him,” Mallmann said. “What he did was amazing. The company is in a very good stage. I hope to bring it to the next level.”

The Next Level

Mallmann said he’s gained a reputation as an executive who can fix problems.

He has a 30-60-90 day plan that includes getting the attention of consumers earlier in the car-buying process.

“We are very good on the finance part. Now we need to help the consumers more,” he said. “We’re going to come with a better, clearer shopping experience.”

Mallmann said the current employees—whom he can see with a bird’s eye view from his desk out in the open—can “beat” any of the software engineers at the large tech companies. He said he’s able to recruit the necessary talent in Orange County and doesn’t plan to move the company to Silicon Valley, even though it has a deeper pool of computer engineers.

Besides, his family, which includes his Brazilian wife, Juliana, and their three children under age of 7, love living in Orange County, which he called “beautiful.”

Potential

The car-buying industry is worth about $1 trillion. Americans purchase about 16 million new cars a year and another 20 million used ones. Mallmann said the auto-financing industry doesn’t yet have a breakout internet company that dominates the space.

“The first company that makes the car-buying process easier for the consumer from end to end will win.”

Mallmann, who speaks four languages, also sees opportunity abroad, where he said car-buying apps are “less professional” than AutoGravity’s.

An initial public offering isn’t “on the table” at this time, he said; declined to reveal annual revenue. He did acknowledge AutoGravity had buyout offers before he arrived.

While he also declined to discuss its valuation, when asked if it could reach $1 billion, he quipped, “Why not?”

“The potential is unbelievable. AutoGravity is in a very good position.”

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.
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