Tekion founder and CEO Jay Vijayan said his cloud-native automotive platform venture will be profitable by 2025. The former Chief Information Officer of Tesla also added that profitability is a higher priority than going public for the eight-year-old company.
“We want to get the fundamentals solid and strong. So profitability will be a higher priority than an IPO,” Vijayan told Moneycontrol.
An initial public offering (IPO) is one of the milestones but not an end goal, said Vijayan, formerly a close associate of Elon Musk, who left the electric car maker to start Tekion, a firm that reimagines the car buying and selling experience for dealers, auto-makers, and customers.
The Pleasanton, US-based firm has so far raised $640 million, with current valuations standing at over $4 billion. Key investors include Index Ventures, Dragoneer, Advent International, Durable Capital Partners, BMW I Ventures, Hyundai, and Airbus Ventures, amongst others.
At the end of 2023, the company generated revenue worth over $100 million.
Tekion employs close to 3,000 people globally and has plans to hire nearly 300 people globally in the next 10-12 months, out of which 200 will be hired in India.
At present, the company has over 3,000 employees about half of them are based in India. The employee base in India are engaged primarily in product, designing, engineering, support centre, etc.
Also read: We are Salesforce but 20 years in the future: Tekion CEO Jay Vijayan
Path to Profitability
The company is taking many steps to become profitable by 2025 such as setting up processes and discipline to ensure repeatable execution.
"So we want to have more repeatable execution and setting (up of) targets and meeting it consistently, even for internal purposes," Vijayan said. To do that, the company roped in Jacob Shulman as the Chief Financial Officer (CFO) at the beginning of 2024.
Shulman has previously donned the hat of a CFO in two listed companies - JFrog and Mellanox Technologies.
Another bet the company has taken is to invest in building the ubiquitous AI. And Generative AI (Gen AI) capabilities are now embedded in every offering of Tekion's sales. “We'll be investing a lot more in AI. It's not something separate we have to go and sell but within the product, we'll keep enhancing,” Vijayan said.
Clearing Challenges
Tekion’s platform is designed to address key pain points for automotive dealerships and original equipment manufacturers. One of the successes it has had is in the reduction of operational errors and back-end reconciliation issues.
"What happens is, outside of Tekion, they put a small army of people to do all manual. What happens when things are done in manual? Errors. We eliminate errors. No errors at all," Vijayan said, explaining how the company leverages its services when transactions are made using Point of Sale (PoS) machines.
In the US, traditional car dealerships manage payments for a single repair order involving multiple steps and manual reconciliation. For example, if a repair order includes items covered by warranty, a credit card payment, and cash, different systems handle each transaction. This requires a team to manually reconcile payments, compare statements, and input data into a ledger.
Tekion automates this entire process, a major difference from how these transactions are usually done in India.
The company has integrated over 52 brands in its Automotive Retail Cloud platform, including some of the top names such as General Motors, Ford, Jeep, Honda, Hyundai, and Toyota, among others.
Indian Issues
While Tekion’s operations have been successful in the US and Europe, the company is yet to enter the Indian market. The high cost of cloud infrastructure in India has slowed down plans for the company.
"The same cost economics will not work in India. Because just simply, Indian businesses pay one-tenth of what US businesses pay for the same functionality and same software. So, we need to work out on the same economics," Vijayan explained on why the company hasn’t entered the Indian market yet.
Moreover, price sensitivity in India adds another layer of complexity.
Though Tekion does not have immediate plans for expansion into India, Vijayan remains optimistic about the potential. “We’re keeping an eye on the market, but right now, the focus is on strengthening our presence in existing regions,” he said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
