1810 – Vehicle Reimbursement Solutions with Cardata’s Michael Levine

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2:14With us right now, Michael Levine. Michael, you're the president of Car Data. You're found on the web at cardata.co. Michael, thank you so much for joining us. Thank you. Thanks for having me. Give us an overview of what CarData is. Yeah, good question. So CarData is a B2B SaaS platform. We help companies with drivers on the road that use their personal vehicle. So think about a company that their drivers are on the road all day. They're road warriors. It's too difficult to give them fleet cars just because they're not available and they're very expensive. So we've got a mileage tracking app and a reimbursement platform that helps fairly compensate these drivers for the use of their personal car.

2:58The easiest way to conceptualize us, I like to say, is we're a payroll company for mileage reimbursement that follows sort of local tax law in both the United States and Canada. Help me through the kind of the logic chain of like, when does it make sense for the company to purchase a vehicle for an employee versus when does it make sense for them to just use their POV? I would argue it never makes sense to buy them a vehicle. I think it's very old fashioned and there's a lot of like, you know, whether it's shortages or, you know, I think you and I both agree, you're not going to take care of a car that's not yours as much as your own car.

3:36So there's a lot of costs associated with just maintenance and wear and tear that you wouldn't have otherwise. You know, similarly, the amount of idle time when you have to terminate an employee or an employee leaves, like the amount of cost is wasted and just moving that car to a new person, it's pretty astronomical, right? So I would argue there's really no benefit. I think a lot of companies like control over what their employees are driving. And if that is the case, you know, maybe you're a med device company and you want your sales reps going to, you know, doctor's offices in a nice car. Like, if you want some control over that, I think it makes sense.

4:09And maybe your buying power is so high that the deals are insane, but I don't think that really happens anymore. So really, if you're cost conscious and you want to be nimble, I think the reimbursement model makes a lot more sense. what is the advantage for the employee? Choice. I mean, they get to drive their own car. They get to build equity in their own car. And they get to choose what they drive. We've got a lot of companies that come off fleet. And maybe it's like a big sedan. It doesn't really fit their lifestyle. They want to drive a minivan because they have kids or a small crossover. So we're helping them pay for that car.

4:42And they're using it for work. Obviously, there's a lot of people that like a fleet car. From an employee perspective, more often than not, they're like, yeah, this is a great benefit, you know, but it becomes a little difficult to tax from the employee perspective or the employer perspective. So, you know, there's a mixed bag. I'd say there's a spectrum of employees that just say, look, I want to bring my own and I want to get paid to bring my own. And there's a lot that like being given a car because it's just like a benefit they're given out of school and they're like, whoa, this is cool. Right.

5:08So there's a bit of both, I'd say. Yeah. Okay. So why? I mean, just given what else might exist in the marketplace or without car data, how would this normally operate within a company? Yeah, good, really good question. You're usually paying what's called like a flat taxable car allowance. That's like very common. So like, let's say you're going to give someone$500 a month to use their car. The problem is most of that, or a lot of that goes to tax waste because there's no business mileage to substantiate the payment. It all gets taxed. So really what we can do, right, is we can go to these companies and say, Hey, rather than paying them, you know,$500 after tax, right?

5:48Or$500 taxable, why don't you pay them$500 non-taxable? Or why don't you pay them 400 taxable or non-taxable? And, and, you know, you guys have just saved $100 per, per payment, and you're probably in the same position, the driver's in the same position, right? So I think there are just very tax inefficient ways to do this. And also it doesn't, how do you balance someone who drives 20 ,000 miles a year to someone who drives 5 ,000 miles. You can't have a lot of different, it's too cumbersome to have like 50 different allowance tiers. So we actually break it down into a, both a fixed and a variable component to adjust for the miles driven.

6:23And then I would say that the other way is that, you know, the IRS publishes a rate every year. It's like, it's about 67 cents for 2024, but that's an astronomical reimbursement rate. If you drive 30 ,000, you know, 40 ,000 miles, or some people do, you can, you can buy a new car every year with your reimbursement. I think we both agree that's not really what the intent of it should be. We shouldn't be buying you a new car every year. So I think there's a lot of – it's just very hard to standardize for the amount of miles driven. And also, how do you compensate people differently in different geographies?

6:57Our reimbursement rate does that. It looks at local fuel costs. It looks at local insurance costs. So it is location-specific. And it helps – think about large companies with drivers everywhere. it helps to sort of normalize it and standardize it under one program. Yeah. So what would be some examples of companies that use car data? So, you know, we've got a relationship with, I don't want to give up too much proprietary information, but there's a couple of industries, whatever. Yeah. So food and beverages are really good sort of opportunity for us. A lot of drivers on the road. We've got some pharmaceutical companies, some medical device companies.

7:32We're fairly highly indexed in like construction. So like building materials, home builders, things like that. I would say, you know, industry wise, like we're fairly agnostic. I think if you have drivers on the road that drives like, let's say more than 10 ,000 miles a year, like you're a good fit for our platform. Yeah. So CarData, I want to say congratulations. You just had a really significant funding round. So congratulations on that. Thank you. What does the investment world realize about CarData in terms of growth opportunity? Yeah, I think it's a nice sort of reaffirmation that, I mean, one, we're doing great things for our customers and our employees, right?

8:11So it's nice to get that positive reaffirmation from the market that, you know, we're doing something right. I would say, you know, what it looks like for us is, you know, significant investment in our product, make it better, make it more valuable to our customers, maybe add on more services that help them sort of run their reimbursement programs. And I think just increasing our brand at the end of the day, despite our success, we're still a relatively unknown brand in the market. And I think a lot of small B2B SaaS companies have the same issue. There's usually a player in the space that's massive and everyone knows.

8:42And then there's usually a couple of small players, but they've got to be really scrappy in how they build the brand. Because they're never going to have as much money. So I think really our investment is going to go towards making our product much better and really just try to build our brand. Yeah. How have you grown historically in terms of clients that you have that use Cardata right now? How does that relationship usually start? Is it 100 % inbound at this point? Do you go out in the world and on the biz dev side? Yeah. So we've really grown our business just through net new customer acquisitions.

9:20We haven't really gone through the motion of trying to sell them more stuff that we sell. I think we've got a fairly simple offering that it hasn't been through new sales, but it's been a lot of full-court press on growing and adding new customers. So that's really been it, just market coverage and adding new deals. We've been fortunate enough to win some large enterprise deals, which has helped move the needle a lot for us. And that's really the plan going forward. Yeah. And then in terms of like how it works for a company, is it, how does onboarding work? How does, I guess, the kind of the cost or, you know, in terms of how someone could implement this and how easy it would be.

10:02I don't know if, you know, one concern from a customer might be, oh, my sales, they're going to hate this because we, you know, historically we've just been, you know, just paying them some kind of flat car allowance. And now we're going to ask them to, you know, all this variable and tracking and all this other stuff. Can you share maybe a bit about that kind of that onboarding process? Yeah. Change management is kind of the enemy of this industry. I think people understand this makes a lot of sense. Like there's like really no looking at the ROI in quite, it just makes complete sense that if you're purely looking at this from a financial lens, it makes no sense to not do something like this, right?

10:39It's just so obvious. but, but yes, everything you said are real challenges of like, okay, like how do we make sure? Cause you also want to make sure everyone's equally, you know, in the same place, right? Like a lot of these programs kind of run themselves internally for a long time. And we get sort of to the finish line and we find out, you know, John Smith out in Arkansas is somehow making like three grand a month in reimbursements. And like, you got to kind of right size that. Right. So, so I think there's a little bit of that of like, okay, everyone's rate is changing in a way, which is complicated.

11:10And yeah, you get a lot of people that have either been literally recording their mileage and putting it in a system. And I think it's a natural instinct to round up, especially when it comes to mileage. And now they have to go to an app that tracks you. So change management is 100 % the hardest thing we sell against. No decision is what we usually lose to of like, look, I like it. It makes sense. I'm just not going to make a change right now. And, you know, for someone that's been listening to our conversation, maybe they're doing some searching about Cardata and they stumbled upon this podcast episode.

11:44How does the demo process usually work? Or, you know, if they're in that consideration stage, like what does that usually look like? Yeah, there's a few things, right? Our product's a little more complicated than just like, here's a software, like, you know, go play with it. That's not really, that doesn't do it justice. I think there's a lot. There's, we help you design a policy. This is what a vehicle policy could look like. This is when you have to get your insurance to car data, right? There's a little bit more to it. There's also a purely an app trial. A lot of customers want to try our app, which makes a lot of sense.

12:16And then we'll do a bit of a demo of like, hey, what does the system look like? What does the reporting look like? Things like that, right? So it's a bit more immersive than just like, hey, like here's a trial, freemium trial account, go do it. So we have to walk them through how the system works. We have to walk them through, you know, how the policy design works. So similarly, I think an important element is like actually like running rates of like, hey, give me your participant list. Okay, here's what a payment would look like. Here's what the cost would look. So doing a bit of the ROI analysis often becomes a huge part of the sale process is just like, okay, how much money am I going to save?

12:51Are my employees going to get taken care of in the process? So that's a sort of a hidden element of our sales process that is quite complicated that takes quite a bit of time. Yeah. For someone, again, who's maybe not in this world, I'm just curious about, you know, who are kind of opportunity in the marketplace, right? I'm just trying to visualize, you know, who would be like the biggest consumers of, you know, or it may be just generally industry wise. I guess I don't really have a feel for just how big these employees are driving vehicles, just how big of a force that can be. Yeah, look, I think any of your public food and beverage beer companies, any of your public pharma companies, a lot of them are customers of ours or customers of our competitors.

13:44I think there are some very large enterprises using solutions like this over fleet. And that's fairly common. So again, I would just think about any customer, regardless of size, obviously, like the small, small customers, the dollar value may not make sense. Because if you're saving like 1000s of dollars versus millions of dollars, it's a big difference. But really, anyone with drivers on the road is a good fit for us. It's very simple. But yeah, like a lot of public companies, a lot of Fortune 100 companies are on a reimbursement solution like ours. From a user standpoint, what is the driver having to do?

14:21Really just a few things. They're tracking their mileage through our system. They're sort of like letting us know of any changes to their car, which plays into whether they're taxed or not. And they're typically submitting insurance to us like once a year or once every six months, depending on the expiration dates of their policies. To stay in good standing in our program, you just have to make sure your car is current with us and there are some rules around whether it's taxed and submitting insurance to us and submitting mileage once a month. It's not a huge lift. Yeah. Is there, I don't know of existing or old ways of doing this, you know, if this is a concern, right?

14:58Like, yeah, I think they're fudging the numbers a little bit. Do we have the opportunity to maybe get a little bit more accurate with what's happening? Yeah, I think with the tracking app, it certainly sort of negates some of that, like, you know, I'm just going to put in 1000 miles and we don't know what it means. Like, so it's certainly a natural element of the tracking app is that it is more accurate and less fraudulent in a way, right? Because I think a lot of companies are just like, maybe it's through a concur or like an expense solution, where, you know, you're just submitting x miles without much substantiation, right?

15:33Right. And, you know, how do you I think as soon as you are going to sort of reject or not pay someone for their mileage, the onus is sort of on you to prove whether, you know, it's actually fraudulent. Right. So there is some risk in just denying a blanket payment. Right. Because if they come back and show you it's real, you know, it's real and you should pay it. Right. So it's a bit of a gray area. Right. So I think doing it through an app is a little more like simple. Hmm. Michael Levine, again, the website cardata.co, who should be reaching out and what should they be doing? Yeah, good question.

16:08Really good question. Anyone who is like a decision maker at a fairly large enterprise, whether it's in finance, tax, HR, or like any sort of like benefits and compensation, who is, you know, having trouble managing a car program internally, whether fleet or a reimbursement model, who just like wants to offload a lot of that responsibility to us, like we are the ones talking to drivers, we are the ones helping drivers, we're the ones paying drivers. So anyone who feels they don't have great internal fleet management, like should reach out because we offload a lot or sorry, we take on a lot of that responsibility for you working with drivers explaining why they're taxed.

16:47You know, that's really a lot of what we do. Like we're almost service first technology second in a way like we are certainly a technology company. But I think we like to solve problems for our customers with technology and not the other way around. So I think that's really just anyone who's looking to simplify and streamline their vehicle operation. Yeah. Again, your website, cardata.co. And right on there, you could book a demo. So to our friend that's listening to our podcast app, just click on the show notes. There's a direct link. Otherwise, the website, cardata.co. Michael Levine, President, thank you so much for joining us.

17:26Oh, my pleasure. Such a pleasure to be with you.

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