Mergers and Acquisitions: The Empire Strikes Again

Another $1 billion M&A in the mapping space was hinted at today. Intel, the semiconductor giant will buy Moovit, the multimodal mobility as a service (Maas) platform. The rumors have caused some head shaking, smirking and muttering about those “ridiculous startup valuations”.

It’s not as random as it seems. For those who aren’t familiar, since 2015, Intel has been a massive player in transportation. 5 years ago, they purchased Mobileye, an Israeli leader in computer vision and safety systems for a whopping $15.3 billion. It was a transformative M&A, which so far has played out according to plan — opening entire new growing industries for Intel.

So why shell out another $1 billion on a Maas company. Especially with limited revenue and probably no profits? What were they missing?

Data and users.

The acquisition of Mobileye gave Intel a road into the tech world of autonomous cars. And not just any road, Mobileye is by all accounts one of the leaders in the space, have inked partnerships with BMW, VW and more OEMs to bring their technology to market. Some of these are anticipated to launch within the next 18 months.

Here’s where Moovit enters the picture. For those unfamiliar:

Moovit is an Israel-based mobility as a service provider and journey planner app. The company uses both crowdsourced and official public transit data to provide route planning to users as well as transit data APIs to transit companies, cities, and transit agencies. Because Moovit integrates crowdsourced data, it is able to provide transit information for areas where no data is officially available.

As of February 2020, Moovit reported 720 million users in 3000 cities and 100 countries worldwide. If even a third of those users are active, that brings Mobileye/Intel three huge advantages.

The first is in city data. Deploying an autonomous fleet is a capex intensive operation. Knowing which cities to enter, backed by hard data, can prove to be invaluable. Especially given the granularity of the data that Moovit provides. This can go deeper that entering a specific city, and give more targeted neighborhoods and routes to enter.

The second is users. Customer acquisition is always the hardest part of any B2C offering. This is harder when the “job to be done” of moving a user from point A → B can be done by so many alternatives. Beyond the novelty, and maybe a lower price, many autonomous fleets don’t have much to offer yet in terms of a competitive offering.

Enter Moovit’s 720m users. What easier way to acquire users than find them when they already are looking for transportation options? No Facebook or Google advertising necessary. In pure CAC terms, this looks like a steal.

The third solves another user pain point. As long as autonomous fleets will be geo-fenced (i.e can’t leave specific areas or routes) they will be severely limited in the transportation they can provide. Want to go to that out of area arcade?

Sorry, you’ll have to switch to an Uber.

Here’s where an existing Maas, multi-modal operator shines. Moovit already computes routes based on multiple modes of transportation and their limitation to get you to your destination fastest or cheapest. They incorporate biking, walking, public transit, ride hailing etc. Adding in the autonomous option seems only natural.

Do you think $1 billion is still a high price tag for the missing piece in Intel’s autonomous fleet plan?