A couple of key pivots initiated by Telogis Inc.’s cofounders in the early days of the company positioned the software maker for a big growth spurt years down the road.
The bootstrapped Aliso Viejo-based company faced a cash crunch soon after opening its doors in 2001, a predicament that alters most startups.
Telogis was steadily bringing in revenue with its initial product, a location-based logistics software dubbed OnTrack.
It was enough to get by but not enough to finance a growth push.
“It was kind of growing slowly,” said cofounder Jason Koch. “We needed to have money to finance sales and marketing.”
The company decided to spin out another product—geospatial mapping software—and license the technology to competitors around the globe. The bold move came just before the introduction of Google Maps, which spurred demand for such software and brought licensing fees that provided Telogis the financial flexibility to tweak its business model.
The company pivoted to a software-as-a-service model about seven years ago, betting it would attract and retain customers with its logistics line, which would bring recurring revenue streams.
Software-as-a-service models were coming into vogue then but still unproven. Big hits by companies such as SAP and Salesforce.com put the concept into the mainstream.
Fleet Customers
The Telogis management team didn’t know they made the right call at the time, but now “it’s just assumed that every company will have SaaS,” according to Koch.
The new business model generated enough revenue for the company to go directly after end users, an effort that required building a sales team that now stretches around the world.
It’s paid off with a string of big-name fleet customers, which in turn has brought sizable venture investments.
The gains also earned Koch and fellow cofounder Newth Morris a Business Journal Excellence in Entrepreneurship Award at the 14th annual event held March 18 at the Hyatt Regency Irvine (see related coverage, pages 7, 8, 10, 12 and 14).
Today the founders are challenged with scaling a company with more than $100 million in annual revenue and 600 employees around the globe.
“A lot of companies get going, but the hard part is really scaling it,” Koch said. “It’s like trying to solve some Rubik’s Cube.”
Europe
Koch made the comments during a call last week from a train stop in Frankfurt, Germany, as he and other executives crisscrossed key markets in preparation for the European launch of Ford Telematics, an updated software system integrated into fleets from the Dearborn, Mich.-based automaker.
The product relies on GPS technology from Telogis to provide analytics on fuel use, driver and vehicle performance, shipments and deliveries, and better routes, among other features.
Ford Telematics is available in the U.S. and Canada for 2009 and newer models, as well as for Ford Super Duty, F-150 pickups, full-size vans, utility models and law enforcement vehicles.
Telogis’ 2011 deal to embed its telematics software in Ford’s commercial trucks and vans helped put it on the map with serious investors. The company raised $93 million in 2013 in a Series A funding round led by Menlo Park-based investment firm Kleiner Perkins Caufield & Byers. The investment is believed to be the largest an OC company has received in more than two years.
The software maker has inked several more deals in the past year or so, including a partnership with General Motors Inc. to equip commercial vehicles with software that links operation centers with far-flung fleets.
OnStar
Telogis is integrating its telematics software into GM’s OnStar connectivity system, which has more than 6.5 million subscribers in the U.S., Canada, Mexico and China.
The company signed an exclusive agreement with Isuzu Commercial Truck of America Inc. to supply the Anaheim-based company with new telematics systems in an effort to improve the fleet’s connectivity services.
The Isuzu commercial truck division, part of Isuzu Motors Ltd. in Tokyo, has been among the largest sellers of low-cab forward trucks in the U.S. since the mid 1980s, according to the company.
Telogis in June signed a software contract with the U.S. unit of Hino Motors Ltd., the third-largest truck maker in the world. The software maker also secured a small strategic investment from Detroit-based private equity firm Fontinalis Partners LLC, which was cofounded by William Clay Ford Jr., the executive chairman of Ford Motor Co. and son of the owner of the Detroit Lions.
The recent pace of deals is in line with the sort of expectations Telogis has grown into, according to Koch.
“It’s just incumbent upon us to grab as much of the market as we can,” he said. “We’re trying to do something really big on a global scale.”
