Mapbox – Profitability drive

Mapbox reshuffles to go for automotive.

• Mapbox has moved into a new phase of its development by moving its founder and CEO into the role of chairman and chief strategy officer and promoting Peter Sirota to the role of CEO.
• At the same time, Mapbox has announced that it will follow-on from its success from landing a partnership with BMW by addressing the automotive space more widely.
• Peter Sirota has been at Mapbox for three years and announced its partnership with BMW in December of 2020 implying that this was a deal that he led.
• It is quite clear that automotive is now a priority as this appears to be the main reason why the move towards automotive has coincided with a major management change.
• In May last year, Mapbox raised $133m at a pre-money valuation of $1.05bn in a deal lead by Premji Invest which is the family office of Wipro chairman Azim Premji.
• Given the investment climate in May 2020, this raise was a major achievement for Mapbox and probably came with plenty of strings attached and promises made by management.
• I suspect that one of these was a rapid return to profitability which is what the sudden shift towards automotive is may well be all about.
• Mapbox is providing the navigation SDK for Android and Mapbox Studio to BMW to help it design its own in-house navigation experience that will be able to be streamed to the vehicle.
• However, there is no mention of the map itself which leads me to believe that what BMW is licencing is a set of tools and some infrastructure to allow it to create its’ own map in the cloud rather than the licencing Mapbox’s map itself.
• I suspect that its pitch to other automakers will be quite similar and it is this proposition that Mapbox’s competitors will be going up against.
• Map owners like HERE and Google should have an advantage here because a navigation SDK designed for a specific map should be able to enable the developer to make a better and richer experience overall.
• BMW has a significant stake in HERE and a seat on its supervisory board which begs the question of why it did not go with HERE’s offering in this space?
• Maps and navigation are clearly moving to real-time updating and I suspect that BMW is experimenting with different offerings and approaches to work out which one works best.
• This is becoming fairly common across the automotive industry which makes complete sense given the very challenging outlook that the OEMs face.
• RFM estimates that over the next 26 years, demand for automobiles could decline by as much as 65% globally meaning that unless the OEMs change and adapt, none of them will survive in their current form.
• From Mapbox’s perspective, I suspect that the move to automotive is all about addressing a new segment of the market with assets that it pretty much already has and thereby accelerating the path to profitability.
• This focus on automotive may also help Mapbox as the amount of capital being thrown at electric vehicles at the moment is extremely high.
• This is because the ludicrous valuation of Tesla is being used to underpin an ever-growing number of EV start-ups who are raising a lot of money and going public through SPACs at unsupportable valuations.
• With money burning holes in their pockets, this segment represents fertile ground for suppliers of software and services to this industry who need to get in quick before the bubble bursts.
• There is no sign of this bubble bursting yet and so suppliers should make hay while the sun shines.