How three people from graz took off with a photo app for cars
Initially, they wanted to compete with auto1. But then the success came with a by-product. Why dealers in Germany and the USA rely on their app.
When you founded micardo in 2016, your original intention was to set up a brokerage platform for used cars. today, the three austrians stefan fedl, florian konig and patrick schwarzenberger still work with cars, but earn their money with a side project: carcutter.
This is about cropping cars on pictures. For example, if a dealer photographs a vehicle in the yard with the carcutter app, the startup automatically makes the car look like it’s on display in a showroom. Means: the background is cut out and the photo is uploaded to the dealer’s site if necessary. With their app carcutter, the trio from graz is not only successful on the german market, but also in the uSA.
The fact that the three changed their focus at all was due to a miscalculation in the previous project. "we made the mistake with micardo at the time that we only set up a price comparison, and didn’t buy – so unlike auto1, no buy-sell," says fedl in an interview with grunderszene. The founders wanted to earn money through advertising revenue and affiliate business. That was 2018.
At the time, they had already received a small investment from the Austrian Research Promotion Agency (FFG), and business angel maximilian seidel also invested. "we approached our investors and told them that it probably won’t work out with micardo."Instead, they presented carcutter as a new idea. A by-product that worked better than fedl, konig and schwarzenberger would have initially thought.
How success came at the edge of the core product
How the founders came up with their idea in passing: in a car search engine, vehicle images keep turning up that don’t properly depict the car or show a white area instead of the desired vehicle. Micardo wanted to filter out these images. The question was how difficult it is to automatically recognize the outlines of vehicles, says fedl. Within a week, the company was able to implement the basic idea of an automated release, which was already functioning in its basic features. together with the german car trading company, the AHG group, the side project was immediately tested in the trade and further developed, says the founder. By september 2019, the app was up and running.
In the meantime, according to the company’s own information, an artificial intelligence regulates the majority of the work. For the AHG, this would mean a process cost saving of 660.000 euros a year have been generated by carcutter, says fedl. 200 more customers are also to use the franking app – 90 percent of them in germany. fedl does not want to reveal which merchants are in the portfolio. There is cooperation with BMW, audi and mercedes, the company says.
In addition, a large customer in the U.S. uses Carcutter, which is said to account for two-thirds of total sales, says the founder. There is talk of a "million-dollar deal". Carcutter doesn’t sell the app, it sells the service of cropping cars. Ultimately, it’s about saving time. For the uS customer, 30.000 photos are processed per day. "in 2020, we achieved a tenfold increase in sales compared to the previous year," says fedl. From a six-figure to a seven-figure turnover.
This is how the startup makes money
Image editing and cropping app are not a new invention. There are numerous alternatives on the market. Startups such as twinner sometimes offer 360-degree scans of used vehicles. Fedl emphasizes that carcutter should primarily cover the service around it, from the release with the app, to post-processing, to uploading the images. The error rate, it says, is about three percent currently, depending on the perspective from which a photo is taken. In addition to the 13 employees in austria, about 80 freelancers from india and bangladesh provide any corrections or requested edits to the images, the company says. Carcutter promises that, depending on the service package, the error rate will be reduced to zero. Anyone who has extra requests for image processing has to pay extra.
In the simplest version, you pay per image, for example five images for five euros. Other service packages are also sold. According to its own statements, the startup carcutter, for which a separate company has now been founded, is cash flow positive – it can therefore finance its own operations itself. Most recently, situlus holding, the capital provider around business angel seidel, invested another six-figure sum in the startup in november 2020. So far, a total of half a million euros in investment capital has been raised. Micardo, the previous project of the three founders from graz, also continues to run. However, in the future, they will focus only on carcutter, "as it is much more lucrative and scales better," says fedl.
Next, AI should learn to do anti-glare and help users make sure images aren’t overexposed or underexposed even before they’re photographed. Also, 3D showrooms to be added soon.