Smartphones are notorious for creating hazards on the road, with some studies showing that distracted drivers today pose even greater dangers than drunk drivers. But one company is trying to buck this trend by using smartphones as tools to make us better drivers.
Zendrive aggregates smartphone data, anonymizes it, and shares it with a range of partners — app developers, municipalities, regulators, insurance companies, and more — who use the data to design safer roads, make drivers better informed about their behavior, and incentivize safe driving habits. On this episode of Mastering Innovation on SiriusXM Channel 132, Business Radio Powered by The Wharton School, we talked to Zendrive CEO Jonathan Matus, who shared with us how exactly smartphones can make us better drivers and how other stakeholders benefit from this platform.
An excerpt of the interview is transcribed below. Listen to more episodes here.
Jonathan Matus: In San Francisco, a few years ago, there was a debate about Mission Street when the municipality decided to turn one of its lanes into a public transport-only lane. There was a lot of debate about what would be the impact on parallel roads and nearby roads. Some folks were making an argument that if personal drivers wouldn’t be able to drive on Mission Street as fast or use it as a main artery of the city as they did previously, other roads nearby would become more dense and more dangerous.
Because of the amount of data that we collect, we’re able to go and do a comparison. I believe we looked at six months before and six months after. The data was very clear: it showed that not just on Mission Street, but also on all the parallel routes around it, overall exposure for risky driver behavior went down.
That was really valuable information for the municipality and for the regulators to have support for similar projects in the future, and to justify their pedestrian- and cyclist- and public transport-friendly projects. I think that is very important for the overall experience of people sharing the road.
There’s a lot of these examples where we don’t need to be the one and only application, but we can certainly bring a benefit to society by being the largest and most reliable source of data for these types of things.
Saikat Chaudhuri: I’m very interested in the growth strategy that you’ve pursued with your various partners. Clearly automobile manufacturers are very important, but also insurance companies would love this kind of information to have customized premiums. How do you engage with these different partners? How does the relationship work? Do they share in your mission? Is that the idea, or is it that everyone has a common interest on a business side to make these things work? What is the nature of that relationship?
Matus: Sure. As I mentioned in the beginning, it’s really important that partners have a financial incentive to invest in safety, and as such, insurance companies are very natural partners. Understanding and controlling risky behavior exposure for an insurance company can really mean life or death from a financial response perspective.
So, insurance companies are measured through a financial metric that’s called combined ratio. The combined ratio is the costs divided by revenues, which means the higher the number, the less efficient and the less profitable an insurance company is. In the field of motor vehicles, for example, commercial auto vehicles, over the last eight or nine years the combined ratios have been above 100 and trending in the wrong direction. This means that for every $100 that the insurance company collected, they lost more than $100 or paid out more than $100. This is not a sustainable situation. So, the insurance industry is now looking for sources of innovation, sources of data, better ways to identify and acquire the best drivers, better ways to price them in a fair way that actually rewards safe drivers, and better ways to react to a crash in case of a claim and pay out the claim as quickly as possible, while at the same time preventing fraud. Zendrive technology is enabling all of these use cases and several others.
“We don’t need to be the one and only application, but we can certainly bring a benefit to society by being the largest and most reliable source of data.” — Jonathan Matus
Some of the insurance companies we work with include some of the largest brands in the U.S. and in the world, and you can see that some of those companies or some of the lines of business that use Zendrive technology are seeing a reversal of the combined ratio trends that I mentioned earlier. The proof is in the pudding. At the end of the day, if you can help make the insurers more profitable, then you’re also making the end-user happier over time because a lot of those savings translate into savings for the end-user.
Chaudhuri: That makes a lot of sense. Everything that we teach in alliances also has to do with having to align interests, because we don’t have control over the other party. I can see how aligning these incentives of the insurance companies and Zendrive creates a beautiful match, and I can imagine how that goes well. Like you were alluding to, insurance has functioned in a particular way for a long time, and now, by analyzing data, we’re seeing the ability to customize the premium that you can offer to a particular individual, in a way that goes beyond the categories of age and gender. These categories are still relevant, but we are seeing how now we can fine-tune and individualize premiums, so that’s very powerful.
If you look at the future, where do you see as the biggest challenges in growing further and fulfilling the mission that you’re talking about?
Matus: That’s the billion-dollar question. Some of the challenges that we’re facing are usual for any company that’s growing quickly at our stage. We are faced with the challenges of hiring and scaling talent, building the right culture, and making sure that it lasts as we double and triple our workforce. Some of this is related to making sure that we are future-proofing and that we can help the increasing demands of increasingly large and complicated customer relationships. Some of these are also related to an increasingly global footprint of our business. If you think about driver behavior in Latin America versus Columbus, Ohio versus Seattle versus L.A., you’re going to get very different patterns. At the same time, however, the technology that we build needs to be able to support both drivers and businesses throughout the world.
About Our Guest
Jonathan Matus is founder and CEO of Zendrive, a mission-driven company, working to make roads safer with data and analytics. Powered by the world’s largest data set of more than 180 billion mobile driving miles, Zendrive uses AI and machine learning to improve fleet safety and help insurers accelerate their digital transformation.
Prior to Zendrive, Jonathan spent six years at Facebook and Google, focused on various mobile and speech recognition projects. At Google, Jonathan was one of the early members of the Android team, helping to drive its growth to the best-selling mobile platform. He graduated cum laude from Harvard University with an Honors thesis on Artificial Intelligence. Jonathan lives in San Francisco.