Strategy Night with TomTom
¨You probably remember TomTom as the one saving the marriage of your parents some 10 years ago¨ was the opening line of the Co-Founder and Chief Technology Officer of TomTom, Peter Franz Pauwels during the Strategy Night on December 13, 2016. The Strategy Night was organized by Asset Strategy & Logistics and during this event Peter Franz Pauwels told us the story of TomTom. TomTom developed from a small startup into a global company specializing in mapping and navigation products. In addition to corporate history, Pauwels covered different interesting aspects of the industry and naturally we participants had a chance to ask questions.
The company of Mr. Pauwels has had many names, but for convenience the name TomTom will be used during this article. Mr. Pauwels started the event by telling about TomTom’s journey from the very beginning. In early 1990s, TomTom was a small startup focusing on mobile applications and personal digital assistants and selling them with 1-to-1 relationships. The company switched to retail distribution and learned about retail during late 1990s, and Pauwels emphasized that the company was able to build a solid and reliable reputation. An important moment for TomTom’s business opportunities was when Bill Clinton opened GPS signals for private use in 2000 for mainly economic and security reasons. Before the approval by President Clinton, private users had to rely on a GPS signal with an accuracy of 100 yards, whereas the military had an accuracy of 10 yards. The open GPS allowed TomTom to use the more accurate GPS technology in their systems, which obviously resulted in increased performance.
Early 2000s were a time for rapid growth and new products for TomTom. The revenue of Tomtom increased from 2 million to 9 million euros in 2002 and from 9 to 40 million in 2003, whereas the revenue had its peak in 2007 being almost 1.8 billion euros. Tomtom had introduced the Portable Navigation Device in 2004 and went public in 2005. In addition, a strategic realization that TomTom is a part of a car happened during 2004-2005 which contributed to the direction of product innovation.
Eventually Tomtom became Europe’s largest tracking company and its maps are used by Apple, Uber and various governments. Mr. Pauwels illustrated us about different navigation techniques and possibilities they had including the map of London with very detailed information about speed and the level of traffic. Mr. Pauwels also interestingly illustrated various difficulties in mapping, including different systems with addresses. A funny example was that addresses follow their owners in Morocco, which obviously makes mapping somewhat challenging.
Mr. Pauwels also talked about the backlashes of the company, including too expensive navigation system with Ericsson during the dotcom boom and the PR backlash with accusations of selling information to the government, although that was done by a consulting company. However, Mr. Pauwels was very convinced with the benefits of navigation system such as TomTom. He illustrated this by stating that TomTom users spend 15% less time in a car than non-users. In addition, if 10% of all road users used this kind of navigation technology, 5% less time in a car would be spend for all road users. Navigation also contributed to the reducement of deaths in traffic in 2004, but apparently getting distracted with mobile applications has increased the number afterwards.
Towards the end of the event Mr. Pauwels mentioned the future possibilities of TomTom with the automatic cars before the Q&A sessions. Questions were asked about the name of the company, founders, possible cooperation with Tesla, supply chain solutions and new market approaches. We heard that the name of the company has no philosophical meaning, TomTom was indeed founded by student buddies but there was ‘no comment’ on Tesla, which created a joyful laughter among the audience. However, we heard a lot about the industry and competitors of TomTom, and the event as a whole was an interesting opportunity to hear about the journey and future of TomTom.