Digital Mapping Infrastructure: The pipes to wildly useful data
The following is an analysis of why mappy is a strong seed-stage investment.
Think about how you use the maps/GPS on your phone to navigate somewhere. It happens often. Typically, when you navigate somewhere, you end up spending resources (time, money, or both). Of course, if you had an omniscient view of how people were spending their resources, the data would be extraordinarily valuable. It turns out that Google is pretty close. Take the following image for example
Google has statistically significant estimates for where people are going to be and for how long. These data are incredibly powerful with the right analysis. Just think about how impactful of a profile Google can build on you by understanding where you spend your resources.
While Google has been the incumbent in the geo/map data space, Apple has demonstrated massive interest in closing the gap on Google. Apple understands how valuable geodata is as a means to understanding consumers. Now, how has Apple shown its serious interest in maps and the associated data? They’ve spent several billion dollars on R&D, starting with building a dedicated office in India with 4,000 employees solely focused on maps. That’s right– billions of dollars and thousands of employees to work on maps.
Wait- so why is one of the most iconic and successful businesses in the world spending billions of dollars on something that doesn’t impact the top line of their core business? Data. Yes- having data to understand how consumers spend their resources creates a set of impactful operational and product insights.
While we’ve addressed why one might spend so much on map R&D, an equally interesting question is ‘how can you spend so much on maps?’ Well, map software products and data are abnormally complex, especially when dealing with real-time GPS data and additional dimensionality beyond 2D. One of the main reasons Apple needs so many engineers to work on this problem is because of the lack of modern tooling that’s available for building digital mapping software and harnessing the data.
Now comes another interesting question. If it takes billions of dollars from tech giants to build sophisticated digital mapping and data infrastructure products, can smaller businesses afford to harness the value exhaust from scaled consumer map use?
There’s no strong business that provides paper maps who wouldn’t love to understand exactly how consumers are navigating their cruise ship, resort, course, theme park, etc. by providing an incredible digital experience. The reality for most businesses is that they don’t have the tools or resources necessary to build their own tech like Google or Apple maps.
Mappy has created geospatial software development kits for businesses to build rich mapping experiences for consumers while doubling as a mechanism to harness valuable utilization data. Mappy’s business model is a special case of the enterprise Software Development Kit (SDK) subscription model because of the two-birds-one-stone effect from consumer maps that yield valuable business data as a side effect of use. This special case creates several different revenue streams from the same tech.
To illustrate the value, let’s examine a use-case from Mappy Labs, which is how the Mappy team puts their SDK to the test. In the inaugural instance, Mappy Labs produced SnowMappy, which provides rich digital maps for ski resorts. The team built an amazing experience for consumers who can get turn-by-turn navigation anywhere on the resort while providing location visibility to family/friends. While this is a huge value-add for the consumer, the real business value comes from usage data that allows the mountains to make decisions that aren’t possible without data. For instance, a ski resort can pinpoint usage data on runs and decide to adjust snow-making and lift operations based on customer usage. These types of decisions accumulate to save millions of dollars a year or shape budgetary decisions based on mountain feature popularity.
Snowmappy has also been the proving ground for a willingness to pay for the offering. Beyond ski resorts, the value proposition is clear for any business (venue) with a map that wants to understand resource utilization and optimization. While the market is challenging to precisely quantify, it’s sufficiently large for venture scale returns.
Now that we’ve laid out the details of the problem, market, and solution we find ourselves at an interesting juncture to explain Mappy’s underwriting. As a seed investor, I’m of the belief that a lot of the alpha is captured in the ability to access and identify companies who can scale into a massive market before they demonstrate traction that absorbs information asymmetry. With that idea in mind, I acknowledge the risk that comes with the early entry point in the lifecycle of the company. In fact, I’m of the belief that reducing the risk from lack of traction/revenue is where an active seed investor can create the most leverage.
The risk I’m most focused on at the seed stage is founder risk. Let’s walk through a few of the points behind why we’re excited about this founding team. Centered around Karyn, founder-market-fit exceeds expectations as she’s been in the GIS (geographic information systems) space her entire career. There are very few people starting software companies with as much experience in the market as Karyn. Better yet, her experience is predominantly as an entrepreneur running a GIS services contracting company, which she eventually exited. Notably, I’ve found that the best founders are bona fide entrepreneurs. It’s their worldview. While there are several other important signals, the last one I’ll touch on here is character. Karyn is poised, thoughtful, and has a winning balance of coachability and persistence.
As a final word, we’ll touch on timing. The COVID crisis birthed an opportunity for digital tools to replace physical objects, like maps and menus, and have become a consumer expectation in a post-pandemic environment. We’re in the age of rich digital experiences for consumers that businesses can leverage to improve service at the speed of information.
I’m excited to be the lead for Scout’s investment in mappy. If you would like to discuss the company, please reach out.