Driving the Future: Embracing Automation and AI with Magiis CEO Leonardo Gannio

On this exciting edition of the Ground Transportation Podcast host, Ken Lucci, digs into the future of the chauffeur transportation industry with special guest Leonardo from Magis. They discuss the transformative power of AI and autonomous vehicles, addressing the challenges and opportunities these innovations bring. Learn about the importance of embracing new technologies, potential roadblocks, and the need for the industry to evolve.

00:00 Intro + Welcome
04:24 Why Magis Came to the USA
06:57 Tech Monopolies and the Future
10:21 Parallels with the Electronic Security Industry
12:50 Not in the Business of Innovation, and Automation Growth
27:53 Pony AI
29:36 May Mobility
31:47 The Future of AV s
37:15 Parallels between Movie Studios and AVs
47:33 The Real Cost of Rideshare
55:18 What's in store for the Future


Connect with Leonardo: https://leonardo-gannio.com

Leonardo's book:
https://www.amazon.com/Mobility-3-0-Thrive-Passenger-Transportation/dp/B0DSKBBLSS

Article mentioned:
https://www.aeaweb.org/articles?id=10.1257/jep.33.2.3 

At Driving Transactions, Ken Lucci and his team offer financial analysis, KPI reviews,  for specific purposes like improving profitability, enhancing the value of the enterprise business planning and buying and selling companies. So if you have any of those needs, please give us a call or check us out at www.drivingtransactions.com.

Pax Training is your  all in one solution designed to elevate your team's skills, boost passenger satisfaction, and keep your business ahead of the curve. Learn more at www.paxtraining.com/gtp

Connect with Kenneth Lucci, Principle Analyst at Driving Transactions:
https://www.drivingtransactions.com/

Connect with James Blain, President at PAX Training:
https://paxtraining.com/

Transcript

Ken Lucci: 0:25

good afternoon all and welcome to another exciting edition of the Ground Transportation Podcast. I'm a little sad today that my partner in crime, James Blaine, from PS training is not with us today. he's out training a chauffeur crew, I'm sure, somewhere in the country and y but I am very, very pleased to have a good friend of mine, Leonardo ano from Mag's, uh, a little bit of just history. He and I met back in 2018, 1819 timeframe, out in Las Vegas. Leo is the, I'm gonna let him tell you about his company, but he is a magnificent entrepreneur and came to the United States with a fantastic software for the chauffeur transportation industry. But Leo, tell us about your background and then we'll talk about Magis a little bit.

Leonardo Gannio: 1:20

Well, Ken thank you So much for having me, and it is a pleasure to, to share with you. my insights and, uh, thank you. Thank you again for this opportunity. Well, uh, I have been in the, in the technology industry for the last 35 years, uh, working with for different worldwide companies in technology as by president of Latin America. And then in 2000, I decided to start my entrepreneur career. my last endeavor was active. That was a$500 million company that was sold, to, uh, an American company that is calling Micro. And I decided to move to The States and start my new endeavors and, uh, living here. uh, I started in 2018, this idea of building mags, uh, mags is an end-to-end software platform. For, uh, people, transportation providers with, uh, an open marketplace. we define ourself as the Shopify for transportation providers. Uh, we have a passion to empower business owners. Why we believe this, because our philosophy is that we empower business owners. They have a positive impact in their communities and their workforce because they pay better, better salaries. And opposite to the gig economy that we think that is empowering, the people that work in that gig economy caught on.

Ken Lucci: 2:45

So you. The other thing that we, we do share a lot in common, other than the fact that you've lived a great life in, outside the United States, but you wrote an unbelievable book, mobility 3.0, which we're gonna talk about. And to me, I have to tell you, I, I left the book basically saying, with absolutely more admiration for you, not just as a software and tech guy, but almost a futurist, almost the understanding of where you think the industry is going to me as bulletproof. So do me a favor, give us a little bit of a background of where your biggest deployment for Maje is. Where?

Leonardo Gannio: 3:28

First I want to say something, but I was inspired by your book in 2019, and what I discovered at that time is that was crucial for our industry to, give or to put all of our beliefs, all our, knowledge in a book because this is the best way for our industry. To spread out the news, to spread out our voice because, you know, you go to presentations, you go to different places, but sometimes they forget what we say. But it's good to say today because after we will tell them, we told you and we give you the guidelines for the future as you did in your book. I think that is a continuation of your book. And thanks you, uh, I decided to write this book. Then back to your question, of course our biggest deployment are in different countries in Latin America. And, uh, uh, we decided, two years ago, or one year and a half ago, to fully launch and deploy it in the United States. why Magi entered the us, because we believe that this market, uh, represent the most mature. Complex and opportunity reach landscape for mobility innovation.

Ken Lucci: 4:46

Yep.

Leonardo Gannio: 4:47

the US has, long been a global benchmark in terms of scale, infrastructure and diversity of transportation needs. But. ironically, still struggles with fragmented, inefficient, and legacy bound technology infrastructure, especially for delivery providers trying to thrive in the new digital economy. And, and that is very important because sometimes I, I'm, I am asked, uh, what type of issues are the Latin American market, facing compared to United States? And I answer always the same, the same issues. The landscape is totally different, but the issues are. They're the same issues no matter where you go, you go to Europe, you go to Latin America, and the same issues are, uh, facing, uh, are the companies facing in this new digital economy we saw? Yeah,

Ken Lucci: 5:45

So what are your, what are the biggest challenges that you see that are similar from an operator to operator perspective in the US and Latin America?

Leonardo Gannio: 5:56

Uh, the very first one is, try to enhance their customer engagement. Some of them are waiting, the magic of receiving reservations requests, and that does, it's not happening, you know, it's not gonna happen organically. The second thing is. Streamlining their back office, automating their back office with policies. Some of them that they're really big in the states, they only have one or two price lists and they price the rights, basically with the face of the customer or they out of the blue, they, they put the prices. They don't have a pricing strategy and because they don't have the technology to support that. And the third thing, is that even though they have a big company, sometimes they have service denial because they don't have enough assets or they don't have the enough, relationships into the market to provide services to their passengers.

Ken Lucci: 6:57

Gotcha so just generally, because you've been in tech in other industries, why do you think the traditional limo tech has not advanced to what we see on the transportation network side? On the Uber side? Why has the limo tech not evolved in capacity utilization tracking and just the user experience, the front end user experience. Why hasn't it, in your mind.

Leonardo Gannio: 7:34

Well, the first phrase that comes to my head, and that is why I started this company, is that the limo tech monopoly is creeping the future of our industry. That's it. That's it. When I hear a provider saying, I've used the same software, the same, uh, for the last 20 years, I said, okay. 20 years ago we didn't have an iPhone. We didn't have, uh, a lot of technology that now is available. Uh, we didn't have Uber. Let me tell you, Uber was made. A$44 billion company was made by two kids, traveling through France then

Ken Lucci: 8:08

With no transportation experience.

Leonardo Gannio: 8:10

And experience. is not more an asset. It's an asset, but it's not more a distinctive asset in the market.

Ken Lucci: 8:17

You know, you hit upon something there that I struggle with, which is sometimes actually the experience that you have is your biggest hindrance because you're comfortable, you're complacent. And this is a phrase that I've used. Recently in front of some pretty damn successful operators, where I say I would rather deal with operators who are not profitable because they listen more. The profitable operators. I fight comfort, complacency, and what I call omnisci thinking, thinking that everything about their business tomorrow is gonna be the same as it was today, or worse yesterday. I think a lot of people are caught in yesterday, and I, I, I think the same thing on the software side. Excuse me, the traditional software side of the industry.

Leonardo Gannio: 9:13

let me give you, uh, I have cases that I can, I can tell you now, but let's be honest. the traditional limo in technology providers in the us. Have became a monopoly, and that monopoly is actively choking innovation in delivery industry.

Ken Lucci: 9:30

Yeah, but isn't that the case in any technology monopoly in any industry? Like the hotel booking industry for a long time had a monopoly until the online travel com agencies came on. So how do you break it?

Leonardo Gannio: 9:47

Well, it, it's very easy to change the narrative and start to show the success cases. Uh, they are narrative is that success come from first margin, second revenue grow, and third automation in that order. However, that is half a true because, craft, crafted to buy time while they lock in customer with existing, uh, exit with high exit barriers. And that is a fact. They charge inflate fees and continue toole technology that be.

Ken Lucci: 10:21

Yeah. Yeah. we saw that we, I saw the same thing when I was in the electronic security business, and I won't bore you with the tremendous details, but a company called alarm.com came into the industry. they were from outside the business and before they came in, they were these little software providers that all sold not only their software, but the monitoring center receiving equipment, and they never talked to each other. So then the alarm.com came in and said, look, I'm gonna make it so that they all talk to each other, and I'm gonna create an app for the user experience so that they won't have to use your keypads anymore. So in the alarm business, the keypad was the same thing as we see in the, in this space as the dependence on telephone. So now I can have a, security system through alarm.com. With no devices in my house, this is what I deal with. And I, I struggle because from my perspective, and you don't have to say it, I'll say it, the technology in our, in our space, the user interface, whether it's a corporate dashboard or an online ordering portal or the smartphone is in best case, very clunky. It's very clunky. we get we can't track the vehicle the way as it approaches on the app. We have to get text messages. It varies from place to place in town to town and provider to a pro provider. And it is very frustrating. And I think my biggest issue is I hear operators say, and you must also, well people, you know, people like to call us on the phone or they like to send us emails and. I think, I don't think they realize corporate clients who do that, they're retiring and they're being replaced with corporate travel people who do wanna do everything remotely and everything on their phone. And the same with the corporate travelers who are the, the average traveler is, right now, the average corporate traveler is 42 years old. So they're, they're relative kids and they want to do everything on their own. So wh where do you see the, I mean, where do you see the next two to three years? And do you see us taking any giant leaps forward? Or is it gonna be status quo?

Leonardo Gannio: 12:50

Okay, let me first say something that is very important. Uh, uh, continue your, your comments. The tech limo Today, these companies are not in the business of innovation. First,

Ken Lucci: 13:03

They are not, say that again? The limo tech

Leonardo Gannio: 13:06

not the business of innovation. They are in the business of rent seeking. That's it. Okay. Meanwhile, and this is very important because these are the things that are, struggling. The, the market, meanwhile, the world around them is changing fast.

Ken Lucci: 13:24

God forbid it's changing. Oh God, yes. Yep.

Leonardo Gannio: 13:28

delivery sector is growing, but fuel by younger generation generations opting out of car ownership and new expectations shaped by TNCs. But this is just the beginning. You know, we are now entering a transform transformational era era driven by the convers convergence of electric vehicles, ai, autonomous technologies, EOLs and hyper personalized service. and the formula is not anymore the old formula. This is an not an evolution, it's a revolution. And the only limo tech stack can keep up. Then the real formula for success today isn't just margin revenue and automation. It's revenue margin growth, both vertically and horizontally enabled by automation. That is The, key. They need to understand that they're going with new technology. They can go to new opportunities, they can automate their business and they can compete in the new digital world. And this is a fact, a lot of companies are raising, uh, are appearing in the market Alto, a new TNC, very high class, uh, Olo, uh, Roso, sorry many of them freebie in Florida, and they are expanding their operations to Dallas then that is a fact. And we need to open the eyes because who are the best position, providers in the market? to achieve success, our industry, delivery industry, but they need to open up their strategy.

Ken Lucci: 15:10

Yeah, I, I, uh, 100% agree and I think that, again, fighting what has always been not fighting, but moving past the same old, same old tech and the same old, same old voices is difficult. There's a new owner to one of the biggest networks in the country. We're not gonna give'em a free plug here, but, we've had some very good interaction with them and. This network is, uh, poised to make some big technology changes. They understand completely that the service experience is superior in the back of the car, but the technology, the cost, excuse me, the man, the processes are manual and the cost to take a reservation and manage a transaction is largely much higher because of the labor involved. So would you agree with the statement that the next three years we're gonna see because of, autonomous vehicles and because of outside forces coming into the industry, that we're gonna be, we're gonna be forced to make changes or we're gonna be left in the dust?

Leonardo Gannio: 16:24

I totally agree. let me bring up, an example that maybe you are aware of it, you remember Blackberry?

Ken Lucci: 16:34

Sure.

Leonardo Gannio: 16:35

Okay. Blackberry was, I think, the dominant provider until 2007, dominant. When I'm talking about dominant, 90% of the market share was from for, from Bradberry

Ken Lucci: 16:49

Yep,

Leonardo Gannio: 16:51

until the iPhone appeared. And you remember when the iPhone appeared? They said, no, nobody's going to to accept a touchscreen, uh uh, keyboard or nobody's going to use it. End of the story, 2009, two years after started the decline of Blackberry and they disappeared. Then. It's very important to understand that we are in a pivotal moment, and decisions might be made now because in the next three years, most of them are going to disappear.

Ken Lucci: 17:25

And you know, the rules of business, progression growth and decline are not suspended in the limousine industry. To amplify your point, growing up as a kid, Kodak was one of the biggest corporations in the United States, United, they made film. the first digital camera was designed by an engineer inside Kodak, and the leadership at Kodak said, now it's never gonna take off. Oh, by the way, we don't want you showing that anywhere. And within four years, digital cameras were the norm, and Kodak was sold for pennies on the dollar. you know, there is definitely, from a standpoint of the evolution of business. We need to really examine as an industry where we are or we're gonna be left behind. I always say this to people, you know, there are still some fantastic companies that make horse-drawn carriages and stage coaches. There's just not a lot of'em. So I agree a thousand percent with you and I, I myself, am frustrated by the lack of evolution and, you know, there's voices that in the industry that say it's too expensive to create a universal app. Quite frankly, like an Uber, quite frankly, you've done it. I mean, your, your software, your, your user experience is pretty damn close.

Leonardo Gannio: 18:49

yeah, but again, first, the platform is right here. Second, We need to evolve as any software company. And third, the providers need to understand that they are going to change the way they're doing business. Then when I sit down with a provider and he says, I don't have time to establish the policies for my company. I say, you don't have a company. You have a fleet of cars and you are a driver that you became a business owner. Then sooner or later you are going to you or you are losing money, or you're going to get outside of the market and you are going to close your doors, and that is happening. They'll blame economy. They'll blame the market, the competition, they will blame. The first thing that they will blame is that Uber is cheaper. That is wrong. That is wrong.

Ken Lucci: 19:39

No.

Leonardo Gannio: 19:40

not cheaper.

Ken Lucci: 19:41

By the way, this is statistic out that 30% of the TNC users. Do not even look at what their total payment was. They don't even look at it. It's a total convenience play for them, and it has just become part of their lifestyle that they're going to spend Exxon, Uber. But I agree with you. When we consistently for clients look at, a similar service, Uber Black from 25 miles outside an airport in the suburbs, it's pretty damn close. And the thing with our industry is we all know we have fixed prices. We don't have surge prices. So I think that that's a cop out. And, in many cases, I, I, I've said to operators, you know, the problem is not the market. It's your mindset. Okay. Client said to me the other day, not the other day, about three months ago, I said, your business is not growing. you grow by, you grew by 3%, but your costs are going, growing so much higher that you're losing ground on profitability. And I said, 3% is not growth. he's in in Hartford, Connecticut, I'm not gonna identify him. And he said, well, you know, Hartford is terrible. it's not the market that it used to be. You know, and I, I hated to tell him that we've done business with two or three other providers that serve that same area and they're growing. And in this case it was 100% his and his strategy. Not his market, no outreach to new prospects, really no communication in your words, no real innovation of any kind. His clients have se it seems as sta a stagnant enterprise. So let's shift gears a minute because, you know, in your book, this is not a book about limo software. This is a book about the evolution of mobility and you hit upon quite a few things, but I wanna focus because of what's been in the news recently on the just hurried deployment of robo taxis. So there's a ton of talk about autonomous. When do you think that autonomous vehicles meaning will become mainstream? Meaning we're gonna see'em on highways? And they're gonna be in service in major US cities. When are they gonna go from a novelty to normal? In your mind? What's the timeframe?

Leonardo Gannio: 22:22

Well, the timeframe? will be between three to five years. But let me, let me base this affirmation. one month ago, Sean Dfi Duffy, that is the Secretary of Transportation, the Federal Secretary of deportation, he released a framework for abs. You know, that as in America, when the framework is put into the market, all the forces align itself just to start to produce this country. And my country here is like very powerful in aligning and putting resources to achieve a goal. The second thing that is very important is. Waymo just launched their service in San Francisco I saw, that you use Waymo in San Francisco and they achieve 27% of the market share. Only in 20 months. Only in 20 months. And let's be honest, because every everyone says no, but they're a taxi service. I don't think that a Jaguar I Pace is an entry-level car.

Ken Lucci: 23:28

Oh, uh, I, you know what's funny? You tell me if I'm wrong, if their fleet was black, the li the limo industry would be shitting its pants. Oh, by the, by the way, I just wanna let you know I'm allowed to swear he bleeps it out. But we are on a podcast and we are somewhat not ruled by the FCC, but I agree with you. I've been in the back of a friend of mine's Jaguar, SUV. It's ex, you know, just a private vehicle and it was black with the same tan interior and it, you had the sa you had a completely different experience, but they're all white, you are, right. And those, those jags, if you and I went out to buy one, they're about 120,$130,000 vehicle, aren't they?

Leonardo Gannio: 24:14

Yeah. Yeah. They, I, I don't know around what, uh, what is the amount, but they, they have the, the power of aggregation. They're buying cheap. You know, let me, if you give me two minutes, I will explain the, because it's very important to, to explain our industry what is going on. I think that we are, uh, on the verge of a major transformation, and as I told you, I believe that autonomous vehicles and road taxes. Will being going mainstream with the next three to five years, and we'll start seeking them across Mayor US cities first in meaningful numbers. not just pilots, not just pilot meaningful numbers, but as a real transportation option. what companies are leading this drug. Companies like Waymo, may Mobility, so are already making exciting progresses. why they're progressing and why this is working like this. Autonomous vehicles, they work in a platform. No matter what car manufacturer is that is, uh, what we call drive by wire. That means that you cannot retrofit a normal car. You need to have them from the factory where the driver is a truck driver like Tesla, where you hit the wheel driver. But some cables are giving the signal to, to go right or left. The same for the accelerator the brakes and everything. Then there comes the technology of the, what we call the interceptors, the ones that push those, devices to move. And then you have the brains and the, all the radars and cameras. today, all the cars are approved to, to have a, a speed of 35 miles per hour, and they cannot get into a highway without the driver. Why? Because the lidar technology and the camera technology, you know, the only that uses camera technology is Tesla. All the rest are using Lidar. that is safer than cameras. Okay? they are prepared for 35 miles per hour as maximum speed. If you increase the speed, you increase the cost of the cars. But this is a matter of time. They're going to reduce the cost of that technology in the follow three to five years. Then with the framework, with the technology, with the car manufacturer, that they're going to produce their drive-by work cars as a single platform, where we see a lot of that, technology coming in the following three to five years. And lemme give you a little taste. You know the name Gene Farley. He's the CEO of Ford Motors in

Ken Lucci: 27:34

Oh yeah. I saw his Yes. Go. I know what, go ahead. I know what you're

Leonardo Gannio: 27:38

You, you know what car he drives?

Ken Lucci: 27:41

No. What is he drive?

Leonardo Gannio: 27:43

Shomi. SU seven is a Chinese car. Shomi is the work biggest manufacturer of, mobile phones. They also manufacture, vacuum cleaners, robot vacuum cleaners. And then they're producing cars today because the technology is, uh, the AI and all the technologies very similar what we need in a car. This guy is so happy with that car and is pushing all the factory and all the developers because, it is an example. The CIO is a beautiful car. Let me tell you this is coming and they know that.

Ken Lucci: 28:19

You know, to your point, I follow, we have a ton of databases that we get news, financial information, data analytics, and I follow a company called Pony ai.

Leonardo Gannio: 28:31

Pony Yeah, of course. Yeah.

Ken Lucci: 28:32

Pony AI just announced their seventh generation platform. to your point, in China, they are working with two auto manufacturers to build models. So evolving quickly in other countries. Wuhan China, you know, made famous because of the COVID virus, but Wuhan China, has 30,000 avs on the road. And someone was telling me the other day that they don't even, they don't have any downtime on charging because the vehicles go back to the hub and someone changes out the power source in 20 minutes and the vehicle goes back on the road.

Leonardo Gannio: 29:20

that is called Swappable battery technology.

Ken Lucci: 29:23

Say that again.

Leonardo Gannio: 29:25

Swappable battery technology. You swap the battery.

Ken Lucci: 29:29

And think about that. We don't have anything close to that yet. And at the end of the day, I think that you are right on the three to five years we're following. In other cases, we are following shuttle vans that are being built in Korea. They're being deployed right now in Singapore. They're being deployed in Dubai, and right now they're piloting them in closed areas like colleges and universities. When I started looking into it, I see that the University of Michigan's doing it, the University of Mississippi is doing it. So I think you're on the money that it's gonna become more, a lot more mainstream, much quicker than we, that we thought.

Leonardo Gannio: 30:15

Let me give you some insights. You know that we partner with main mobility. Our platform is able to dispatch autonomous cars. Main mobility has made an agreement with techno. Bass is an Italian company to the techno buses are those small buses that they use in Europe that are more or less 40 people, 30 to 40 people. That bus has swappable battery technology and they're going to release that in the us uh, I think that end of 2026. Then. We will have them here as we speak because different of what the provider thinks. The provider says, okay, I will lose the car business, but I, I am gonna go to the coach business. No, no. The coach business is getting faster to the autonomous side than the cars.

Ken Lucci: 31:09

And when we, uh, one of the databases we use is, uh, Dow Jones Factiva. And when, when they were setting it up for us and,'cause I'm a neophyte, they said, Ken, don't look at tech. Just look at tech in the United States. Look at it worldwide. And this is how you get tech information from all over the country, all over the world. And I was a little skeptical until I saw these continuous names coming up from all over the world. and you're absolutely right. Germany is big in it, Italy's big in it. the Asia Pacific is just absolutely incredible. On, AVS and China is way ahead of us. why do you think, China is way ahead of us? Do you, think we'll catch up to that tech? When do you think we'll see, 30,000 vehicles sit in Wuhan, which I think Wuhan is probably, I have to look at the population, but it's a very large city. When do you think we'll see 30,000 avs on the road?

Leonardo Gannio: 32:11

First I, I would say That China is not a democracy. Then they have the ability to funnel resources by force, or more than convincing. But,

Ken Lucci: 32:23

That, that's a nice way to put it. Funneling resources by force.

Leonardo Gannio: 32:27

Yeah. And that is the way, and it is, it is been, it's been very effective to be honest, but said that we are very good at catching up. Let, let, let me give you an example. Do you remember three years ago that Elam said we need to start to work on AI only three years ago because the Chinese were way ahead? Now AI is all over the United States. We have several providers, several supervisors, then with this framework of the federal government. And with this guideline, all the, the resources are going to be funnel a lot of, money and resources to do this. Let me give you an example. The other day I was talking to a very big provider and, um, he told me no, you know, here in Boston is gonna be difficult. To have autonomous vehicles because the traffic is terrible. Boom. One week after Waymo announced to, uh, the, the release in New York, and I call him and said, New York is worse than Boston. Boston is worse than New York. Then we need to start to think in the future and start to take out our mental barriers about technology. Imagine, you know, but I'm very happy, uh, I'm very positive. In 2019, I was talking about autonomous vehicle and the people were saying, Hey, what you smoking? Then, but today what I see is that there, there are many opportunities because we see a lot of providers that they're very good business owners and they're willing to grow. Then, uh, I'm very positive about the future and let's be very, direct on that as well. There are many young entrepreneurs that, with the Right? technology. They will grow because they don't need to deal with, uh, drivers. They will not need to deal with a lot of things. And they will be the next generation for our industry where they will have RS instead of drivers inside the cars. Because you cannot eliminate, the, the drivers. You, you'll have hybrid fleets. You know, if you have an autonomous Rolls Royce in the future, you're not going to send a car. You're going to send a person that will help the people with luggage, help the people with other things. But again, it will be hybrid and they will be, as I told in the hospitality business, not in the transportation business.

Ken Lucci: 34:53

You know it. So what I hear you saying, because first of all, I, I, every single day I fight the same sentiment that you heard from that Boston operator, which again, the definition is omniscient thinking. You are assuming that tomorrow in business is going to be exactly like today and yesterday, and there's just no way. In this era that we're in, in this tech advanced era, that's valid, right? So tech is gonna move forward. It's gonna move forward with or without us. I love this, this story about when automobiles first came into existence, there were 3,200 automobile makers in the first five years. And then over time it came down to, in the United States, the big three. So do you agree with this statement that AVS are going to be perceived as a negative? Auto autonomous vehicles are gonna be perceived as a negative disruptor in the beginning, in the chauffeur space. But for those that embrace the future there's opportunity here for them.

Leonardo Gannio: 36:10

let me, uh, I believe that autonomous vehicles will ultimately evolve into a powerful opportunity for our industry. But, uh, like any technology shift, the transition will be disrupted at first, and I recommend a lecture, you know, a, a reading of a publication of a novel ate Darren and Repo. They have a paper that is called Automation and New Tasks. This paper

Ken Lucci: 36:39

AU automation

Leonardo Gannio: 36:41

automation and, new tasks from Repo and Asog, they are no prices. you know, they're not Leonardo Gao and Ken, they are PhD, you know, they, they are big guys, recognize worldwide. and we understand that the technology doesn't just eliminate jobs. It also creates new roles, business models and source of value. The net effort depends on whether the economy and stakeholders can adapt quickly enough to unlock those new opportunities. And let me give you one,

Ken Lucci: 37:16

I want you to repeat, I want you to repeat that last sentence. It all depends on the adoption of who

Leonardo Gannio: 37:24

The providers they need to adopt new technologies. And they need to adopt not only. New roles, new business models and new sources of value. Because the net effect depends on where the economy and stakeholders can adapt quickly. They need to adapt very quickly to unlock these new opportunities. Let me give you an example, do you have thought in 2018 when we met that you were going to to be a horse in a podcast?

Ken Lucci: 37:54

No.

Leonardo Gannio: 37:55

Okay, why? Let me give you this case. On the early nineties, there were six big producers, like MGM Universal Paramount Plus until YouTube appear

Ken Lucci: 38:11

Yep.

Leonardo Gannio: 38:12

and what happened with YouTube? They said, no, they are killing all the industry. No, no, No. No. At the very beginning, it was a disruption, and now you have thousands of thousands of producers and creators enable those old production companies. They are in the, in this space. Then we need to understand that now is the moment we are in a pivotal moment of our industry. We need to talk to the NLA, we need to talk about this in, in all the shows. We need to talk with every single provider because they need to understand that AI is here and in two years you are going to be an AI company or you're going to be in the other side. The other side is going to fail and disappear.

Ken Lucci: 39:02

Uh, you, you're a hundred percent right. And I, and I will share with, share this with you, but I can't say for who. We, for the first, we've received our first financial analysis engagement to do a cost pro forma on the cost of an AV vehicle. Okay. Which this is a, a, a longstanding customer that we've had who've said, listen, I've been approached with an opportunity and I want you to do a cost model and fixed cost variables. What do I need to charge for revenue to achieve the margins that, you know, that we preach? And I said, I just wanna let you know this is the first AV that someone has asked us to do. His comment was, oh, there's gonna be many more. Uh, you know, this is a company that's on the cutting edge. The other thing I will share with you is I had a conversation with Chris Weiss, the publisher of Chauffeur Driven, and we are starting, we're gonna start to do a, a column on AV for him. And we'll, I, I, I do not under any circumstances, see myself as ever becoming an expert at it. But I will tell you that we will take the data that we curate and we will compile it on these companies.

Leonardo Gannio: 41:26

I have a dream and my dream is you and me in a stage in the NLA Las Vegas presenting the future of the mobility because I'm a little tired of hearing, you can use chat GPT to write an email to your customers. Hey, you know, uh, you can use this technology to reduce the cost of, uh, the car processing. That is, those are conversations of the nineties.

Ken Lucci: 41:57

Oh, there's, listen, there's no listen, there's no question about it, because AI is so daunting and AV is so daunting and it's changing daily that I, I think there's a fear. I think there's an apprehension. And the other thing I've noticed, it's funny, this is my first role as an analyst. You know, I started the company in 18, we were part-time 18 and 19, and it just took off like a rocket ship. But one of the things I've seen is far as entrepreneurs, two things. One is. They're very reluctant to receive criticism on the business or the box that they've created. They really are in many cases. The second thing that I've seen, and, and there are exceptions by the way, there are some who call upon us and say, we've gotten to a certain point. We need your help getting us getting to another level financially. The other piece of the puzzle is people say they embrace change but change is not muscle memory to the average person. True change, evolutionary change is scary to a lot of people, but I think to your point, we are way past the time as an industry where we can ignore it. I, I look at it, the, I look at it this way. Excuse me one second. Back in before Uber, only. 11% of the country used taxis and it was all in the urban spaces. Only 8% of America, the pub population used chauffeur services and it was all corporations. Well, now 60% of the population has a TNC app on their phone, and 40% use one of those TNCs more than six times a month. Now they don't use them a little lot of cases early, early morning to get to the airport. You know, they're TNCs are like the post office, right? Anytime you need to mail a a letter, you use a T, you use the post office. But if you have to get it there, you use Federal Express. We are federal. We are the Federal Express with Ritz. We like to think with Ritz Carlton luxury, but we're still operating on. That's pre Uber, which is frustrating.

Leonardo Gannio: 44:31

Yeah, but even Federal Express and u uh, UPS, they need to change and embrace the new tech, the new, uh, digital technology because now you can follow up your parcels. Before that was unthinkable, and now you have an app where you can follow up the parcels or, or what you are sending through them. But let me tell you something that, that I think that is very important. we need to know where to fight, the business model of the TNCs that they're growing and they're eating our lunch, again, they are eating our lunch. let's not be in denial mode. They're easy to hire. They're always available, and they're easy to pay. That is the basic business model. Okay.

Ken Lucci: 45:21

Yep.

Leonardo Gannio: 45:21

Then once I was hearing the podcast, because I am, I'm, I'm, I am a, a follower of the post, and I saw a provider that he was very proud of having multiple screens, uh, while dispatching the cards. And I thought, that is not a, that is not a differentiator while you are operating your company. If Elon Musk can send a rocket to the Space Station with only one screen

Ken Lucci: 45:50

And catch it.

Leonardo Gannio: 45:52

And

Ken Lucci: 45:52

it.

Leonardo Gannio: 45:53

why this person is so happy to have six screens, while with mags our technology, he can have one screen only and relaying our AI technology. And I call him, I think that he reacted with your ear. He, he was not thinking, and again, I agree with you that his fear. It's not that they are arrogant, it's fear. That's why

Ken Lucci: 46:20

Yeah.

Leonardo Gannio: 46:20

I think that this dream that they have to explain the future of technology, lead by the NLA and the and the software driven magazine will be a breakthrough in our industry. Just to leave behind all that old type of conversation and discussion and start to discuss this new technology.

Ken Lucci: 46:43

Well, and you, and to your point, you know, you, you can't just have an article on AI or a session on ai. It now has to live in everything the industry does and look at and look at what we ask the questions. What can we expect? Similar, similar situation. When I take a, a chauffeur car to the airport, I call a company. We're, I'm in a suburb, very rural area. I call a company and I have to continually repeat my home address, the airline I'm going to and the airport, et cetera, et cetera, et cetera. What I don't understand is why can't I, at the very least, the most rudimentary, why can't I call a phone number and say, this is Ken Luci calling from 7 2 7 6 3 8 3 3 8 8, pick me up at my house, going to Salisbury Airport, flight number 40 42 21. Repeat back or te send me a text message. You know, the human, when we do the, when we do an analysis on how much it costs to take a reservation. These people, operators are leaving five, 10,$15 on the table because the process is completely manual constantly. We don't even have the ability to have our favorites right recorded. So if I can order my prescription through CVS without talking to a human being and getting a and get a text reply, why are we so far behind?

Leonardo Gannio: 48:22

Again, we talk about the monopoly. We talk about the comfort of not changing. We talk about, narrative in the market that is completely wrong. Then you can do that for your company today. Maybe not the way you do it, but let me tell you, you don't need to rely on, on mags. You have seven companies, seven companies in the United States with IVR, interactive voice recognition that they're working with ai. You can hire them. You have the pricing on the web and hook kept that to Mags and Magis will receive that reservation as an automatic reservation. Then again, we need to tell all the story. If you write only a paper and a column of abs, they're going to read and say, okay, we are far from there.

Ken Lucci: 49:14

Oh no. They'll say that's nice, but it doesn't apply to me.

Leonardo Gannio: 49:18

Yeah. if you explain all the picture with all the pieces of the puzzle it started, it will be started to make sense for them. We need to explain all the picture, and this is what is about mobility 3.0, explaining all the picture, telling the people that if You work for Uber, your net gain is$9. Is not 25 is nine because after amortization, after social benefits, after those things, you are not going to replace your car, but you'll figure out that five years later,

Ken Lucci: 49:54

Yeah.

Leonardo Gannio: 49:55

in, in the beginning.

Ken Lucci: 49:57

and I did a podcast called The Uber Dream and it was so edgy that the producer put a disclaimer on it. Okay, now this is this stuff this podcast is an outlet for me because six days a week I'm looking at financial statements. My business partner and I are crunching like little numbers, and it's, it's taxing right? The entire reason why we did the Uber Dream is because I've just spoken to too many Uber drivers and seen too many Uber drivers comment on Facebook. That just what you said, I thought I was going to make X and after you deduct all this, I'm not making minimum wage. You, you hit upon something in your book about the unintended consequences of the gig economy. The gig economy's hidden cost, how it's eroding the American middle class. That chapter should, this chapter itself should be sent to everybody in dc every labor secretary in every single state. Okay. And they should, beyond just reading the chapter, they should do the math, the Uber driver, the Uber driver that they're taking from the capitol. To their condo is not even making minimum wage. Not only, you said something about the the social safety net and the social consequences. Tell me what, what did, what prompted that chapter in the book?

Leonardo Gannio: 51:38

Hmm. Very good question. I think that in our industry, we have a say in my, in my bond camp, uh, country, you know, we have a lot of soccer. Uh, we have been, uh, uh, war, uh, championships, and we say every single, uh, habitat of that country is a ma, is a manager. They, everyone knows about futo, uh, or soccer, sorry.

Ken Lucci: 52:03

Yep. Yep. Yep.

Leonardo Gannio: 52:04

that in our industry. Everyone knows how to save the economy and how to manage this business, then I think that we don't need to wait the government to do something with Uber. I think that we need to bring tools and empower business owners to win this digital economy. And this is the way to increase jobs and to increase, you know, the, the, the, the power of aggregation in our industry, and tell me if I'm wrong, they all, they can, people that want to sell their businesses, people that they're reducing, people that are saying, I'm too old and they're 50 years old, said, too old for what? No, no. You want to quit and you want to get some money from your, your company. But again, we need to plant the seed for them to tell them you have a tool. You have the market and you have new opportunities that you need to grab. You have campus university campuses, you have hospital campuses, you have government campuses that you are not delivering that service. You have cities. We have been engaging with a lot of municipalities for micro transit. Who do you think that are going to manage those cars, not us, the providers and are in a better position with all the locations to service those peoples, our providers, the National Limo Association business partners. Then we have a unique opportunity today before they start to eat our lunch. But we need to automate with AI and second focus on revenue growth margin. That's it.

Ken Lucci: 53:50

Yeah, no, you, you, you're right on the money. Let me, and let me emphasize, emphasize why the other day, yesterday I did an update an AV trend update on at NC called Grab, and they are huge. Singapore. Okay. Now they just contracted with a Korean auto, uh, AV co auto autonomous vehicle company. And they're a full stack from literally from the building of the vehicle to the platform, the AV platform. Do you know what they're doing? Grab is doing a pilot program, and they're partnering with the equivalent of the National Limousine Association. Okay. They're for the autonomous vehicle pilot. They're training the drivers to be safety at attendants inside the av. So grab, I said to myself, grab is literally the equivalent of Uber, okay. In, in that part of the world, they are parting. With the National Livery Association over there for this AV pilot program. So to me, that's proof positive that there are opportunities here. Now let's just be, let's just be realistic. There are gonna be a lot of operators who are left behind because they don't embrace change. They may not have the capital. Okay. But at the end of the day, I think that the first operators that are the innovators, and you and I know a couple of them, and you're working with a couple of them and a couple of, they're my clients as well. Those innovators may take may take some bruises and a learning experience, but that mentality is going to rule the day, that mentality of innovation and the, and saying, no, no AVS are competing with me. I think that operators need to. Learn everything they possibly can. They need to be involved with their local regulators. They need to understand and get themselves on the radar of everybody on autonomous that they can. Because to your point, I mean, Waymo at some point is going to get sick and tired of building hubs around the country, right? And Tesla doesn't like building those kind of hubs. They don't even like to buy, you know, they don't even have traditional dealerships. And the same with Zoox, the same with MA Mobility, and I know mobility. You know, one of, one of your partners and they are looking, actively looking for fleet operators. So in the last f five minutes, what, what's your final message to any livery operator or provider that's listening to us? By the way, the audience is growing. Uh, John tells me we're doing fantastically well, uh, which is good'cause this is like a second job. What is your final message to operators, on the subject of transformation and innovation?

Leonardo Gannio: 57:03

Well first I will tell them that in the near future they will be three type of operators. One the one that is going to embrace change, and they were going to be the ones that move forward, the industry. The second ones are going to be a service company that will maintain the autonomous cars of other operators or other companies. And that could be a good job. You know, they're going to earn money, but they're going to be in the background like expect. And the third one are the one that they were going to disappear.

Ken Lucci: 57:40

Yes. And I, by the way, we're seeing it and it's not, we're not seeing it because of AV necessarily, but there's a quiet cleansing going on, and it's primarily because of fleet insurance going through the roof the inability to financially manage that cost issue. But as far as I'm concerned, it's the same thing. We have been talking about changes in commercial fleet insurance and the hard market for the past three years, and it's. The operators that are going outta business now are the ones that didn't listen back then. Okay. And I know I have friends on that. The insurance side research underwriter, Steve Freeberg is one of, just admire the hell out of what he's built, the biggest private, commercial, uh, agency in the country. And he said, Ken, what you've been saying, we've been saying what you've been saying for three years. We've been saying for 30. Thank you. Thank you fi People are finally listening. But the same's gonna happen with AI and AV the same thing, but, and I think it's gonna happen faster. you are a hundred percent right.

Leonardo Gannio: 58:48

Uh, and, and pricing are going down. Uh, if you start to talk to the insurance companies, like Principal or other companies, they are, they're starting to change their business model because autonomous cars are zero accident or free accident. No. Then they need to change the way the business model for transportation, and they're starting to analyze insurance in the person, not the car. Because the person is subject to the movement. They can take a car, they can take a micro mobility, a bicycle, they can do a lot of things. And they've started to think about inuring in, in fact, there is one company, Latin America, that started to insure people while they're moving from one side to the other. Then again, I think that the future is bright, Ken, it's fantastic, but it'll take a lot of work, a lot of enthusiasm and a lot of openness to start to embrace technology. Let's move our industry from the denial to the proactive way of thinking, and let's partner all together because this is coming, and let me tell you, not in Korea. Here in the United States, you have many new companies that they're not part of the NLA and they're huge operators and they're operating with EVs, they're operating with municipalities, and they're building new TNCs in the market. New York, Florida many places.

Ken Lucci: 1:00:23

Yep. I agree. I agree. So the message today is evolve, or let or get left behind the message of the today is to, let's, as an industry try to move the, move our limo tech forward, and, uh, perhaps not listen to the same voices or, or the same empty promises move forward. We're gonna move forward and succeed with AI and, embrace av, uh, as it shakes out. I think it's gonna be an extremely good thing for the industry because labor is so intensive and difficult to get. we do a great job managing fleet. We do a terrific job keeping'em on the road. So I think that you're right, the future is gonna be bright for the industry, but it's gonna require a An awakening.

Leonardo Gannio: 1:01:09

And, and and new talent. New jobs, new talent. And that is, and to get a new talent, you need to learn.

Ken Lucci: 1:01:17

So everybody for those who can't see me on YouTube. Go to Amazon and buy Mobility 3.0, how to win and Thrive in the future of Passenger transportation. Leonardo from jis, thank you so much for taking the time out to be on our podcast. And I will see you, uh, at the chauffeur driven show in Dallas, I hope in the fall. If not, we're definitely gonna see you in the chauffeur driven NLA show in Las Vegas. Thank you very much.

Leonardo Gannio: 1:01:48

Thank you for having me. Thank you.

1:01:52

Thank you for listening to the ground transportation podcast. If you enjoyed this episode, please remember to subscribe to the show on apple, Spotify, YouTube, or wherever you get your podcasts. For more information about PAX training and to contact James, go to PAX training.com. And for more information about driving transactions and to contact Ken, Go to driving transactions.com. We'll see you next time on the ground transportation podcast.