OCTANe, Coffee @ the Cove: From OC Tech Startup to Successful Exit

Past Tides
November 21, 2017 By Natalie Gomez

OCTANe held its monthly event, Coffee @ the Cove, where local innovators interact with other members of the community before their day begins on the second Tuesday of every month. For this specific event, OCTANe invited Newth Morris, SVP of Strategy at Verizon and founder of Telogis, to discuss what it takes to begin as a startup and successfully exit in Orange County.

Before the creation of Telogis–a fleet management software using GPS tracking, driver safety applications, commercial navigation, work order management, dispatch, and route optimization–Morris consulted with Howard Jelinek, Ph.D., and built widgets for people who presented their ideas to them. It was through this consulting enterprise that the idea for Telogis was born.

According to Morris, he and the other consultants were approached by a client who said he had an idea: “if he could just track his trucks, he could sell a million of them.” It was from this idea that the consulting team began splitting their time between consulting by day and building the company by night. The team eventually realized that it was time to dedicate their full attention to starting the business–they needed to work 24/7 if they wanted it to succeed.

Once the Telogis team quit their other jobs to work full-time on the company, the startup began to gain momentum and garner attention from large corporations wanting to use its navigation technology. Even though the early days were slow in funding, the Telogis team made a profit off of the products they built, leveraging their backgrounds in engineering; however, this positive cash flow was not enough to fulfill their original plan of hiring a salesforce that sold to customers directly. The team decided to pivot, identifying an opportunity to instead license their technologies to companies within their ecosystem.  

“We didn’t really raise big money for a while, and that did a lot of things for us. One, it forced us to be disciplined on the cash side. Two, it meant that when we did raise money, we were in a pretty good position to do that. You know, that’s kind of the old adage, you only get money when you don’t need it kind of thing,” Morris said.

In the early stages of Telogis, the team had a deal with a company in Venezuela that needed to create digital maps to run its vehicle tracking technology–resulting in the creation of a mapping technology software. This technology was eventually sourced by the Federal Bureau of Investigation (FBI) in a deal amounting to $1 million, after the FBI discovered the technology through an online search for technologies in this space.

“What that [deal] meant was that while we were investing in [other] technologies, we were able to build up a big portfolio of technologies in the early days of the company,” Morris said. “It seemed to me, and seemed to us that in the future of wireless data and GPS, if something was more than a thousand bucks and it moves, you’d be able to find it on the internet.” Web-based business would be essential for Telogis to continue its growth.

Around 2007, the team made another pivot from being a technology provider to selling direct, having built capacity and cash flow from licensing. “We had this broad set of capabilities in the technology platform, but really the CB radio sales guys couldn’t sell this anymore,” Morris said. “So we brought on a couple of direct salespeople, and that coincided with the spike in fuel prices in 2007. That was really the moment I’d say the business took off.”

Morris explained that the business took off in 2007 because all of the elements from previous stages were now mature. Senior level executives from large corporations now used Telogis navigation systems in their personal vehicles–these factors led to the assumption that there was a broad awareness about Telogis technology. Additionally, with the spike in gas prices, corporations did not want GPS technology just to monitor employees, but to cut their fuel usage as well; bringing major companies to Telogis, such as Coca Cola and AT&T.

Building Telogis in Orange County, Morris revealed that he wishes the company stayed longer as he believes OC has the perfect mix for the success of entrepreneurs, including support from universities, incubators, accelerators, and venture capitalists. Telogis is headquartered in Orange County but has built a development center in Austin, Texas “I think Orange County is very much in a position to take advantage of this next wave,” Morris said.

At the end of the discussion, Morris left the audience with two key pieces of advice. “The first one is, raise as little money as you need to, or at least burn as little money as you need to. You can raise the money, but keep it on your balance sheet and don’t burn through it, because the more you control your cap table, the more you control those things, you give yourself more options for later on,” Morris said. “The second thing, which I actually think is the most important, is you have to have the right people around you… The most important thing that we had was the people that came into the company at different phases were just critical, but the other piece in order to do that is you have to give up equity–they have to participate in the upside.”