What do a trucker, an Israeli entrepreneur, Al Gore and Richard Branson all have in common? Proof that the real goldmines are old, neglected industries.
The name of that proof is GreenRoad. While so many entrepreneurs bang their heads against a Web and social media advertising brick wall, GreenRoad has applied common technology to an industry technology has largely passed by and—voila—they’ve got a business that’s growing and saving lives, money and the environment.
Driving is the third most deadly profession after deep sea fishing and working in a coal mine. Not only does driving more safely save lives but research shows it can also save 10% on annual fuel costs, and alleviate a good chunk of the $230 billion professional fleets spend on crashes each year. Enter GreenRoad: a system that helps professional drivers drive more safely and as a result save their company a lot of money.
The GreenRoad system looks simple from the outside: There’s a two-inch device on the dashboard that starts the day with a green light. If a driver brakes hard, swerves or turns recklessly, the light turns yellow. If the driver continues to drive erratically the light stays yellow. If it gets worse the light turns red. That’s it. But like a lot of apparently simple ideas, there’s a lot more going on under the hood.
GreenRoad was the brain-child of an Israeli entrepreneur who was run off the road one night by some wild kids. “If only their parents knew how they were driving…” he muttered to himself and the work on the company began. It morphed over the years from a consumer product to one aimed at commercial fleets. While the device is made up from mostly off-the-shelf products like a GPS chip, accelerometer, a CPU, mashed up with Google maps and a dashboard-like management portal, it took a good three years of hardcore R&D to build.
While you want the system to work well enough that aggressive driving tactics are caught, avoiding false positives are a must if drivers are to trust GreenRoad and accept its results. The algorithms can crunch more than 120 different driving maneuvers and the map on the dashboard helps provide context, both for the driver, and for a supervisor looking at the results later. For instance, a lot of harsh right turns could be the result of a hairpin turn in the road, not carelessness on the part of the driver.
There’s also a good deal of psychology worked into the device. Drivers don’t want to feel spied on, so video and audio surveillance products haven’t been popular. It’s also not a good idea to have something distracting, which is why early models that had icons to describe the offending aggressive move were nixed for the three simple lights. The dashboard, too, helps pull natural competitive levers by showing your performance, relative to your peers. And don’t underestimate things as simple as starting each day with a green light: The key is holding drivers to a high enough standard, while letting them know they can succeed if they work at it and concentrate as well.
GreenRoad has raised less than $40 million to date from Richard Branson’s Virgin Green Fund, Balderton Capital in London, Benchmark and DAG Ventures. On Monday the company will be announcing another $10 million from Generation Investment, a fund started by Al Gore and David Blood, a former CEO of Goldman Sachs asset management.
Sound like a lot of money? Consider how much the company saves. Fuel savings just from driving less aggressively can save a company some $300 per vehicle per year, and when you factor in crash savings it’s more like $1000 to $4000 in savings per vehicle per year. That makes it a very easy ROI sale for a company’s CFO, environmental officer or safety officer.
Now consider how much GreenRoad makes. It has 80 customers so far, and more than one of those customers have installed the technology in 20,000 of their cars. The three-year license goes for $1,000 per car, which the fuel savings alone cover. That’s right: We’re talking about $20 million contracts. And there’s more where that came from. GreenRoad Senior VP Eric Weiss says there are 80 million professionally driven cars in the US and the EU. That puts GreenRoad in the middle of a $80 billion market. I haven’t seen many companies like these since the good old days of enterprise software. And GreenRoad doesn’t have a lot of competition.
Weiss himself came from the enterprise software and mobile space. At first he wasn’t sure about a tech company in such a weird, forgotten market, but pretty soon he got excited. “There are very few problems left of this size to solve,” he says. “Besides, the world doesn’t need another gadget for my phone or another ERP company.
And he’s right. GreenRoad proves what a lot of smart investors have been saying for a while now— that the best tech deals are no longer in a much picked over “tech sector” per se, but rather in applying technology to old-world industries.