Tracks CEO Jakob Muus: “Your Best Investor is the Customer”
Interview with Jakob Muus (Founder & CEO) of Tracks.
It can be a beautiful thing when new technology coming to the market creates opportunities for startups to do something useful with the data and resources available to them. That is exactly what founder Jakob Muus and his startup Tracks are doing. Tracks uses the telematics systems inside trucks all across Europe to measure the cost of CO2 and look for ways that drivers and fleet owners can be more efficient with their use of CO2.
Jakob joined Roland Siebelink on this week’s edition of the Silicon Valley Momentum podcast. He discussed how Tracks can make it easier to make the right decision, the challenges his startup faced during the pandemic, and the long-term vision he has for Tracks:
- How Airbnb’s business model became the inspiration for Tracks.
- The best way to approach things when you have a two-sided market.
- Why it was a mistake for such a small startup to approach big companies at the beginning.
- How Tracks can succeed without being the driver of the ecosystem.
- Why the best investor for any startup is actually the customer.
Roland Siebelink: Hello and welcome to the Silicon Valley Moment Podcast. My name is Roland Siebelink and I am the scaleup ally for tech founders. And what a tech founder do we have with us today? It’s Jakob Muus, the CEO and founder of Tracks, joining us, from Berlin. Is that right, Jakob?
Jakob Muus: That’s correct, yeah. Hi.
Roland Siebelink: Excellent. It’s so nice to be talking to founders from all over the world. And, of course, Berlin has become a huge startup scene in the last 10 years or so, I would say. Anyway, let’s talk about Tracks, Jakob. What do you do and what difference do you make in the world?
Jakob Muus: At Tracks, we get data from trucks driving around in Europe. And we’re pairing it with the loads that have been sent from shippers. Thereby, we make a precise and automated measurement, an allocation of CO2 for the shippers. But that’s only the first half of it, so to speak. We can allocate how much CO2 has each chocolate bar cost down to down to the last gram of CO2 on roadways. But we also use AI to see if it was good or bad. We use the AI to measure: not just how did the trucks drive, but also, is there room for any improvement? And improvement would then suggest on one side to the owners of the trucks, and on other side, to the shippers. That we actually go in and make suggestions: how can you lower either the fuel consumption in your fleet or the CO2 in your supply chain?
Roland Siebelink: Very cool. And you’re saying you’re using existing data that’s already available within the trucks and with the shipping companies? How does that work?
Jakob Muus: It’s fantastic. In Europe, since 2017, all new trucks are built with an onboard telematic system, meaning that the trucks are generating data. And the owner of the truck fleet is the owner of the data. And he can take the holder of the data, which is often the truck producer, and can say, “Please send an API key to Tracks.” And that’s how - it’s very beautiful for us. It’s not a hardware game anymore. And we get access to this very granular data.
We’re talking every 30 seconds we get a snapshot of 70 different data fields. It’s really nice and granular. We can create very good digital twins and we can actually go out and make prescriptive analytics that actually makes a difference.
Roland Siebelink: That’s awesome. It’s such a great example of when a new technology comes to market, that it just opens up wide opportunities for startups to leverage that data. That’s amazing. How long have you been in this business, Jakob? Tell us a little bit about the history of Tracks.
Jakob Muus: I founded the company in January, 2018. And before that I had worked in the Volkswagen Group in different positions in innovation, in the group research in Wolfsburg, and after that, Volkswagen Financial Services, always focusing on product service systems and developing clever product service systems that can connect these vehicles with services that can make them worth more for their owners.
I left the company, the Volkswagen Group, in 2017 because I had this focus. I said it must be possible to use data and to use AI to make operational excellence easier when it comes to - not just trucking, I’m interested in all kinds of vehicles. But I started with trucking, namely because they have the onboard telematic systems and the access to the data. But I wanted to make it easier to make the right decision.
I’ve always been so fascinated that everyone we’re talking to wants trucks to be more efficient. It could be the owner of the truck. It can be the driver. The buyer of the transport wants to save CO2. Everyone wants to have these trucks become more efficient. Why isn’t it happening? And my conclusion was: the cost of making the right decisions is too high. It’s just too difficult. And that’s where we wanted to come in and create new methods for making the right decisions. Either for the shipper side, so the buyer of their services, or for the carrier side, the owner of the truck fleet.
Roland Siebelink: And so you’re really identifying this case on the basis of a shared vision that exists already. And then on the other hand, there is a shared technology that is coming to market. And now what you’re doing is removing a massive amount of friction and bringing these two together, it sounds like.
Jakob Muus: That is definitely, that is our goal. I was very much inspired actually, funnily enough, by AirBnB. Because I looked at it and I said: “They didn’t invent renting out apartments, but they took all the most annoying things about it and made it easier so that people would actually do it.”
That’s the easy way of saying it, but for me, I look at these imperfections and I think there must be some hidden transaction cost somewhere that makes it happen that no one really does it. I must say before I founded my company, I interviewed a lot of fleet owners and many of them said, “I don’t really do any fuel management because it’s not worth it. I don’t really save anything. I don’t want to harass my drivers and I cannot really be sure.”
What I saw was that it is so much work that many people have just given up on doing any fuel management.
Roland Siebelink: Before we go into your growth, I just want to talk right away, as the big elephant in the room, which is going to be the pandemic and the Corona crisis, right? Your business must have been impacted quite a bit, I imagine, by the whole major shifts in the economy. Can you tell us what your experience has been like this last year?
Jakob Muus: It was a smack in the face. But mainly because we had made a couple of strategic decisions that made sense at that time that didn’t work quite well in a pandemic. And then furthermore, we had set it up in a way that we wanted - we needed to raise our seed round in August, 2020. The strategic decisions that we had made was we wanted to develop these different prescriptive functionalities in our product together with bigger corporates, who would get something out of it.
One example is we can set an alarm if someone is not fueling the gasoline or the diesel that he’s saying he’s fueling. If he pays for some very good diesel but he doesn’t really get that good diesel, we can put up an alarm. We wanted to develop this, this is one example. And we wanted to develop together with a fuel card provider so that they can have it as an extra service they can pay for our hours. That was our strategy. And this is just one example. We had three or four, actually five development agreements close to signature. But come the end of March, they all fell apart. All these agreements fell apart. TheR&D budgets were just being cut. Many of our customers said, “Sorry, I just cut 50% of my R&D projects and I’m not going to prioritize an external project.
That’s been a tough six, seven, eight months. We had to put everything down to zero. Everyone has been furloughed. And we have still been able to create very good value. And we have just last week Monday signed our seed round with investors and with governmental support as well.
Now 2 million Euros. That’s fantastic. Thank you very much. And 2 million Euros is - I couldn’t have hoped for a better result.
Roland Siebelink: Let’s talk a little bit more about your customers. You mentioned that you’re typically working with both corporates and then owners of trucks, maybe even with truckers themselves, with shippers. It seems like you’re in the middle of a whole marketplace. Can you explain a little bit more? Who do you consider your core customer and who are more ancillary partners?
Jakob Muus: When I studied innovation management at Copenhagen Business School, I learned one very important rule that when you have a two-sided market, you need to discount one side of the market. And we are very dependent on data from truck owners. And we know that it’s a very, very, very, very fragmented group of people. And also, extremely low tech. We’re still having customers who are on the level of a fax machine and a pen, and a Nokia telephone.
What we do is we go out to shippers - and again, shippers, my definition of shipper is just anyone who buys the transport - and we ask them and suggest to them that they do precise and automated tracking and allocation of CO2. And they pay for that. And every time they have one of the external sub-contractors - and those are then the carriers - if they have them on our product called Tracks for Carriers, then they will get the precise numbers.
Roland Siebelink: And maybe I ask a very dumb question here, Jakob, but because we have listeners all around the world, it may not be obvious to them why saving CO2 saves money. I’m guessing this has to do with the emission trading system in the European Union, is that right?
Jakob Muus: To a certain degree. Trucks are not on the emission trading system. But yes, the interesting thing that has happened the last two years is that if you wanted to offset CO2 two years ago, some people could just pay 10 cents to some dodgy business somewhere in the global South and then get them to grow a forest somewhere. That price has changed in the last two years. First, it exploded and came up to a point where it is on the level of the European emissions trading. Secondly, that number has also risen. You see the European emissions, the prices have grown from €20 last year at this time to €26–28 at the moment. It’s risen extremely fast.
What we have seen within the last year is that companies have started to put very high targets on lowering CO2. I find it extremely interesting, personally, that it started with a group of young people from Sweden, protesting and saying we need to follow the Paris agreements, we need to be more serious to save CO2. Last year at this time, it became more and more clear that it was not just that, we saw the biggest investor in the world, go out and put a gun to the head of many of their companies and say, “If you don’t make serious goals toward adhering to the Paris agreement, then we’re gonna pull our investments”, which in many cases, was enormous amounts of money. We see very big industrial companies. I guess I’m allowed to say one example is BMW - that has gotten out and said: “We really want to save CO2.” And now, where every top manager’s bonus is dependent on how much CO2 he has saved.
Roland Siebelink: Wow. Okay. Coming from America, that’s definitely a little bit more advanced than what we’ve been used to here. Although in California, we do try to keep up with the world that way. And maybe with the political change in the air right now, we’ll see some catching up there as well. But thank you for illustrating that because not everyone will understand how reality has already moved for companies like they have in the EU, for example.
Jakob Muus: And just to that little point, imagine if someone has - the bonus is relevant, how much CO2 you save. How many of his subcontractors have to start just measuring CO2. And if they measure CO2, how many other companies are gonna measure CO2? It is really an industry that’s really rolling right now with an extreme speed.
Roland Siebelink: Let’s talk a little bit about the way you reached those shippers. What’s your go-to market? How do you reach them? How do you convince them to get an audit of that CO2 usage that you offer to them and how do you get them to pay for it?
Jakob Muus: We have a two-directional strategy, so to speak when it comes to shippers. One thing is we go out to shippers. There we have made a little mistake in the beginning. Again, learnings all the time, that we’ve been attacking very big companies. Me having worked in big companies before, I speak the language, so to speak, of European corporates. But it doesn’t change the fact that if you go elephant hunting as a small startup, you can have luck or you can wait a year until you get a no.
We changed things very quickly to go to smaller companies. We go out to them directly. We talk to them about CO2 management and want to support them in building up this part. We always start one project with them where we get access to their transport management system and we create a proof of concept or an MVP. And when that has been rolling, we set them up as customers where they pay as a data, as a service, per month or per trip, so to speak.
And then the other way we’re doing it, we’re trying to growth hack it a little bit. Because we do see that the market is coming. The market for CO2 emissions management is definitely coming in Europe. And secondly, the digitization of the supply chain has also been sped up a lot by the COVID crisis.
We think in both directions: we also have big players who want to be ecosystem drivers. And we can afford not to be an ecosystem driver. We go in and work together with - for instance, companies that do CO2 management for companies. And we go in and say, “Should we work together with you, as a white label or just as a provider of your transportation module?”
That’s on one side. And on the other side, we then go to companies who live off helping shippers to track their external assets, so to speak, the external companies that worked for them. And then we go in and say, “You’re good at tracking position and other things and temperature and all the other things that need to be tracked. We can go in and do a module that we track the CO2 on top. And then we can work together on that.” Those are the two directions we’re going.
Roland Siebelink: It’s very, very good how you can leverage those existing partners and basically access your potential customers through existing lists and existing customer relationships. I’m sure that must speed up the sales cycle a lot, right?
Jakob Muus: It does. I must also say it’s a risky strategy, especially when you talk to investors. Investors want you to be the ecosystem driver and they want you to be the King of the ecosystem. They want you to be Amazon. I go in and say, “No, I can just be a producer of one single piece of this puzzle.” It is risky. But you’re totally right. It’s really good because we deliver high quality. We have an official stamp that the way we allocate CO2 is according to all global norms. And so we have an advantage there and we’re trying to use it as best as we can.
Roland Siebelink: I’d actually love to talk a little bit about the team you’ve built so far. Can you describe what the team looks like right now and what are people working on?
Jakob Muus: We are 14 people. We have had a very big focus on tech and on data science for a long time now. My co-founder, Igor, is a very cool guy. He’s a former professor of mathematics. And after that, he has been working for 30 years now as a CTO in different companies. It’s a fantastic thing to work with him. And he’s also the main reason why we can get such a fantastic team on board. We really have top people on board, really the cleverest brains. And I always get so happy when they say, “I want to work with you.” I’m like, “Yes!” But I know also that it is because we do have a CTO who understands both the core of architecture and the core of managing a whole tech team. And then furthermore, he understands the math behind it and he understands the research behind it. He can really do everything there.
Roland Siebelink: That’s awesome. Great call-out for Igor. And maybe on the next occasion, we’ll have him join the podcast as well to hear how you guys work together. That’s awesome. The team has been mostly tech and data science focused, you said?
Jakob Muus: Definitely. Yeah. And because it’s Igor and myself, we have hired a CFO, Rene, who is in charge of everything that’s organizational administrative, making sure that those parts of the business run. We live in a very bureaucratic country in Germany. There’s a lot of work there. And my mind is not really good at exactly this kind of things. We have hired Rene to do that. We’re working very close together as the three people there.
Now we have hired, with the new investment round, a new sales manager. We’ve hired a new product manager. And then we’ve mainly hired people in sales and product to get those parts of the business going. We have the MVP. Now we want it to be a minimum lovable product on one side. And on the other side, we’ve done the first sales and now we want to professionalize the sales and have a strong sales unit that can run by itself.
We have super people working in every single part of the company and it’s a fantastic thing. And then suddenly I’m like, “Oh, but we also really need to start selling.” I’ve been very curious and focused on: “How do we get the best product out of it?” But now we really need to put a turbo on the selling. And we will.
Roland Siebelink: Absolutely. It sounds like you’re making great strides there. And yes, definitely a learning for many of the founders that when you think you’re building a tech company, ultimately, it’s actually much more about building the sales and marketing machine than it is about just building a good product, right? People don’t just come to the product by themselves. Very good insight. Love it.
Let’s maybe talk about some of the big goals you see to the degree you can share, of course. Where do you see Tracks being in three, five years down the road. What are some big breakthroughs that you’d like to achieve? And what does success look like in the end?
Jakob Muus: Of course, what makes our company so special is that we’re able to get into these trucks. We’re talking about an extremely fragmented industry, probably one of the most fragmented industries out there, where 80% of the fleets have five trucks or less and 90% have 20 trucks or less; so enormously long tail.
And that also is a point where when you talk about digitization of the industry, it hasn’t really happened because no one really has found a way to get into these kinds of companies. They are also very different. All the different fleet owners have different kinds of business models. And what we want to do, first, we want to get into the Truck. We want to help these fleet owners to make their life easier.
We see that especially smaller fleet owners, 80% of their work is repetitive. AI is fantastic because it can actually just tell you when you need to make a decision. And it’s fantastic; then you don’t have to have the repetitiveness there.
My personal goal is that when we get to four or five years ahead, we will use the knowledge and the insights we have from the trucks to help everyone who could drive an electric truck to have bought an electric truck. And anyone who could drive a hydrogen truck to buy a hydrogen truck. We want to be a catalyst for this change in the transport industry. And not just say, “You should drive electric.” No, we’ll actually use the data to say you could drive electric on this route and on this route you shouldn’t.
We want to continue the different steps that the industry is taking. We just want to be there as a support - not as the brain because I don’t think we’re ever going to deliver our services into a middle layer. But we want to be the decision support that can make sure that people make the decisions that they want to make.
Roland Siebelink: The key question I definitely always want to finish with, Jakob, is what is your advice for some of the founders listening to this podcast, who may be a little bit behind you in their startup journey. What is some of the learning you have had as a startup founder that you’d like to impart on people?
Jakob Muus: My first and most important learning is your best investor is your customer. It is always the best thing - before you build up a burn rate or anything, go out and see if you can get a customer. ust in any way. Also, if it’s on the R&D budget or whatever, your best investor is the customer. That’s the first and most important thing.
The second important thing is think twice or three times when you find a co-founder. I’ve seen it so many times. Founder breakups are tough. It’s like a marriage. If you can find someone you’ve been working with before and you trust professionally, that makes a lot of difference.
Roland Siebelink: Excellent. Thank you so much, Jakob, for joining the Silicon Valley Momentum Podcast. It’s been an awesome talk to speak with you. The company is Tracks. Tracksfortrucks.com is the website. And, Jakob, if people want to find out more about Tracks, maybe are even interested in joining the company or investing, where should they go and who should they be in touch with?
Jakob Muus: They’re welcome to contact me on LinkedIn. Follow me on LinkedIn, on Twitter. I’ll be happy to start the conversation.
Roland Siebelink: Excellent. Okay. And we’ll put those links in the show notes, of course. And, of course, if you know me already and you’d like an introduction to Jakob, I’m happy to provide. Thank you once again, Jakob, the CEO and founder of Tracks for Trucks. And we hope you will all be back in line for next week’s podcast, which will be yet another amazing tech founder.
Thank you everyone.
Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.