Editor’s note: This interview has been recorded and published as part of a content project in collaboration with the Japan External Trade Organization (JETRO).

Road infrastructure plays a huge role in the future of smart mobility, even though it may be not as media-genic as self-driving — or, even better, flying — cars and trucks. Valerann, an Israeli-UK startup that raised $5 million at the end of 2018, is working on a technology that allows road operators to track, manage, and optimise everything that's happening on the road. Its technology is already being piloted by the Spanish toll road operator Global Via. We talked to Valerann's co-founder and CBO Michael Dan Vardi to learn more about the startup's technology, plans, and the price of making our roads smarter.

This interview has been edited for clarity and brevity. Listen to the conversation in full on our podcast.

Q: Tell me a bit more about yourself and Valerann.

A: To put it shortly, Valerann makes a road smart. I specifically find the company much more interesting than me, so I usually start with that. But I'm one of the four co-founders, we started just about four years ago. Before that, I did consulting focused on connected vehicles and connected autonomous vehicles and transport. On the other hand, I worked a lot in the Israeli Prime Minister's Office, helping large government organisations become data-centric.

So, Valerann makes roads smart and enables road operators — potentially one of the most important organisations in our lives that we are not aware of — to become much more data-savvy, and helps them take their natural role as an active participant in the future of mobility.

We closed a funding round between August and October of 2018. We're now raising another round, because we have a few big projects. We're raising money to deliver on these projects and show the value that such micro-data can provide, because we think that's something that people will get very excited about.

Today we are 24 people, the vast majority are engineers. I am definitely one of the least smart people in the room when we have our company meetings.

Q: Where are you based?

A: I'm based in London. Valerann is co-located, we're a bi-national company. Myself, one of the co-founders, and CEO, as well as the data team, sit in London, but the majority of the tech development is in Tel Aviv, in Israel.

Q: And why is it set up like this?

A: Our objective is to data-enable our partners. But we want to do this with the best tech possible. So the majority of the R&D is done in Israel to make sure that we have the best talent available to build the systems we're building.

On the other hand, the data team are not developing in a vacuum — they need to be working with our road operator partners to understand how the data can add most value. And that's why the data team sits with us in London, so they are very close to our partners and can actually work with them throughout our projects.

Q: How does having half of the company based in the UK and the other half in Israel work for you?

A: To be honest, it is all we know. Obviously, it has some challenges; communication is tougher, it is tougher to build relationships between teams. However, it also has some amazing advantages: we get to enjoy the best of what both countries have to offer in terms of talent. We can do strong R&D in Israel while ensuring we have tight-knit relationships with our clients in Europe. Also, we are able to build an international company from day one, so when we scale, it will be natural for us.

Q: What do you do to keep the teams from both offices on the same page?

A: Most important thing we did was to make sure we had founders in both offices. This way we know there is always someone pushing the teams in the right direction. Then we make sure the leadership is on the same page. So, the founder and senior management have frequent conversations.

We also have frequent inter-team updates to make sure everyone is aware of where the rest of the teams are working on. The founders also visit both sites frequently. Lastly, but super importantly, we use Slack, which makes focused topic-based conversations quite easy.

Q: So, your goal is to make the roads smart — how exactly do you achieve that?

A: We do that by first of all understanding what the unique advantage of roads is, and where roads add value. Roads are the infrastructure, the baseline for almost all of our transport. What roads bring that nothing else can bring is this ability to sense and know exactly what's happening. What we do is we enable roads to become a comprehensive, reliable, full source of information about everything that happens there. The roads that we work on for the first time have full visibility of every single vehicle and its exact driving pattern, down to 10-centimeter accuracy.

This data, which is fully anonymous, allows roads to make our journeys much safer, because they see risks they see accidents in to respond, a lot faster, because they can detect and even prevent congestion sooner; but also become an active and valuable player in the future of autonomy, because they can use this unique data set to help support autonomous vehicles and some of the areas they find most challenging.

Q: I understood from the website and the presentation videos I saw, the technology is basically hardware and both hardware and software, right?

A: Yes, the heart of the company is a platform that can take data from any source and turn it into this comprehensive micro-detailed dataset. We are agnostic to the sensors that we use, but what we found is that the majority of sensors in the market are not yet mature enough to provide the level of data that is required to really add value. And because of this, we also offer an IoT-based sensory platform that's based on many small sensors that you install in the road that collect this data.

Q: How long did it take to actually develop the technology itself? 

A: It took us a total of 2.5 years to get to a product that we can scale. On the hardware side of things, it’s basically complete. There are obviously always things you can do, but we're good. The place we're putting on most our effort is the data platform. We are creating new ways to integrate new types of sensors and using new ways of collecting data to feed our data system. So, in the future, when cameras and radars mature to be able to collect the type of data we collect, then our system will be ready to use those sensors as well.

Q: What's your pitch like to a private company that operates a toll road? What problems do you solve for them?

A: This is where things often get technical, because you have to explain the use cases. But in short, we help you, an operator, make more money by helping you increase the capacity of your road in peak hours, improve the safety of your road in the times you need it most, and reduce the cost of the road by optimizing your maintenance. That's the bottom line; I obviously go into a lot of different use cases the micro data has, and that's where the conversation always becomes very interesting and engaged.

Q: What's included in your sensor modules?

A: Each “smart stud” in itself is quite “simple.” It's solar-powered, with battery. It is based on our own version of LoRa for communication. It has six different sensors. Those sensors can detect movement, stationary objects, and ambient environment conditions. Each one gets very rough data and sends that data to the cloud. And when you take signals from many sensors in a row, you start seeing patterns, and those patterns represent the driving pattern of every single vehicle. You put those together, you start seeing traffic flow. And once you can analyse traffic flow, you can also identify disruptions and risks.

Q: And a practical question, how expensive are these sensors?

A: They are wireless, they are basically off-grid, and we don't require any supportive infrastructure or any big civil works to put them in place. We are up to 95% more economic than alternative comprehensive solutions. The big advantage of IoT is always that you can get very good coverage for a very low price. And that's what we provide as well.

Q: How much will it cost to cover like one kilometre of a road with this sort of studs?

A: The price would start at about €8,000 per kilometre. And then there's a lot of dependency on what you want to see, the number of lanes you have, and the use cases. From there, what we do is we provide a data service, which is charged according to the length of the road and the use cases you want to see.

Q: Does Valerann work with different navigation apps that people normally use, like Waze, or Google Maps?

A: The apps are a very good way to understand the value we provide. When you want to go from A to B, where you can ask Waze or Google Maps, how long this will take, and it'll give you an overall route, it'll tell you it'd take you half an hour to get there.

This is what we call macro data, a high-level understanding of what is happening. That's great if you want to plan how to get somewhere. It's not as useful if you want to try and do something about it. In order to try and understand and to prevent things, to manage things, you need to know why they're happening, you need to know micro-data.

Valerann provides a detailed understanding of how every single vehicle is moving. And that allows road operators to try and see how they can manage this, how they can prevent congestions from actually happening in the first place, or, at the very least, mitigate them.

The same level of data is super useful for navigation. Imagine you're driving on a road, and I can tell you 500 meters in advance, that the upcoming exit is quite congested. You should move now to the middle lane to avoid that queue, so you’re making your overall journey faster and safer, because you don't need to do any last-minute changes.

This is the type of data we would want to provide to navigation apps. And it's also the type of data that we will be providing to autonomous vehicles.

Q: In your presentation video, you said that you connect the non-connected vehicles. So how does that work?

A: This comes back to the competitive advantage of roads when it comes to the world of data. Connected cars today and in the future are going to provide us a wealth of information about how they are behaving. And they'll give us unparalleled insights into traffic flow, etc.

But what they will not give us any time soon, is a certainty that we know all of the vehicles in our vicinity, where they are, and what they're doing, because not all vehicles will be sharing all their information all the time anytime soon. The road gives a full comprehensive picture of 100% of vehicles, whether they're connected or not connected, just through the passive sensors that we have. Once you have this image, you can only imagine a two-dimensional map of the of the lanes, and you see the small cars moving in them.

You can provide this map in real time to connected vehicles, allowing them to know not only the location of other connected vehicles, but also the location of the legacy vehicles. So if they merge into traffic, they know to take into consideration that Collector's Edition 1978 Renault that someone just wanted to drive, and it's not connected. But we will be able to see that and share the information with the connected car, so it can adjust its planning accordingly.

Q: Do you see technical developments in your field happening in Asia?

A: We have seen a lot of effort in Asia in Smart Cities. Japan and South Korea are leading these efforts. Major conglomerates like Soft Bank and JG are creating data hubs to integrate data sets from many sources to help municipalities better manage their shared spaces and services. We have also seen in China a push to making their motorways smarter and better able to support autonomous vehicles. We are very much excited by these developments and see how Valerann will fit right in with these huge trends.

Q: Have you considered expanding to the Asian markets?

A: We have considered that. China today holds about 70% of the world's toll roads. Nearly all of Japan's motorway network is tolled, and India is investing heavily in privatised infrastructure and toll roads. There is a massive opportunity for a high-value-add solution like ours, especially as it also provides the economic advantages of being an IoT solution. Today we are focused on Western Europe because we are familiar with these markets and our pipeline is already full. But, in the not-too-distant future, we expect to make roads in these markets smart too.