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Interview Series: Diving Deeper Into Cyngn
In the second interview of our interview series, we sat down with Ben Landen, VP of Business Development to learn more about Cyngn. Watch the video to learn more about Cyngn's mission, our paths to revenue, the behind-the-scenes of our current contracts, and what we can expect to see in 2023.
Thank you, everybody, for joining us back here at Cyngn’s Channel. We're sitting here once again with Mr. Ben Landen, the Vice President of Business Development at Cyngn. And Ben, previously we got to know a bit about yourself and kind of the origin, so to speak, but today we want more of a general company overview. So how are you doing? Are you ready to get into it?
I'm doing well. I'm ready every day to get into it. It's what I do.
Perfect. So let's dive straight in. Start me off with the elevator pitch, or the business model, so to speak, for the company.
The elevator pitch is, and we touched on this last time we talked, labor, and people driving vehicles that do really heavy work in industrial sites is getting to be the failure mode of lots of different industries - ranging from logistics to manufacturing. Vehicles couldn't drive themselves before, people had to sit on them. Now we're having trouble staffing people to sit and do those mundane jobs where they drive the same thing over and over again, just hauling stuff around.
And we can drive those vehicles ourselves now, which means that people can get freed up to do other more interesting work, more difficult work, work that is higher value creation for the company that they work for, as well.
So we're really seeing this intersection of a win-win of labor, not wanting to do the work that we have finally figured out the technology to replace the work that doesn't want to be done.
Yeah, it's definitely now the time, culturally, for this to work out really well and really help businesses scale. As you said, the need for this is increasing now pretty dramatically. So from there then, so where do you guys sit so far in terms of paths to revenue? Can you walk us through a couple of those vertical, so to speak?
Yeah. Our primary business model is that we effectively offer vehicles that drive themselves as a service. So as a subscription, you're effectively paying, think of it, you're paying the vehicle, the salary to go and move things around in the way that in the past you had to pay people, where now you can't even hire those people to move those things for you.
So that primary model within our Enterprise Autonomy Suite offering, which is kind of the whole product offering, that includes the software that lets you control those vehicles. And that's really what we see our customers engaging with more. They don't necessarily care about the AI, the sensors, the fancy stuff in the vehicle that lets it drive itself. They obviously need to know that it does that very, very, very well, which is the proof that we provide to our customers.
But then their window to that product is simple software that lets you see, where are all my vehicles? What tasks am I going to give my vehicles? What sequences do I want them repeating? What diagnostics? What analytics can I get from those vehicles? And working from basically any computer, even mobile applications, to be able to control that fleet of very smart self-driving vehicles and all of that’s bundled together into that subscription offering.
Yeah, definitely makes a lot of sense. You give them the tools, so on, to do the job, then you have to give them the UI and everything to be able to interact with them. They don't necessarily have to know everything that's going on behind the scenes and you guys handle that.
So in terms of that, obviously that's very much a B to B model. Can you walk me through like, the contracts that you can share in terms of how long you guys sign for, how these work out, how you guys are getting sales and so on?
Sure. So it is absolutely a B to B model. Our end customers are folks who are operating sites. So this could be manufacturing facilities, third party logistics companies, 3PLs distribution centers. Whoever is there responsible for making the site work, that's the end customer.
We partner very closely with vehicle manufacturers, with other complementary technology providers that enable the complex technology stack that is required for deploying autonomous vehicles. We don't reinvent wheels that we don't need to reinvent. But those end customers are folks running the site.
So, a perfect example, we just released a press release about one of the customers that we recently signed, a company called U.S. Continental and they manufacture and distribute fabric and leather care products. So there's a lot of chemical engineering involved. And that's a perfect example.
I mean, we worked with them for months. We figured out their facility, what are their needs? They were moving things with forklifts that they didn't need to be moving with forklifts, which is very expensive. They had to go indoor and outdoor, which is something our technology is uniquely positioned to do. So we worked through all of that, figured out how many vehicles do they need, got a contract in place, and those vehicles are getting deployed at the beginning of next year.
Interesting. I guess that does make it a pretty persuasive sale that you can fulfill needs that they currently need to grow their business in the first place. So overall, the service pays for itself and helps the business grow further on their own as well.
Absolutely. And it's a shift that we've seen really get amplified by everything that's happened with increases in e-commerce, the impacts the pandemic had on the way that we work. And we're now in a world where lots of business is still booming and growing, especially distribution based business, because people are ordering more and more things online. And you have this need within the companies that are serving this demand, to grow the workforce, but they can't grow in the same way that they've grown before. They can't just hire more people and linearly expect to serve the growing demand by just continuing to grow the workforce because the workforce is not agreeing to grow with them.
So I've literally talked to customers who have said — “If I could hire 500 more people tomorrow, I would. But it's not an option for me. I can't even hire ten, let alone 500.”
And when you see that paradigm shift is when you see, oh, by spending time moving things with vehicles that drive themselves while you're unlocking a lot of value there.
Yeah, it's tapping into labor without having to include the human element in terms of actually physically doing the manual labor and definitely allowing a really powerful tool for leverage at that point, I believe is pretty future proof, if not fueling the future at that point.
And in that regard, I'm curious then — so then talk to me about the financial health of the company.
Currently, we're well capitalized. We have on the order of $26 million on our balance sheet that we use to run the business. Our burn is relatively low. It primarily goes for paying our staff, and our staff is majority engineers that build these products. We obviously have some SG&A in finance in my team, that includes sales, marketing, product management. So we're in good shape. We have zero debt, and now it's a matter of executing and putting that money to good use.
But we run a pretty lean operation, which is by design, by focusing on software and not needing to deal with bringing up our own manufacturing lines and designing our own robots and things of that nature. That's where we partner.
Makes sense. And I guess from there then. So, 2022 wrapping up rather quickly. Seems like the year kind of flew by. Unfortunately there have been a lot of issues on the macro scale, but how do you feel like it went for you guys so far?
It's a great topic for us to discuss in the macro scale because there's no way around it. You get punished by the macro scale no matter where you're sitting. Or boosted by it in positive macro conditions. But the world has been having a tough 2022.
With that said, we actually have a slide that's in our Investor Relations deck that is one of my favorite slides, what we call the Land and Expand slide, which does two things. One, it shows our competitive advantage of the fact that we're vehicle agnostic, and that once we land with a customer, we can expand across other types of vehicles, not just across the same type of vehicle at different facilities, which opens, one, a new dimension of growth for us with customers.
And two, make it so that our marginal costs for bringing on a new vehicle decrease every time. Because we've already mapped the facility, we've already trained the customer on how to use our UI, and it effectively creates a moat for us against competitors.
I don't see a realistic world where we do three autonomous vehicle types for a customer and they decide to go with a new supplier for the fourth to go redo all the work that we've already done.
So that's the one side. The other side of it is that it's an outline of what we see our plan going 2022 and into a few years into the future. It gives that high level plan. So there kind of the punchline is that we actually outperformed the plan that we laid for 2022. That slide hasn't changed since we IPOed over a year ago and we deployed to more sites than we targeted to deploy to.
And we already started to work on our second vehicle, the electric forklift, which we have a commercial contract to get our DriveMod tech stack onto from a paying customer. We've already embarked on that where that was something that we hadn't slated until 2023. So we are performing to our goals. We're actually outperforming a lot of them, but big waves, big ocean, small fish, we've still gotten punished from a macro perspective.
Yeah. Ben, it sounds like overall you guys have a lot in place that has largely kept you afloat, even though times are hard. And honestly, who knows what's around the bend in 2023. Obviously we're all staying positive, but it sounds like you guys are going to be doing pretty well regardless. Is there anything else involving 2023 that you guys have planned or anything that you could potentially share now?
From here, it's doing more of the same. So the stock chasers that we've talked about, those we spent time through R%D and it really shows the formula that we plan on copying and pasting across different vehicles.
We spent the R&D time on the stock chaser. It's now commercially released, it's ready to go and reduce the R&D focus and turn into more of a sales and deployment and customer success type of effort.
By reaching that milestone, we're now able to refocus that R&D effort onto electric forklifts, the next project. And then we see it following the same type of path that the stock chaser just spent over the last year or so, which is prototyping, finalizing the business use case with the customer.
And for electric forklifts, the good news is it's just about the most ubiquitous material handling vehicle out there. The use case is very strong. And then bringing that to a commercial ready state where then you can start thinking about cost reductions and scale and decreasing that R&G effort and moving on to the next thing with R&d.
So there's a lot of kind of rinse, lather, and repeat that's coming over the next few years, which equates to bringing more vehicles into our Enterprise Autonomy Suite, our EAS offering. Because each one of those is effectively a product that solves a different problem under that umbrella. And then repeating it to get as many of those vehicles placed with customers as possible, which is where we're going to start seeing more significant revenue growth.
Yeah, that sounds like a pretty solid plan from here on out. So Ben, thank you so much for coming on, giving us this general overview. Really appreciate you taking the time.
And if anyone here has any questions about it, please don't be afraid to reach out. We'll happily get you answers and stay tuned for more updates coming soon. Closing words for you, Ben, before we go.
In conclusion, we're heading into the holiday season here. We've been working hard through 2022 and outperforming a lot of those goals and swimming up against the macro stream of the market. So I'd say keep an eye on us.
We're hiring aggressively. We've been succeeding in doing that as well. Our condolences go out to the many, many large tech layoffs that have been happening, but it's creating a great opportunity pool for us folks who are still going up into the right in terms of our need for growth and bringing on new talent.
So if you are interested, if you know anybody who's interested, give us a shout because we've got a lot of work to continue on from 2022 and bring in to 2023.
Perfect. Ben, thank you again for coming on and please have a wonderful day.
Ben Landen: Thank you.