This former Tesla CIO just raised $150 million more to pull car dealers into the 21st century

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“I have to choose my words carefully,” says Joe Castelino of Stevens Creek Volkswagen in San Jose, Ca., when asked about the software on which most car dealerships rely for inventory information, to manage marketing, to handle customer relationships and to otherwise help sell cars.

Castelino, the dealership’s service director, laughs as he says this. But the joke has apparently been on car dealers, most of whom have largely relied on a few frustratingly antiquated vendors for their dealer management systems over the years — along with many more sophisticated point solutions.

It’s the precise opportunity that former Tesla CIO, Jay Vijayan, concluded he was well-positioned to address while still in the employ of the electric vehicle giant. As Vijayan tells it, he knew nothing about cars until joining Tesla in 2011, following a dozen years of working in product development at Oracle, then VMWare. Yet he learned plenty over the subsequent four years. Specifically, he says he helped to build with Elon Musk a central analysis system inside Tesla, a kind of brain that could see all of the company’s internal systems, from what was happening in the supply chain to its factory systems to its retail platform.

Tesla needed to build it itself, says Vijayan; after evaluating the existing software of third company providers, the team “realized that none of them had anything close to what we needed to provide a frictionless modern consumer experience.”

It was around then that a lightbulb turned on. If Tesla could transform the experience for its own customers and potential customers, maybe Vijayan could recreate the platform in a way that could transform the buying and selling experience for the much bigger, broader automotive industry. Enter Tekion, a now four-year-old, San Carlos, Ca., company that now employs 470 people and has come far enough along that just attracted $150 million in fresh funding led by the private equity investor Advent International.

With the Series C round — which also included checks from Index Ventures, Airbus Ventures, FM Capital and Exor, the holding company of Fiat-Chrysler and Ferrari — the company has now raised $185 million altogether. It’s also valued at north of $1 billion. (The automakers General Motors, BMW, and the Nissan-Renault-Mitsubishi Alliance are also investors.)

Eric Wei, a managing director at Advent (and newly a member on the board of Tekion), says that over the last decade, his team had been eager to seize on what’s approaching a $10 billion market annually but they mostly found themselves tracking incumbents Reynolds & Reynolds, CDKGlobal and Dealertrack, which is owned by Cox Automotive, waiting for a better player to emerge.

Then Wei was connected to Tekion through Jon McNeill, a former Tesla president and an advisory partner to Advent. Says Wei of seeing its tech compared with its more established rivals: “It was like comparing a flip phone to an iPhone.”

Perhaps unsurprisingly, McNeill, who worked at Tesla with Vijayan, also sings the company’s praises, noting that Tekion even bought a dealership in Gilroy — the “garlic capital” of California — to use as a kind of lab while it was building its technology from scratch.

More importantly, dealers are back in the market. Though citing competitive reasons, Vijayan declined to share how many have bought its cloud software —  which connects dealers with both manufacturers and car buyers via a retail platform that’s powered by machine learning algorithms — he says it’s already being used across 28 states.

One of these is the national chain Serra Automotive, whose founder, Joseph Serra, is also an investor in Tekion.

Another, again, is Stevens Creek Volkswagen, where Castelino — who doesn’t have a financial interest in Tekion, nor does Steven Creek — speaks enthusiastically about the time and expenses the dealership is saving because of Tekion’s platform.

For example, he says customers need only log-in now to flag a particular issue. After that, with the help of an RFID tag, Stevens Creek knows exactly when that customer pulls into the dealership and what kind of help they need, and if all goes as planned, there are people ready to greet them as they arrive.

Tekion can also recommend based on a car’s history a brake fluid flush “without an advisor having to look through a customer’s history,” he says.

Not last, he says, the dealership has been able to cut ties with a lot of other software vendors, while also making more productive use of its time.

Says Castelino, “As soon as a [repair order] is live, it’s in a dispatcher’s hand and a technician can grab the car. It’s like that with every step. You’re saving 15 minutes again and again and you suddenly have three hours where your intake can be higher.”




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