By now, you have probably heard that there are more than 200 million connected cars on the road today. But, wait a minute. What is a connected car – and how does a connected car make our lives better? A simple way to think about it is that a connected car is one that is linked to the internet, just like our phone. And like our smartphones, that linkage gives cars an ability to deliver countless new features and functions via over-the-air updates. Connected cars are new in another way: For the first time in over one hundred years, the automotive industry relies on a different industry - cellular - for key innovation. So, how exactly do automakers engage with the tech providers, the ones holding the valuable tech patents? Enter Avanci, a company formed in 2016 to serve as a bridge and broker between the tech powerhouses and the automotive giants. Joining this episode of the Driving With Dunne podcast is Laurie Fitzgerald, President, Avanci Vehicle. Laurie walks us through Avanci's unique role working as a vital go-between for global carmakers and the global tech providers. Laurie also shares her very first experience driving in Ireland, a right-hand drive market. Was the car connected?
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Speaker 1 (00:02):
Where top executives and crazy entrepreneurs gathered to talk about
the future of electric vehicles. This is the Driving with
Done podcast.
Speaker 2 (00:12):
Hello and welcome to the Driving with Done podcast. I
am your host, Michael Dunn. By now, you've probably heard
that there are more than two hundred million connected cars
on the road today worldwide. But hang on a minute.
What is a connected car and how do they make
our lives better? Well, one simple way to think about
(00:33):
it is that a connected car is the ones that
are linked to the Internet. Just like our phones, and
like our smartphones, those linkages give cars an ability to
deliver countless new features and functions via this magical carpet
called over the air updates. Connected cars are new in
another important way, For the first time in over one
(00:55):
hundred years, the automotive industry leaders rely on a different industry,
cellular for key innovations. So question of the day, how
exactly to the automakers get together with those tech providers,
the ones holding the valuable tech patents. Are they friends,
foes or something in between? Enter Avanci, a company formed
(01:19):
in twenty sixteen to serve as a bridge and broker
between the tech powerhouses and the automotive giants. Joining me
in this episode of the Driving With Done podcast is
Lourie Fitzgerald, President AVANCI Vehicle. Laurie walks us through Avanci's
unique role working as a vital go between for global
automakers and those giant tech providers. Laurie also shares her
(01:43):
very first experience driving in a right hand drive market Ireland.
Was the car connected? Would it matter? Let's find out
right now with Louri Fitzgerald, President AVANCI Vehicle on the
Driving With Done Podcast. Laurie Fitzgerald, Welcome to the Driving
(02:09):
With Done Podcast.
Speaker 3 (02:10):
Hi, Hi Michael, Thanks for inviting me to be your guest.
Speaker 2 (02:13):
I've been looking forward to this conversation, Laurie for some time,
in part because I know that you're in Ireland, and
I'm super curious about when you moved to Ireland. What
was it like the first day driving there?
Speaker 4 (02:26):
Probably my most memorable driving experience is the first time
I got behind.
Speaker 3 (02:32):
The wheel in Ireland. It was a.
Speaker 4 (02:36):
Rental car from the Airport, Toyota Corolla, and I have
never been as terrified as I was when I pulled
out into the Airport roundabout, which it turns out is
one of the busiest traffic situations in all of Dublin
and had to basically do everything backwards. But I live
to tell the tale, and here I am. I am
(02:57):
a licensed Irish driver almost seven years later. And for
anyone who is moving to the country where they have
to drive on the other side of the road, the
best piece of advice I was ever given was driver
in the middle.
Speaker 3 (03:12):
As long as you were always in the middle, you
will be You'll be, You'll be Okay.
Speaker 2 (03:17):
That's some deep wisdom right there. Driver, Driver in the middle.
Speaker 3 (03:21):
Driver in the middle.
Speaker 4 (03:22):
Just remember you put your steering wheel in the middle
next to that line and you'll be fine.
Speaker 2 (03:27):
It isn't uncommon to mix up the wipers with the
turn signal, right, you know.
Speaker 4 (03:33):
That's not uncommon at all, and it happened all the time.
But you know now it's funny, all these years later,
when I go back to America and I drive on
the other side, then I have to readjust my brain.
Speaker 3 (03:45):
But you know, I'm, I'm.
Speaker 4 (03:47):
It's always good to learn new skills as an adult,
and driving, you know, on the other side, was one
of mine.
Speaker 2 (03:54):
So we're here to dive into your business. Laurie Avanci,
which serves as a kind of a crucial bridge in
the world of connected cars. So let's start at the beginning,
big picture. What is in your view, what is a
connected car?
Speaker 4 (04:07):
So, cars today use four G and five G cellular
technology to connect to the cloud, just like our smartphones.
You see the for G or the five G logo
come up on your phone, it's the same with your car.
Speaker 3 (04:22):
And FORG and five G are what we call.
Speaker 4 (04:25):
Standardized technologies, So any product with the cellular connection connects
to the network using the same standard, similar to electric
plugs being standardized when you plug something into.
Speaker 3 (04:39):
The wall and the standard.
Speaker 4 (04:41):
These standards are what makes network equipment and smartphones and
vehicles and all the other connected things in the world
interoperable with each other. So that is the idea of
a connected car, is that your car is essentially connecting
to the internet.
Speaker 3 (04:58):
Just like your phone.
Speaker 2 (05:00):
What are some of the key features that we benefit
from as drivers or writers in a car from having
this connectivity.
Speaker 4 (05:07):
Sure, there's so many, and it's not just benefits for
drivers and passengers, but also for the automakers who sell
the cars.
Speaker 3 (05:16):
You know, one.
Speaker 4 (05:17):
Of the connective features I think that is so valuable
is over the air updates. You know, automakers can update
vehicles and actually increase the value of the vehicle to
the driver and the passengers. After you've driven away with
the car, features can be added later over the air
(05:38):
in a simple way, rather than taking the vehicle back
to a dealer and the time and expense associated with that.
You know, connectivity also makes for a more immersive infotainment
a safer driving experience because there's you know, uh.
Speaker 3 (05:56):
Safety features that use connectivity.
Speaker 4 (06:00):
Activities involved in the beginning of autonomous driving that we're
seeing now, many many things. I think the list goes on,
but overall, I'd say connective features can make the driving
experience safer, more enjoyable, and for everyone on the road.
Speaker 2 (06:16):
The next question is, for all these benefits we derive,
there are people out there thinking, wow, so much of
what my car is doing is dependent on something out
there in the cloud or somewhere being controlled remotely, it seems,
how do you get comfortable with the fact that, yes,
the car is no longer just an isolated machine driven
(06:36):
by a motor, It's actually connected to the Internet, and
that Internet has a lot of power over the performance
of the vehicle.
Speaker 3 (06:44):
Sure, I mean.
Speaker 4 (06:45):
On one hand, I think it's amazing that cars can
connect to the internet, and I think as we see
all of this technology develop, cars are going to be
talking to each other and also to infrastructure, and this
is going to make driving so much safer for all
of us because when you have vehicles that can communicate
using cellular V two x technology, you can have roads
(07:10):
where vehicles can platoon. You don't have traffic, you also
won't have you know, you'll have less accident, more accident avoidance, right,
and so in some ways you see how you know
cars being connected is going to make driving better for
all of us, But I do you know, there is
(07:31):
a lot of there has been a lot of concern
as you point out about the fact that whenever you
connect things together, then you know you don't maybe you
don't have the privacy or the security that you would otherwise.
But I think it's important to know that the companies
are developing the four G and five G standards, they're
(07:53):
definitely working on all of these issues and very aware.
And just like there's security and privacy in your phone,
those features are also in the standards. It's the same standard,
and so those features, you know, also protect you and
that technology protects you in your car.
Speaker 2 (08:09):
That's a great answer. There's trade offs in life, and
here we go again, you know, and in exchange for enhanced,
better and safer, more efficient vehicles in the future. There
it's not going to be perfect ever, but we're heading
in the right direction. You feel confident.
Speaker 4 (08:23):
I think that five G if you look at five
G compared to four G. You know, I'm not an
engineer creating the standards, but I work with this technology
in a Vancey. My understanding is that there's been a
lot of work on security features and that five G,
you know, has a lot of these security issues are
being addressed in the development and as the standard evolves,
(08:45):
so will the security excellent.
Speaker 2 (08:47):
Now, your company of Vancey is sort of I refer
to a bridge or a middleman or a middle woman
or a market maker. In a way, You've got, on
the one hand, a cast of characters who are the
technology pers and on the other hand you have the
licensees who are the automakers. So just to give us
some flavor, could you share with us the names of like,
(09:07):
who are the key technology players delivering connected services to
the car today?
Speaker 3 (09:13):
Sure?
Speaker 4 (09:13):
And maybe I'll explain a bit about Avansie, if you'll
let me go into that just for a moment. And
so when you think about the four G and five
G standards, a lot of times I hear them referred
to as open, and that means that companies who want
to make and sell connective products can can use them.
Speaker 3 (09:34):
They're open for all of us so that things can.
Speaker 4 (09:37):
Interoperate, but open doesn't necessarily mean free.
Speaker 3 (09:42):
The standards are the products.
Speaker 4 (09:44):
Of billions of dollars in decades of research and development,
and so this investment and this innovation that's happened over
time by the telecom industry has resulted in the cellular
stand that connect all.
Speaker 3 (10:01):
Of us every day.
Speaker 4 (10:03):
And much of that innovation is patented, meaning that in
order to use the patented technology, that there's royalties that
are owed to ensure that the company is inventing the
standards are receiving a fair return on their research and
development investment, and that they know this then fuels further innovation.
Speaker 3 (10:28):
So it's an innovation cycle.
Speaker 4 (10:30):
And you've got players to answer your question, and companies
who are working on the standards that we've all heard of, Samsung,
LG Electronics, Qualcom, Nokia, ericson wildwey Ete China Mobile.
Speaker 3 (10:46):
There's companies all around the world and Intel.
Speaker 4 (10:50):
There's these companies that I think that many of us
you see and hear about every day.
Speaker 3 (10:56):
But then there's also dozens and dozens.
Speaker 4 (10:58):
Of other companies who also own patented inventions that are
essential to the cellular standards. And what Avanceie has done
is we have created a platform where the holders of
these patented inventions have come together and given a Vanstie
(11:19):
the rights to license their technology to the auto industry
in a very simple, one stop shop way. An automaker
selling a connective vehicle before a vansie, its only option
was to go to all of these dozens of telecom
companies and individually negotiate.
Speaker 2 (11:42):
A lot of work, a.
Speaker 3 (11:43):
Lot of work, a lot of work.
Speaker 4 (11:45):
So the idea of a Vansie was to have a
one stop shop option, an alternative where the automaker could
come to us, sign one agreement and get all of
the rights in a predictable way at.
Speaker 3 (11:57):
A fixed cost.
Speaker 2 (11:58):
The history is fascinating. It took a couple of years
to get your first customer BMW, then I think Volvo
was next, and then just recently I was reading this year,
one after another, You've got JLR, Nissan, Honda, and the
parade goes on. So today, do you virtually cover all
vehicle automakers or are there still some out there.
Speaker 4 (12:18):
To be a had Yes, So we have more than
one hundred and ten automotive brands around the world are
selling vehicles that are covered by ANIVANSI license, So it's
essentially every major automaker in the world outside of China.
And we also have licensees who are selling in the
(12:40):
construction industry or agricultural vehicles. So it's not just you know,
the passenger vehicles on the road. It's everything from mobile
cranes to connected forklifts, to passenger vehicles, luxury vehicles. Anything
that is is a vehicle and connected can be licensed
in our platform.
Speaker 2 (13:00):
So one of the things that struck me as I
looked into AVANCI is that so much of the value
of a car today comes from outside of the automakers.
You know, in the old days they innovate on the engine,
the transmission, the gearbox, the chassis, but today increasing our
cars are gadgets, you know, electronic gadgets. So when an automaker,
(13:23):
what's the value added to the automaker. These days, it
seems to be declining over time and increasingly the power
and the innovation resides outside of the automaker. Is that
a fair assessment or where's this industry headed?
Speaker 4 (13:37):
I can only speak about this from my perspective, you know,
looking at the connectivity, and I actually work with all
of these different automotive companies around the world, and I
see incredible innovation.
Speaker 2 (13:51):
Inside the company. Still the car companies are still doing innovation.
What about in this space? Are they also working in
this space too?
Speaker 3 (13:58):
Well?
Speaker 4 (13:58):
What I do see I think increasingly automakers working in
this space. But what I what I've seen over the
years is, you know, an automaker will will license the
rights to use the core radio functionality, the cellular technology,
but then they're innovating on top of that technology. They're
(14:22):
you know, they have teams who are finding ways to
offer their customers new features or ways to connect with
our customers more or you know, different ways to use
connectivity within the vehicle. So you know, what we're doing
is we're licensing the technology that is also used by
your phone, or by a connected meter, or by a
(14:45):
connected electric vehicle charger. But then the automakers are are
taking that technology and using it in in new and
different ways. And you know, particularly you see like CV
two X, you know this, you know, the cellular vehicle
to everything technology, and there's ways that automakers are going
(15:07):
to be using that technology in the future, which I
think will you know, absolutely make it so much safer
for all of us on the roads.
Speaker 2 (15:15):
Okay, So that makes sense. So they're licensing the core
technologies and then building on those and differentiating each of
their brands and their products through innovating in house.
Speaker 3 (15:26):
Yeah, that's what I that's what I'm seeing.
Speaker 2 (15:28):
Okay. Curious when someone a vehicle maker. You've got this
basket of patents, the innovators on the one hand, and
how many are there now there's I think all together we.
Speaker 4 (15:41):
Work with over seventy patent holders, so more than I
think more than ninety percent of the four G and
five G patents in the world are within our license.
Speaker 2 (15:53):
Okay. So you've got basically, it looks to me from
the outside that you've got virtually all the automakers in
the at least in the outside of China up until now,
and most of the patent holders with regards to connected cars.
How does how do the patent holders? You know, if
I'm a patent holder, I'm looking in the situation. Go boy,
I wonder how much I can maximize my profit by
(16:15):
selling individually to each company versus joining avanceis group. Obviously
you've convinced them that that's the better way to go.
Everybody's on board, curious, like how do they individually get paid?
Speaker 4 (16:27):
So, first of all, I'll say that when you decide
to participate in a vanste as a licensee or a licenseer,
you are It's just an option, and you can always
enter into individual licenses outside of Avanzi.
Speaker 2 (16:46):
Oh good, I like.
Speaker 3 (16:48):
During and after?
Speaker 4 (16:50):
Okay, So this is one hundred percent optional. No one
has to participate in Avanzi, and even after you participate,
you can still sign individual licenses and and so it
really for us, in order to be successful and have
a lot of licensing happening through our platform, we have
(17:11):
to offer a set of license terms that can be
widely accepted both by the patent holders and by the automakers.
And that's, you know, that's a bit of where the
magic has to happen.
Speaker 2 (17:27):
That's where we come in.
Speaker 4 (17:28):
You have to have the middle ground, which is never easy,
particularly when you have two different industries coming together that
may have very different views on not just the value
but all the other terms of the license as well.
And so what we do is, you know, I think
the simplest way to explain it is we have two agreements.
(17:50):
One is between AVANCEI and all of the patent holders
and that is where they give us the rights to
license with the standard form agreement the automakers, and then
it's also an agreement where we have a formula for
dividing up the royalties that we collect. The second agreement
is a standard license that the automakers sign, and then
(18:13):
we handle all of the administration of both agreements. So
automaker is, you know, every half year or quarter would
report to us how many connected cars it sold, pays
the royalties to Avance, and then we do I think
probably the most difficult part is the dividing up of
(18:35):
the royalties among all of the owners of the patents,
and that is that's something where I think it takes
away a lot of work for the automaker who would
otherwise have to be doing that.
Speaker 2 (18:49):
I see. And so is that those terms with the
license sores annual five years ten years forever. What does
that look like.
Speaker 4 (18:59):
It's a long term platform agreement, so we have the
rights for a long term and then we sign long
term licenses.
Speaker 3 (19:05):
And the idea there is predictability.
Speaker 4 (19:09):
I think something I've learned about the auto industry is
you know, when you when you set out to introduce
a new vehicle model, it's you know, not going to
be like maybe consumer electronics, where the new model will
come around in just a few months. I mean, here
you're going to you want to plan ahead and know
(19:30):
that what your cost will be and the cost on
the bill of materials. So we'll sign a long term
license and the cost will never change for the lifetime
of the license. It's the same price per vehicle for
the lifetime of the vehicle for the entire term of
our agreement.
Speaker 3 (19:47):
Now, what happens over time on the license soorce.
Speaker 4 (19:51):
Side is more and more patent owners participate in the platform,
and as a new patent own or joins, we don't
increase the price to the.
Speaker 3 (20:02):
Automaker on the other side.
Speaker 4 (20:04):
Yes, right, So the compromise for a license, Dore is
you know they know going in that their share of
the royalty for each car will go in one direction
over time down.
Speaker 3 (20:17):
But if you can find the right set of terms.
Speaker 4 (20:20):
And continue to increase participation by the automakers, then maybe
your share of the royalty goes down, but the number
of vehicles ultimately under license goes up. And and that
is I think what makes avance attractive is once you
have a high level of participation, it's an easy way
(20:41):
to license your technology obtain a fair return, and then
on the other side, it's an easy way to obtain
all the licenses you need without all of the administration
and transaction costs that would come with dozens of licensed negotiations.
Speaker 2 (20:57):
What percentage of cars sold today roughly are connected, that's
a good question.
Speaker 4 (21:03):
It goes up every year, I think right now with
new vehicles it's certainly.
Speaker 3 (21:08):
More than half and climbing.
Speaker 4 (21:13):
There are around two hundred million vehicles in the world
on the roads that are covered by an AVANTI license
million two hundred.
Speaker 3 (21:22):
Million, So it's.
Speaker 2 (21:25):
So does it come down to a number each vehicle
has an amount attached to it or what's the equation?
How does I'm a license or I'm looking at two
hundred million out there. I'm getting ready for my pay
and I know I have to share that with all
the other license doors and that's another conversation. But is
there a standard rate that you guys charged per vehicle?
Speaker 3 (21:47):
There is, And something that I think is different about.
Speaker 4 (21:52):
A vansie and versus licensing everyone's patent individually is that
we put our price on our web site.
Speaker 3 (22:00):
So a four G connective vehicle, so this is a vehicle.
Speaker 4 (22:05):
That has four G but not five G, and an
automaker pays twenty dollars one time for the life of
the vehicle and obtains the license rights to you know.
Right now, in our FOG program, it's around sixty patent portfolios,
so the vast majority of FOG patents are licensed, and
(22:27):
then that twenty dollars that's where we share it between
all of the licensores. And they've agreed on a formula
and it's you know that we use and we administer
all of that and all of the taxes and all
of the other work that goes along with taking in
the royalties.
Speaker 3 (22:45):
And then distributing them out.
Speaker 4 (22:47):
But from the automaker's perspective, it's simple and they know
the royalty per car, and so the only work is
to report the number of vehicles and then to pay
the royalty and then we can handle it from there.
Speaker 2 (23:00):
This is probably some simplistic math, but that sounds like
sounds like a great deal for the automakers. That bear
with me. So each vehicle twenty bucks. A vehicle costs
I don't know a price. Average price with a new
car in America last year forty eight thousand dollars. Oh,
hang on, there's also hardware involved. So I'm imagining as
(23:21):
electronics and connectivity become a larger larger percentage of the
value of a car than twenty dollars, sounds like a
really good deal.
Speaker 4 (23:29):
Well, you know, I think that in my opinion, I
think it's a very fair deal. You know, I always
try to look at this from both.
Speaker 2 (23:39):
Sides, all sides.
Speaker 4 (23:40):
Yes, And I think an automaker would say, but twenty
dollars multiplied by the number of cars that I sell.
It's not just twenty dollars. And I understand that point
of view. The license source would say exactly what you
just said. There's so much value here, and so the
(24:00):
idea is it's a compromise. But I do think that
we are a very good deal. I mean something that
I think about a lot is that if if you
were to license all of the patents individually, the amount
of time and energy and probably extra staff you would
need to hire. And in all of that, those costs
(24:20):
are eliminated with the fans, and I think that twenty
dollars represent somewhere in the middle. We don't set the
value ourselves. We really we get to the price by
talking with everyone that wants to talk to us and
give us their views, and we ultimately find what we
(24:41):
hope will be a widely accepted compromise.
Speaker 2 (24:43):
You know, it looks like you landed on. It looks
like you I agree to it, So it's it's happening.
It's real. It's not theoretical, it is real. I'm pretty
sure I'm going to nominate you to join the US
Trade and Tariff Teams. So if we need a negotiator
with your skills right now more than ever before.
Speaker 4 (25:02):
You know, I have sometimes we talk internally, and we have.
Speaker 3 (25:06):
You know, we have licensores and licensees in so.
Speaker 4 (25:09):
Many different countries all around the world, and many of
them compete with each other in different markets. And you know,
not only are the automakers competing with each other, but
the patent owners they also are different suppliers to the
auto industry or different telecom companies.
Speaker 3 (25:27):
It's such a wide variety of companies.
Speaker 4 (25:30):
You know, we talk internally, sometimes it does feel like,
you know, we are the World Trade Organization or the
United Nations or one of these organizations that needs to
work on, you know, multi level compromises.
Speaker 2 (25:43):
I noticed on your website that you have offices. Let
me restate that you, Laura, you have offices all over
the world, including you're in Ireland. I saw Tokyo, Soul, Beijing.
I think let's talk Beijing. Let's talk China for a moment,
because hey, it's no secret that China is increasingly a
source of cutting edge innovation when it comes to connectivity
(26:05):
and features. So what's your experience, both the highs and
the lows with working with Chinese companies so far?
Speaker 3 (26:13):
Sure?
Speaker 4 (26:13):
So, First, you know, I have AVANSI has a long
history of working with Chinese telecom companies, patent holders, innovators.
A meaningful percentage of the patent holders who license through
AVANSI are based in China.
Speaker 3 (26:32):
You know, we have I think our.
Speaker 4 (26:34):
Original license soars back in twenty sixteen included a number
of Asian companies, including from China. So we you know,
it's a large portion of what we are licensing is
Chinese innovation, together with European, American, you know, Japan, we have,
the Korea, we have the license sours are are from
(26:56):
all over and I think we have had a great
relationship over time with Chinese licensores, and I have, you know,
really enjoyed spending time over the years in China, learning
about doing business there, learning the culture. I think it
is a country that I could spend fifty years there
(27:19):
and only scratch the surface. It's an amazing and incredibly
diverse and sometimes to me.
Speaker 3 (27:27):
Baffling place.
Speaker 4 (27:30):
As of you know, as of recently especially i'd say
over the last couple of years, I spent much more
time working with the Chinese automotive players and watching their
incredible rise in the auto industry worldwide. I think that
here in Ireland I see more and more Chinese vehicles
(27:53):
on the road every every month, and I you know,
they are in some ways the missing piece in the
platform right now. We have I think most of the
major patent holders or are participating in a vanzi.
Speaker 3 (28:08):
But so far we haven't seen.
Speaker 4 (28:12):
The participation by the Chinese OEMs like we have with
OEMs outside of China, and I do think that we
can offer those automakers all of the same benefits that
we offer their competitors and in the global market, and
that we can really support them as they go global.
And that is such a theme of conversations I have
(28:32):
in China now, is the auto industry going global. And
when you go global, you really do need to navigate
the patent systems in all the countries around the world
where you're now operating. That's something that you know, I
hope Avanzie will be able to assist them with.
Speaker 2 (28:48):
That's a great point. Just recently as twenty twenty, China
was not exporting that many cars last year number one
exporter in the world six million cars globally. Seems to
be on the upswing again this year, so they'll need
to be in line with everyone else as they go
into markets worldwide. Why do you think up until now
there's there's been a hesitation. Do they prefer to go
(29:10):
direct to license or it's just so new to them
that they they're unfamiliar with with.
Speaker 4 (29:16):
You know, I think, Michael, you really have to ask them.
It's I can't speak for anyone at an automaker in China.
Speaker 3 (29:28):
But what you said is true.
Speaker 4 (29:30):
Back in twenty twenty when I came to AVANCEI it
really that was when I started in my role now,
and at the time You're right, the volumes were much less,
and I'm sure that's why I've spent more time in
the past two years working in China than I was
five years ago. And also you see now the Chinese
(29:54):
OEMs selling more and more outside of China, where I
think there's there's been more of a foxocus on needing
a global license like the one that Avansty can offer.
Speaker 3 (30:05):
So so we'll see.
Speaker 4 (30:07):
I'm I'm hoping that, you know, next time we talk,
perhaps we'll have more participation from Chinese OEMs. It'd be great,
I think for overall for us to be able to
level the playing field. You know, they're the OEMs outside
of China are paying royalties to all of these patent holders,
(30:30):
including the ones in China, and what that does is
it creates an unleveled playing field with respect to to
patent you know, to patent royalties into licensing rights, and
Avansty is one way to level it because everyone pays
the same That's a great point.
Speaker 2 (30:47):
Let's talk a little bit more about that. How how
does the un leveled playing field come about? Are we
saying that the Chinese autom makes are able to secure
access to some technologies for which they're not necessarily right now?
Speaker 3 (30:58):
Right Well, like.
Speaker 4 (30:59):
I said at the beginning, the four and five G
standards are open, meaning that you know, companies all around
the world can implement them in their products. And so
it's a bit different than say buying a hardware part
for your car, where the you don't have the component
until you've paid the supplier and had the component shift
(31:23):
to you. But with the standardized technology, companies can implement
the standards in their vehicles. You know, you need the
chip and the module and the telematics control unit, but
you don't necessarily you don't have to pay the royalty
before you used the technology, and so it's I think
(31:46):
I always think of ourselves as a supplier. We are
a tier one supplier, I would say, to the auto
industry of patent rights. But it's a situation where you
don't necessarily have to pay for those rights before you
start to use to use the standards in your vehicles.
(32:06):
So that's where the un level playing field comes about
because you have all of these OEM selling connected vehicles
around the world, with some paying the licensees and others not,
and by everyone participating in avansie, maybe no one is
paying less than their competitor, but no one is paying more.
(32:26):
They're paying the price that's on our website.
Speaker 2 (32:29):
Okay. So one other thing that may be going on,
just speculating here, is that BYD, among others Chinese automakers
seem to be really hell bent on vertical integration. That is,
doing so much of the technology in house. Eighty percent
of what BYD builds for its vehicles comes internally, batteries,
even semiconductors. So perhaps the thinking like, hey, we can
(32:53):
we are the source of technology ourselves. Who knows who
knows where that will head.
Speaker 4 (32:58):
But that is something I've thought a lot about vertical
integration and the auto industry generally when thinking about a vancy.
And when automakers first started to use cellular connectivity in
their cars, it was a new thing because for you know,
one hundred years, the auto industry had largely invented everything
(33:21):
in the vehicle, and in some ways you could be
vertically integrated if you owned the companies in your own
supply chain. But cellular technology is very different because it's
been invented by a different industry, the telencommon industry, and
you can't design around the standards.
Speaker 3 (33:40):
If you want your vehicle to.
Speaker 4 (33:42):
Connect to the cloud, you have to use this essential
patent of technology that you cannot invent yourself.
Speaker 3 (33:51):
There's no substitute. So it is.
Speaker 4 (33:55):
It's a new thing, I think for the auto industry
over the past decade, and I think our role and
what we've tried to do is to help is that
you know, any friction at that intersection.
Speaker 2 (34:09):
Okay, that's a very diplomatic answer, right, Well, let's be honest.
China is a powerhouse manufacturer, builds one third of all
cars globally now exports more than anyone else does so
at enormous scale, has ambitions to do its own technology
and innovation. So it's a player, a force to be
(34:30):
reckoned with, and over time we'd all like to see
them join a standard global platform. So I think momentum
is on your side and things will work out. One
final question for you, Laurie, you're there in Ireland. You
actually I wanted to ask this question earlier. What inspired
(34:52):
you to go to Ireland in the first place.
Speaker 3 (34:55):
Yeah, that's a good question, believe it or not.
Speaker 4 (34:59):
The first day I ever came to Ireland was the
day I stepped off the plane and moved here with
my family. And I came here for a Vanci and
we had offices at the time in Beijing, Tokyo, Dublin,
and in Dallas, Texas. When I was offered the job.
(35:21):
This is back in twenty eighteen.
Speaker 2 (35:24):
Were you in Dallas at the time.
Speaker 3 (35:26):
No, Actually, I was living in Austin, Texas. Austin, yeah,
so not too far from Dallas.
Speaker 4 (35:31):
But our founder, Kassim off Lacki, he gave me the
option of which office I wanted to work in. And
you know, I had two young children my husband and
I thought Beijing or Tokyo seemed really far away from
our families in the States, but Ireland sounded like it
(35:51):
could be an adventure. And also it was an opportunity
for me professionally to move here. We had three people
at the time working in Ireland and now we have
more than you know, more than twenty I think more
than twenty five in Europe. So it's a fantastic opportunity
for me to come here and help grow a business,
(36:16):
and now we operate the vehicle business, all of our
vehicle programs from my office here in Dublin largely. So
it's been it's Ireland has been great for Avanzi. It's
been really great for me. I've really enjoyed my time here.
And yeah, now it's you know, I thought at first
(36:36):
I thought we'd move back, but now we're here to stay.
Speaker 2 (36:40):
Fabulous. I love that success story. You've gone from three
to more than twenty. Tell us one way in which
your perception of the world has changed as an American
having lived outside of the United States for these many years.
Speaker 4 (36:55):
Now, you know, I think what I've realized is people
are far more similar than they are different.
Speaker 3 (37:02):
In any given day.
Speaker 4 (37:03):
I talk to people from probably between ten and fifteen
different countries every day in this role, and I really
think that everyone laughs and smiles and cries, all in
the same language. We are much more similar than I
(37:26):
think I maybe I thought before I have had.
Speaker 3 (37:29):
This experience, and.
Speaker 4 (37:32):
I think there are certainly differences across the world, but
it's always possible to connect with someone who maybe at
first glance you you think what am I going to
talk about? And then you know a few hours later,
you're at lunch and you have a lot in common.
Speaker 2 (37:48):
I know all your children, your clients are equal, but
you're a country or a region that you really look
forward to making that call more than any other.
Speaker 3 (37:57):
That is a really, really tough ques question.
Speaker 4 (38:01):
You know, every every country that I visit or work with,
you know, has its strengths.
Speaker 3 (38:10):
But I love a good meal, and I have to
say that.
Speaker 4 (38:15):
Probably one of my favorite places to travel for work
from from an eating perspective.
Speaker 3 (38:22):
Is I do love Japan.
Speaker 4 (38:25):
I have. I would say that going and visiting Japan
for work is always there's always a memorable meal involved.
Speaker 2 (38:34):
You do everything first class, everything ality right. The food
is quality, it's fresh, it's presented nicely. You're on your
way there, the car, your uber is clean, the streets
are clean, there's no graffiti, there's no whoa such an
impression country.
Speaker 4 (38:50):
Right, absolutely, But you know, I also think that you know,
there's I have learned a lot, you know, working with
companies all around the world, and you you really do
have to be willing to be open minded and flexible
and a job like this and and also adapt to
the culture you're in. I've I've learned that you know,
certain countries, I better get to the video call, you know,
(39:11):
five minutes early, or everyone will be waiting on me,
and you know others, I need to be patient and
people will join maybe a few minutes late.
Speaker 3 (39:22):
You know. It's just it's it's fascinating.
Speaker 4 (39:24):
I think to have gotten to be part of this,
of being in the middle of such a global platform.
Speaker 3 (39:31):
And hopefully we'll keep growing.
Speaker 4 (39:33):
You know, we've we're we have a new program for
electric vehicle chargers that has been growing quickly over the
past year, and it's it's been wonderful to take what
we've built in vehicle and kind of take the model
and start to roll it out into other product verticals
and other industries.
Speaker 3 (39:52):
So hopefully the you know, the sky's the limit.
Speaker 2 (39:55):
Laurie, I think of antigue found exactly the right person
at the right time. Congratulate you success and wishing you
all the best.
Speaker 3 (40:02):
Thank you so much, Michael, I really enjoyed it.
Speaker 2 (40:05):
Thank you, Bye bye. Austin, Texas native Laurie Fitzgerald, now
a resident in Ireland for several years, is a first
class professional. She's a lawyer by training. She knows her stuff,
(40:25):
learned a ton from her here are three or four
takeaways from our conversation today. One, and maybe most important
for the first time, automakers do not have overwhelming leverage
over their suppliers. Those tech guys kow taw to exactly nobody,
and that was the opportunity for Avanci when they pounced
(40:46):
on Two. The numbers are always fascinating. Twenty dollars per
car doesn't sound like a lot, especially when we consider
that forty percent of the value of your modern car
is electronics or electronic relation software. Forty percent vehicle manufacturers
are paying twenty bucks a car. I guess you make
it up in volume. Everyone agreed to the deal, so
(41:09):
everyone must be making some money. Third, fascinating to watch
how Avanci went from a near impossible business proposition back
in twenty sixteen twenty seventeen when BMW was the first
to sign up and almost no brainer. Everyone. More than
one hundred vehicle manufacturers are now customers of Avanci. It
looks like it's all aboard. So intriguing to see how
(41:34):
business can look so risky at the outset and then
so automatic later on. It's not totally automatic. There is
this wildcoard out there, and that brings me to my
fourth and final observation, the China wildcard vendors. The tech
companies are on board with AVANCI, but the vehicle manufacturers,
many of them at least, are not yet. What are
(41:57):
they thinking? Are they thinking like bids? Hey, what do
we need to look outside for? We'll do all of
our technology in the house. They already do their own batteries,
battery supply chains, and semiconductors. Is this the trend of
the future. Will China change the game once again? Let's
watch and see how it plays out. Hey, listen up.
(42:18):
Thank you very much for joining me today. If you
liked what you heard, dm me or share this episode
with a friend, post it on your socials. You know
the drill. I really appreciate each and every one of
you tuning in. I am Michael Dunn and this is
the Driving with Done podcast.
Speaker 1 (42:37):
Where you meet the experts creating the technologies that will
power tomorrow's cars electric autonomous software. To find this is
a Driving with Done podcast.
Speaker 3 (42:48):
Thank you for.
Speaker 1 (42:49):
Joining this episode of the Driving with Done podcast. To
connect with Michael Donn, visit Doninsights dot com or find
Michael on x or LinkedIn. This is Driving Done podcast.
Where top executives and crazy entrepreneurs gathered to talk about
the future of electric vehicles. This is the Driving with
Done podcast.
Speaker 2 (00:12):
Hello and welcome to the Driving with Done podcast. I
am your host, Michael Dunn. By now, you've probably heard
that there are more than two hundred million connected cars
on the road today worldwide. But hang on a minute.
What is a connected car and how do they make
our lives better? Well, one simple way to think about
(00:33):
it is that a connected car is the ones that
are linked to the Internet. Just like our phones, and
like our smartphones, those linkages give cars an ability to
deliver countless new features and functions via this magical carpet
called over the air updates. Connected cars are new in
another important way, For the first time in over one
(00:55):
hundred years, the automotive industry leaders rely on a different industry,
cellular for key innovations. So question of the day, how
exactly to the automakers get together with those tech providers,
the ones holding the valuable tech patents. Are they friends,
foes or something in between? Enter Avanci, a company formed
(01:19):
in twenty sixteen to serve as a bridge and broker
between the tech powerhouses and the automotive giants. Joining me
in this episode of the Driving With Done podcast is
Lourie Fitzgerald, President AVANCI Vehicle. Laurie walks us through Avanci's
unique role working as a vital go between for global
automakers and those giant tech providers. Laurie also shares her
(01:43):
very first experience driving in a right hand drive market Ireland.
Was the car connected? Would it matter? Let's find out
right now with Louri Fitzgerald, President AVANCI Vehicle on the
Driving With Done Podcast. Laurie Fitzgerald, Welcome to the Driving
(02:09):
With Done Podcast.
Speaker 3 (02:10):
Hi, Hi Michael, Thanks for inviting me to be your guest.
Speaker 2 (02:13):
I've been looking forward to this conversation, Laurie for some time,
in part because I know that you're in Ireland, and
I'm super curious about when you moved to Ireland. What
was it like the first day driving there?
Speaker 4 (02:26):
Probably my most memorable driving experience is the first time
I got behind.
Speaker 3 (02:32):
The wheel in Ireland. It was a.
Speaker 4 (02:36):
Rental car from the Airport, Toyota Corolla, and I have
never been as terrified as I was when I pulled
out into the Airport roundabout, which it turns out is
one of the busiest traffic situations in all of Dublin
and had to basically do everything backwards. But I live
to tell the tale, and here I am. I am
(02:57):
a licensed Irish driver almost seven years later. And for
anyone who is moving to the country where they have
to drive on the other side of the road, the
best piece of advice I was ever given was driver
in the middle.
Speaker 3 (03:12):
As long as you were always in the middle, you
will be You'll be, You'll be Okay.
Speaker 2 (03:17):
That's some deep wisdom right there. Driver, Driver in the middle.
Speaker 3 (03:21):
Driver in the middle.
Speaker 4 (03:22):
Just remember you put your steering wheel in the middle
next to that line and you'll be fine.
Speaker 2 (03:27):
It isn't uncommon to mix up the wipers with the
turn signal, right, you know.
Speaker 4 (03:33):
That's not uncommon at all, and it happened all the time.
But you know now it's funny, all these years later,
when I go back to America and I drive on
the other side, then I have to readjust my brain.
Speaker 3 (03:45):
But you know, I'm, I'm.
Speaker 4 (03:47):
It's always good to learn new skills as an adult,
and driving, you know, on the other side, was one
of mine.
Speaker 2 (03:54):
So we're here to dive into your business. Laurie Avanci,
which serves as a kind of a crucial bridge in
the world of connected cars. So let's start at the beginning,
big picture. What is in your view, what is a
connected car?
Speaker 4 (04:07):
So, cars today use four G and five G cellular
technology to connect to the cloud, just like our smartphones.
You see the for G or the five G logo
come up on your phone, it's the same with your car.
Speaker 3 (04:22):
And FORG and five G are what we call.
Speaker 4 (04:25):
Standardized technologies, So any product with the cellular connection connects
to the network using the same standard, similar to electric
plugs being standardized when you plug something into.
Speaker 3 (04:39):
The wall and the standard.
Speaker 4 (04:41):
These standards are what makes network equipment and smartphones and
vehicles and all the other connected things in the world
interoperable with each other. So that is the idea of
a connected car, is that your car is essentially connecting
to the internet.
Speaker 3 (04:58):
Just like your phone.
Speaker 2 (05:00):
What are some of the key features that we benefit
from as drivers or writers in a car from having
this connectivity.
Speaker 4 (05:07):
Sure, there's so many, and it's not just benefits for
drivers and passengers, but also for the automakers who sell
the cars.
Speaker 3 (05:16):
You know, one.
Speaker 4 (05:17):
Of the connective features I think that is so valuable
is over the air updates. You know, automakers can update
vehicles and actually increase the value of the vehicle to
the driver and the passengers. After you've driven away with
the car, features can be added later over the air
(05:38):
in a simple way, rather than taking the vehicle back
to a dealer and the time and expense associated with that.
You know, connectivity also makes for a more immersive infotainment
a safer driving experience because there's you know, uh.
Speaker 3 (05:56):
Safety features that use connectivity.
Speaker 4 (06:00):
Activities involved in the beginning of autonomous driving that we're
seeing now, many many things. I think the list goes on,
but overall, I'd say connective features can make the driving
experience safer, more enjoyable, and for everyone on the road.
Speaker 2 (06:16):
The next question is, for all these benefits we derive,
there are people out there thinking, wow, so much of
what my car is doing is dependent on something out
there in the cloud or somewhere being controlled remotely, it seems,
how do you get comfortable with the fact that, yes,
the car is no longer just an isolated machine driven
(06:36):
by a motor, It's actually connected to the Internet, and
that Internet has a lot of power over the performance
of the vehicle.
Speaker 3 (06:44):
Sure, I mean.
Speaker 4 (06:45):
On one hand, I think it's amazing that cars can
connect to the internet, and I think as we see
all of this technology develop, cars are going to be
talking to each other and also to infrastructure, and this
is going to make driving so much safer for all
of us because when you have vehicles that can communicate
using cellular V two x technology, you can have roads
(07:10):
where vehicles can platoon. You don't have traffic, you also
won't have you know, you'll have less accident, more accident avoidance, right,
and so in some ways you see how you know
cars being connected is going to make driving better for
all of us, But I do you know, there is
(07:31):
a lot of there has been a lot of concern
as you point out about the fact that whenever you
connect things together, then you know you don't maybe you
don't have the privacy or the security that you would otherwise.
But I think it's important to know that the companies
are developing the four G and five G standards, they're
(07:53):
definitely working on all of these issues and very aware.
And just like there's security and privacy in your phone,
those features are also in the standards. It's the same standard,
and so those features, you know, also protect you and
that technology protects you in your car.
Speaker 2 (08:09):
That's a great answer. There's trade offs in life, and
here we go again, you know, and in exchange for enhanced,
better and safer, more efficient vehicles in the future. There
it's not going to be perfect ever, but we're heading
in the right direction. You feel confident.
Speaker 4 (08:23):
I think that five G if you look at five
G compared to four G. You know, I'm not an
engineer creating the standards, but I work with this technology
in a Vancey. My understanding is that there's been a
lot of work on security features and that five G,
you know, has a lot of these security issues are
being addressed in the development and as the standard evolves,
(08:45):
so will the security excellent.
Speaker 2 (08:47):
Now, your company of Vancey is sort of I refer
to a bridge or a middleman or a middle woman
or a market maker. In a way, You've got, on
the one hand, a cast of characters who are the
technology pers and on the other hand you have the
licensees who are the automakers. So just to give us
some flavor, could you share with us the names of like,
(09:07):
who are the key technology players delivering connected services to
the car today?
Speaker 3 (09:13):
Sure?
Speaker 4 (09:13):
And maybe I'll explain a bit about Avansie, if you'll
let me go into that just for a moment. And
so when you think about the four G and five
G standards, a lot of times I hear them referred
to as open, and that means that companies who want
to make and sell connective products can can use them.
Speaker 3 (09:34):
They're open for all of us so that things can.
Speaker 4 (09:37):
Interoperate, but open doesn't necessarily mean free.
Speaker 3 (09:42):
The standards are the products.
Speaker 4 (09:44):
Of billions of dollars in decades of research and development,
and so this investment and this innovation that's happened over
time by the telecom industry has resulted in the cellular
stand that connect all.
Speaker 3 (10:01):
Of us every day.
Speaker 4 (10:03):
And much of that innovation is patented, meaning that in
order to use the patented technology, that there's royalties that
are owed to ensure that the company is inventing the
standards are receiving a fair return on their research and
development investment, and that they know this then fuels further innovation.
Speaker 3 (10:28):
So it's an innovation cycle.
Speaker 4 (10:30):
And you've got players to answer your question, and companies
who are working on the standards that we've all heard of, Samsung,
LG Electronics, Qualcom, Nokia, ericson wildwey Ete China Mobile.
Speaker 3 (10:46):
There's companies all around the world and Intel.
Speaker 4 (10:50):
There's these companies that I think that many of us
you see and hear about every day.
Speaker 3 (10:56):
But then there's also dozens and dozens.
Speaker 4 (10:58):
Of other companies who also own patented inventions that are
essential to the cellular standards. And what Avanceie has done
is we have created a platform where the holders of
these patented inventions have come together and given a Vanstie
(11:19):
the rights to license their technology to the auto industry
in a very simple, one stop shop way. An automaker
selling a connective vehicle before a vansie, its only option
was to go to all of these dozens of telecom
companies and individually negotiate.
Speaker 2 (11:42):
A lot of work, a.
Speaker 3 (11:43):
Lot of work, a lot of work.
Speaker 4 (11:45):
So the idea of a Vansie was to have a
one stop shop option, an alternative where the automaker could
come to us, sign one agreement and get all of
the rights in a predictable way at.
Speaker 3 (11:57):
A fixed cost.
Speaker 2 (11:58):
The history is fascinating. It took a couple of years
to get your first customer BMW, then I think Volvo
was next, and then just recently I was reading this year,
one after another, You've got JLR, Nissan, Honda, and the
parade goes on. So today, do you virtually cover all
vehicle automakers or are there still some out there.
Speaker 4 (12:18):
To be a had Yes, So we have more than
one hundred and ten automotive brands around the world are
selling vehicles that are covered by ANIVANSI license, So it's
essentially every major automaker in the world outside of China.
And we also have licensees who are selling in the
(12:40):
construction industry or agricultural vehicles. So it's not just you know,
the passenger vehicles on the road. It's everything from mobile
cranes to connected forklifts, to passenger vehicles, luxury vehicles. Anything
that is is a vehicle and connected can be licensed
in our platform.
Speaker 2 (13:00):
So one of the things that struck me as I
looked into AVANCI is that so much of the value
of a car today comes from outside of the automakers.
You know, in the old days they innovate on the engine,
the transmission, the gearbox, the chassis, but today increasing our
cars are gadgets, you know, electronic gadgets. So when an automaker,
(13:23):
what's the value added to the automaker. These days, it
seems to be declining over time and increasingly the power
and the innovation resides outside of the automaker. Is that
a fair assessment or where's this industry headed?
Speaker 4 (13:37):
I can only speak about this from my perspective, you know,
looking at the connectivity, and I actually work with all
of these different automotive companies around the world, and I
see incredible innovation.
Speaker 2 (13:51):
Inside the company. Still the car companies are still doing innovation.
What about in this space? Are they also working in
this space too?
Speaker 3 (13:58):
Well?
Speaker 4 (13:58):
What I do see I think increasingly automakers working in
this space. But what I what I've seen over the
years is, you know, an automaker will will license the
rights to use the core radio functionality, the cellular technology,
but then they're innovating on top of that technology. They're
(14:22):
you know, they have teams who are finding ways to
offer their customers new features or ways to connect with
our customers more or you know, different ways to use
connectivity within the vehicle. So you know, what we're doing
is we're licensing the technology that is also used by
your phone, or by a connected meter, or by a
(14:45):
connected electric vehicle charger. But then the automakers are are
taking that technology and using it in in new and
different ways. And you know, particularly you see like CV
two X, you know this, you know, the cellular vehicle
to everything technology, and there's ways that automakers are going
(15:07):
to be using that technology in the future, which I
think will you know, absolutely make it so much safer
for all of us on the roads.
Speaker 2 (15:15):
Okay, So that makes sense. So they're licensing the core
technologies and then building on those and differentiating each of
their brands and their products through innovating in house.
Speaker 3 (15:26):
Yeah, that's what I that's what I'm seeing.
Speaker 2 (15:28):
Okay. Curious when someone a vehicle maker. You've got this
basket of patents, the innovators on the one hand, and
how many are there now there's I think all together we.
Speaker 4 (15:41):
Work with over seventy patent holders, so more than I
think more than ninety percent of the four G and
five G patents in the world are within our license.
Speaker 2 (15:53):
Okay. So you've got basically, it looks to me from
the outside that you've got virtually all the automakers in
the at least in the outside of China up until now,
and most of the patent holders with regards to connected cars.
How does how do the patent holders? You know, if
I'm a patent holder, I'm looking in the situation. Go boy,
I wonder how much I can maximize my profit by
(16:15):
selling individually to each company versus joining avanceis group. Obviously
you've convinced them that that's the better way to go.
Everybody's on board, curious, like how do they individually get paid?
Speaker 4 (16:27):
So, first of all, I'll say that when you decide
to participate in a vanste as a licensee or a licenseer,
you are It's just an option, and you can always
enter into individual licenses outside of Avanzi.
Speaker 2 (16:46):
Oh good, I like.
Speaker 3 (16:48):
During and after?
Speaker 4 (16:50):
Okay, So this is one hundred percent optional. No one
has to participate in Avanzi, and even after you participate,
you can still sign individual licenses and and so it
really for us, in order to be successful and have
a lot of licensing happening through our platform, we have
(17:11):
to offer a set of license terms that can be
widely accepted both by the patent holders and by the automakers.
And that's, you know, that's a bit of where the
magic has to happen.
Speaker 2 (17:27):
That's where we come in.
Speaker 4 (17:28):
You have to have the middle ground, which is never easy,
particularly when you have two different industries coming together that
may have very different views on not just the value
but all the other terms of the license as well.
And so what we do is, you know, I think
the simplest way to explain it is we have two agreements.
(17:50):
One is between AVANCEI and all of the patent holders
and that is where they give us the rights to
license with the standard form agreement the automakers, and then
it's also an agreement where we have a formula for
dividing up the royalties that we collect. The second agreement
is a standard license that the automakers sign, and then
(18:13):
we handle all of the administration of both agreements. So
automaker is, you know, every half year or quarter would
report to us how many connected cars it sold, pays
the royalties to Avance, and then we do I think
probably the most difficult part is the dividing up of
(18:35):
the royalties among all of the owners of the patents,
and that is that's something where I think it takes
away a lot of work for the automaker who would
otherwise have to be doing that.
Speaker 2 (18:49):
I see. And so is that those terms with the
license sores annual five years ten years forever. What does
that look like.
Speaker 4 (18:59):
It's a long term platform agreement, so we have the
rights for a long term and then we sign long
term licenses.
Speaker 3 (19:05):
And the idea there is predictability.
Speaker 4 (19:09):
I think something I've learned about the auto industry is
you know, when you when you set out to introduce
a new vehicle model, it's you know, not going to
be like maybe consumer electronics, where the new model will
come around in just a few months. I mean, here
you're going to you want to plan ahead and know
(19:30):
that what your cost will be and the cost on
the bill of materials. So we'll sign a long term
license and the cost will never change for the lifetime
of the license. It's the same price per vehicle for
the lifetime of the vehicle for the entire term of
our agreement.
Speaker 3 (19:47):
Now, what happens over time on the license soorce.
Speaker 4 (19:51):
Side is more and more patent owners participate in the platform,
and as a new patent own or joins, we don't
increase the price to the.
Speaker 3 (20:02):
Automaker on the other side.
Speaker 4 (20:04):
Yes, right, So the compromise for a license, Dore is
you know they know going in that their share of
the royalty for each car will go in one direction
over time down.
Speaker 3 (20:17):
But if you can find the right set of terms.
Speaker 4 (20:20):
And continue to increase participation by the automakers, then maybe
your share of the royalty goes down, but the number
of vehicles ultimately under license goes up. And and that
is I think what makes avance attractive is once you
have a high level of participation, it's an easy way
(20:41):
to license your technology obtain a fair return, and then
on the other side, it's an easy way to obtain
all the licenses you need without all of the administration
and transaction costs that would come with dozens of licensed negotiations.
Speaker 2 (20:57):
What percentage of cars sold today roughly are connected, that's
a good question.
Speaker 4 (21:03):
It goes up every year, I think right now with
new vehicles it's certainly.
Speaker 3 (21:08):
More than half and climbing.
Speaker 4 (21:13):
There are around two hundred million vehicles in the world
on the roads that are covered by an AVANTI license
million two hundred.
Speaker 3 (21:22):
Million, So it's.
Speaker 2 (21:25):
So does it come down to a number each vehicle
has an amount attached to it or what's the equation?
How does I'm a license or I'm looking at two
hundred million out there. I'm getting ready for my pay
and I know I have to share that with all
the other license doors and that's another conversation. But is
there a standard rate that you guys charged per vehicle?
Speaker 3 (21:47):
There is, And something that I think is different about.
Speaker 4 (21:52):
A vansie and versus licensing everyone's patent individually is that
we put our price on our web site.
Speaker 3 (22:00):
So a four G connective vehicle, so this is a vehicle.
Speaker 4 (22:05):
That has four G but not five G, and an
automaker pays twenty dollars one time for the life of
the vehicle and obtains the license rights to you know.
Right now, in our FOG program, it's around sixty patent portfolios,
so the vast majority of FOG patents are licensed, and
(22:27):
then that twenty dollars that's where we share it between
all of the licensores. And they've agreed on a formula
and it's you know that we use and we administer
all of that and all of the taxes and all
of the other work that goes along with taking in
the royalties.
Speaker 3 (22:45):
And then distributing them out.
Speaker 4 (22:47):
But from the automaker's perspective, it's simple and they know
the royalty per car, and so the only work is
to report the number of vehicles and then to pay
the royalty and then we can handle it from there.
Speaker 2 (23:00):
This is probably some simplistic math, but that sounds like
sounds like a great deal for the automakers. That bear
with me. So each vehicle twenty bucks. A vehicle costs
I don't know a price. Average price with a new
car in America last year forty eight thousand dollars. Oh,
hang on, there's also hardware involved. So I'm imagining as
(23:21):
electronics and connectivity become a larger larger percentage of the
value of a car than twenty dollars, sounds like a
really good deal.
Speaker 4 (23:29):
Well, you know, I think that in my opinion, I
think it's a very fair deal. You know, I always
try to look at this from both.
Speaker 2 (23:39):
Sides, all sides.
Speaker 4 (23:40):
Yes, And I think an automaker would say, but twenty
dollars multiplied by the number of cars that I sell.
It's not just twenty dollars. And I understand that point
of view. The license source would say exactly what you
just said. There's so much value here, and so the
(24:00):
idea is it's a compromise. But I do think that
we are a very good deal. I mean something that
I think about a lot is that if if you
were to license all of the patents individually, the amount
of time and energy and probably extra staff you would
need to hire. And in all of that, those costs
(24:20):
are eliminated with the fans, and I think that twenty
dollars represent somewhere in the middle. We don't set the
value ourselves. We really we get to the price by
talking with everyone that wants to talk to us and
give us their views, and we ultimately find what we
(24:41):
hope will be a widely accepted compromise.
Speaker 2 (24:43):
You know, it looks like you landed on. It looks
like you I agree to it, So it's it's happening.
It's real. It's not theoretical, it is real. I'm pretty
sure I'm going to nominate you to join the US
Trade and Tariff Teams. So if we need a negotiator
with your skills right now more than ever before.
Speaker 4 (25:02):
You know, I have sometimes we talk internally, and we have.
Speaker 3 (25:06):
You know, we have licensores and licensees in so.
Speaker 4 (25:09):
Many different countries all around the world, and many of
them compete with each other in different markets. And you know,
not only are the automakers competing with each other, but
the patent owners they also are different suppliers to the
auto industry or different telecom companies.
Speaker 3 (25:27):
It's such a wide variety of companies.
Speaker 4 (25:30):
You know, we talk internally, sometimes it does feel like,
you know, we are the World Trade Organization or the
United Nations or one of these organizations that needs to
work on, you know, multi level compromises.
Speaker 2 (25:43):
I noticed on your website that you have offices. Let
me restate that you, Laura, you have offices all over
the world, including you're in Ireland. I saw Tokyo, Soul, Beijing.
I think let's talk Beijing. Let's talk China for a moment,
because hey, it's no secret that China is increasingly a
source of cutting edge innovation when it comes to connectivity
(26:05):
and features. So what's your experience, both the highs and
the lows with working with Chinese companies so far?
Speaker 3 (26:13):
Sure?
Speaker 4 (26:13):
So, First, you know, I have AVANSI has a long
history of working with Chinese telecom companies, patent holders, innovators.
A meaningful percentage of the patent holders who license through
AVANSI are based in China.
Speaker 3 (26:32):
You know, we have I think our.
Speaker 4 (26:34):
Original license soars back in twenty sixteen included a number
of Asian companies, including from China. So we you know,
it's a large portion of what we are licensing is
Chinese innovation, together with European, American, you know, Japan, we have,
the Korea, we have the license sours are are from
(26:56):
all over and I think we have had a great
relationship over time with Chinese licensores, and I have, you know,
really enjoyed spending time over the years in China, learning
about doing business there, learning the culture. I think it
is a country that I could spend fifty years there
(27:19):
and only scratch the surface. It's an amazing and incredibly
diverse and sometimes to me.
Speaker 3 (27:27):
Baffling place.
Speaker 4 (27:30):
As of you know, as of recently especially i'd say
over the last couple of years, I spent much more
time working with the Chinese automotive players and watching their
incredible rise in the auto industry worldwide. I think that
here in Ireland I see more and more Chinese vehicles
(27:53):
on the road every every month, and I you know,
they are in some ways the missing piece in the
platform right now. We have I think most of the
major patent holders or are participating in a vanzi.
Speaker 3 (28:08):
But so far we haven't seen.
Speaker 4 (28:12):
The participation by the Chinese OEMs like we have with
OEMs outside of China, and I do think that we
can offer those automakers all of the same benefits that
we offer their competitors and in the global market, and
that we can really support them as they go global.
And that is such a theme of conversations I have
(28:32):
in China now, is the auto industry going global. And
when you go global, you really do need to navigate
the patent systems in all the countries around the world
where you're now operating. That's something that you know, I
hope Avanzie will be able to assist them with.
Speaker 2 (28:48):
That's a great point. Just recently as twenty twenty, China
was not exporting that many cars last year number one
exporter in the world six million cars globally. Seems to
be on the upswing again this year, so they'll need
to be in line with everyone else as they go
into markets worldwide. Why do you think up until now
there's there's been a hesitation. Do they prefer to go
(29:10):
direct to license or it's just so new to them
that they they're unfamiliar with with.
Speaker 4 (29:16):
You know, I think, Michael, you really have to ask them.
It's I can't speak for anyone at an automaker in China.
Speaker 3 (29:28):
But what you said is true.
Speaker 4 (29:30):
Back in twenty twenty when I came to AVANCEI it
really that was when I started in my role now,
and at the time You're right, the volumes were much less,
and I'm sure that's why I've spent more time in
the past two years working in China than I was
five years ago. And also you see now the Chinese
(29:54):
OEMs selling more and more outside of China, where I
think there's there's been more of a foxocus on needing
a global license like the one that Avansty can offer.
Speaker 3 (30:05):
So so we'll see.
Speaker 4 (30:07):
I'm I'm hoping that, you know, next time we talk,
perhaps we'll have more participation from Chinese OEMs. It'd be great,
I think for overall for us to be able to
level the playing field. You know, they're the OEMs outside
of China are paying royalties to all of these patent holders,
(30:30):
including the ones in China, and what that does is
it creates an unleveled playing field with respect to to
patent you know, to patent royalties into licensing rights, and
Avansty is one way to level it because everyone pays
the same That's a great point.
Speaker 2 (30:47):
Let's talk a little bit more about that. How how
does the un leveled playing field come about? Are we
saying that the Chinese autom makes are able to secure
access to some technologies for which they're not necessarily right now?
Speaker 3 (30:58):
Right Well, like.
Speaker 4 (30:59):
I said at the beginning, the four and five G
standards are open, meaning that you know, companies all around
the world can implement them in their products. And so
it's a bit different than say buying a hardware part
for your car, where the you don't have the component
until you've paid the supplier and had the component shift
(31:23):
to you. But with the standardized technology, companies can implement
the standards in their vehicles. You know, you need the
chip and the module and the telematics control unit, but
you don't necessarily you don't have to pay the royalty
before you used the technology, and so it's I think
(31:46):
I always think of ourselves as a supplier. We are
a tier one supplier, I would say, to the auto
industry of patent rights. But it's a situation where you
don't necessarily have to pay for those rights before you
start to use to use the standards in your vehicles.
(32:06):
So that's where the un level playing field comes about
because you have all of these OEM selling connected vehicles
around the world, with some paying the licensees and others not,
and by everyone participating in avansie, maybe no one is
paying less than their competitor, but no one is paying more.
(32:26):
They're paying the price that's on our website.
Speaker 2 (32:29):
Okay. So one other thing that may be going on,
just speculating here, is that BYD, among others Chinese automakers
seem to be really hell bent on vertical integration. That is,
doing so much of the technology in house. Eighty percent
of what BYD builds for its vehicles comes internally, batteries,
even semiconductors. So perhaps the thinking like, hey, we can
(32:53):
we are the source of technology ourselves. Who knows who
knows where that will head.
Speaker 4 (32:58):
But that is something I've thought a lot about vertical
integration and the auto industry generally when thinking about a vancy.
And when automakers first started to use cellular connectivity in
their cars, it was a new thing because for you know,
one hundred years, the auto industry had largely invented everything
(33:21):
in the vehicle, and in some ways you could be
vertically integrated if you owned the companies in your own
supply chain. But cellular technology is very different because it's
been invented by a different industry, the telencommon industry, and
you can't design around the standards.
Speaker 3 (33:40):
If you want your vehicle to.
Speaker 4 (33:42):
Connect to the cloud, you have to use this essential
patent of technology that you cannot invent yourself.
Speaker 3 (33:51):
There's no substitute. So it is.
Speaker 4 (33:55):
It's a new thing, I think for the auto industry
over the past decade, and I think our role and
what we've tried to do is to help is that
you know, any friction at that intersection.
Speaker 2 (34:09):
Okay, that's a very diplomatic answer, right, Well, let's be honest.
China is a powerhouse manufacturer, builds one third of all
cars globally now exports more than anyone else does so
at enormous scale, has ambitions to do its own technology
and innovation. So it's a player, a force to be
(34:30):
reckoned with, and over time we'd all like to see
them join a standard global platform. So I think momentum
is on your side and things will work out. One
final question for you, Laurie, you're there in Ireland. You
actually I wanted to ask this question earlier. What inspired
(34:52):
you to go to Ireland in the first place.
Speaker 3 (34:55):
Yeah, that's a good question, believe it or not.
Speaker 4 (34:59):
The first day I ever came to Ireland was the
day I stepped off the plane and moved here with
my family. And I came here for a Vanci and
we had offices at the time in Beijing, Tokyo, Dublin,
and in Dallas, Texas. When I was offered the job.
(35:21):
This is back in twenty eighteen.
Speaker 2 (35:24):
Were you in Dallas at the time.
Speaker 3 (35:26):
No, Actually, I was living in Austin, Texas. Austin, yeah,
so not too far from Dallas.
Speaker 4 (35:31):
But our founder, Kassim off Lacki, he gave me the
option of which office I wanted to work in. And
you know, I had two young children my husband and
I thought Beijing or Tokyo seemed really far away from
our families in the States, but Ireland sounded like it
(35:51):
could be an adventure. And also it was an opportunity
for me professionally to move here. We had three people
at the time working in Ireland and now we have
more than you know, more than twenty I think more
than twenty five in Europe. So it's a fantastic opportunity
for me to come here and help grow a business,
(36:16):
and now we operate the vehicle business, all of our
vehicle programs from my office here in Dublin largely. So
it's been it's Ireland has been great for Avanzi. It's
been really great for me. I've really enjoyed my time here.
And yeah, now it's you know, I thought at first
(36:36):
I thought we'd move back, but now we're here to stay.
Speaker 2 (36:40):
Fabulous. I love that success story. You've gone from three
to more than twenty. Tell us one way in which
your perception of the world has changed as an American
having lived outside of the United States for these many years.
Speaker 4 (36:55):
Now, you know, I think what I've realized is people
are far more similar than they are different.
Speaker 3 (37:02):
In any given day.
Speaker 4 (37:03):
I talk to people from probably between ten and fifteen
different countries every day in this role, and I really
think that everyone laughs and smiles and cries, all in
the same language. We are much more similar than I
(37:26):
think I maybe I thought before I have had.
Speaker 3 (37:29):
This experience, and.
Speaker 4 (37:32):
I think there are certainly differences across the world, but
it's always possible to connect with someone who maybe at
first glance you you think what am I going to
talk about? And then you know a few hours later,
you're at lunch and you have a lot in common.
Speaker 2 (37:48):
I know all your children, your clients are equal, but
you're a country or a region that you really look
forward to making that call more than any other.
Speaker 3 (37:57):
That is a really, really tough ques question.
Speaker 4 (38:01):
You know, every every country that I visit or work with,
you know, has its strengths.
Speaker 3 (38:10):
But I love a good meal, and I have to
say that.
Speaker 4 (38:15):
Probably one of my favorite places to travel for work
from from an eating perspective.
Speaker 3 (38:22):
Is I do love Japan.
Speaker 4 (38:25):
I have. I would say that going and visiting Japan
for work is always there's always a memorable meal involved.
Speaker 2 (38:34):
You do everything first class, everything ality right. The food
is quality, it's fresh, it's presented nicely. You're on your
way there, the car, your uber is clean, the streets
are clean, there's no graffiti, there's no whoa such an
impression country.
Speaker 4 (38:50):
Right, absolutely, But you know, I also think that you know,
there's I have learned a lot, you know, working with
companies all around the world, and you you really do
have to be willing to be open minded and flexible
and a job like this and and also adapt to
the culture you're in. I've I've learned that you know,
certain countries, I better get to the video call, you know,
(39:11):
five minutes early, or everyone will be waiting on me,
and you know others, I need to be patient and
people will join maybe a few minutes late.
Speaker 3 (39:22):
You know. It's just it's it's fascinating.
Speaker 4 (39:24):
I think to have gotten to be part of this,
of being in the middle of such a global platform.
Speaker 3 (39:31):
And hopefully we'll keep growing.
Speaker 4 (39:33):
You know, we've we're we have a new program for
electric vehicle chargers that has been growing quickly over the
past year, and it's it's been wonderful to take what
we've built in vehicle and kind of take the model
and start to roll it out into other product verticals
and other industries.
Speaker 3 (39:52):
So hopefully the you know, the sky's the limit.
Speaker 2 (39:55):
Laurie, I think of antigue found exactly the right person
at the right time. Congratulate you success and wishing you
all the best.
Speaker 3 (40:02):
Thank you so much, Michael, I really enjoyed it.
Speaker 2 (40:05):
Thank you, Bye bye. Austin, Texas native Laurie Fitzgerald, now
a resident in Ireland for several years, is a first
class professional. She's a lawyer by training. She knows her stuff,
(40:25):
learned a ton from her here are three or four
takeaways from our conversation today. One, and maybe most important
for the first time, automakers do not have overwhelming leverage
over their suppliers. Those tech guys kow taw to exactly nobody,
and that was the opportunity for Avanci when they pounced
(40:46):
on Two. The numbers are always fascinating. Twenty dollars per
car doesn't sound like a lot, especially when we consider
that forty percent of the value of your modern car
is electronics or electronic relation software. Forty percent vehicle manufacturers
are paying twenty bucks a car. I guess you make
it up in volume. Everyone agreed to the deal, so
(41:09):
everyone must be making some money. Third, fascinating to watch
how Avanci went from a near impossible business proposition back
in twenty sixteen twenty seventeen when BMW was the first
to sign up and almost no brainer. Everyone. More than
one hundred vehicle manufacturers are now customers of Avanci. It
looks like it's all aboard. So intriguing to see how
(41:34):
business can look so risky at the outset and then
so automatic later on. It's not totally automatic. There is
this wildcoard out there, and that brings me to my
fourth and final observation, the China wildcard vendors. The tech
companies are on board with AVANCI, but the vehicle manufacturers,
many of them at least, are not yet. What are
(41:57):
they thinking? Are they thinking like bids? Hey, what do
we need to look outside for? We'll do all of
our technology in the house. They already do their own batteries,
battery supply chains, and semiconductors. Is this the trend of
the future. Will China change the game once again? Let's
watch and see how it plays out. Hey, listen up.
(42:18):
Thank you very much for joining me today. If you
liked what you heard, dm me or share this episode
with a friend, post it on your socials. You know
the drill. I really appreciate each and every one of
you tuning in. I am Michael Dunn and this is
the Driving with Done podcast.
Speaker 1 (42:37):
Where you meet the experts creating the technologies that will
power tomorrow's cars electric autonomous software. To find this is
a Driving with Done podcast.
Speaker 3 (42:48):
Thank you for.
Speaker 1 (42:49):
Joining this episode of the Driving with Done podcast. To
connect with Michael Donn, visit Doninsights dot com or find
Michael on x or LinkedIn. This is Driving Done podcast.
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