Ukrainians sold their technology to Audi, earned 14 million euros - the history of Apostera

 

 

 Audi e-tron Q4 came out with a unique technology - head-up navigation on the windshield. Besides Audi, only two other brands have similar technology - Mercedes and VW (VW and Skoda). The system in Audi helps drivers navigate the road in a completely new way and is technologically superior to the solutions in Mercedes and VW. Few people know that this system was developed in Ukraine.
It all started at Luxoft

Andrey Golubinsky, Viktor Sdobnikov and Olga Mirkina met at Luxoft, one of the largest outsourcing companies in Ukraine. All of them were involved in projects for car manufacturers. Today, software for the automotive industry is also made by other Ukrainian outsourcers, in particular GlobalLogic, EPAM, TietoEVRY (Infopulse). But the first embedded and in-vehicle infotainment systems began in Odessa Luxoft in 2006.

“The first software for the foreign automotive industry in Ukraine was developed by Ukrainian engineers at Luxoft in 2006,” says Victor. "For example, in Odessa, navigation systems were made for premium cars of the German market."

The idea for Apostera was born back in 2012 from a concept that seemed fantastic at the time. Andrey and Viktor were driving through Germany and expressively told the customer where the world was heading and what the navigation of the future would be.

    “We said with enthusiasm that soon there would be no need to be distracted from the road to look at the map. That we will look through the windshield, and there will be hints on how to get to the pharmacy, for example. There will be no need to count ramps, to compare buildings in reality and in the picture ... And suddenly the car stops and the driver sarcastically says: here's a pharmacy, get out, ”laughs Viktor.

At that time, there was still no equipment that would make it possible to bring the idea to life. It was postponed, but not forgotten. Andrey and Victor have worked in automotive for 10 years and understood the fundamental problem of modern navigation, which no one has yet been able to solve qualitatively.
In 2018, it will be solved by Apostera.
From point A to point B

In 2012, there were already high-quality navigators on the market with detailed maps and smart routes. It would seem that there is nothing more to disrupt in this area. But the founders of Apostera were haunted by one problem.

For 30 years, the approach to road navigation has not changed. People looked at their navigators the same way they looked at paper maps before the advent of smartphones. The driver had to compare two pictures all the time: the road that he sees in front of him through the windshield, and its digital copy on the navigator screen.

    “For example, you need a hospital. You enter its address into the navigator, drive along the route, you see a building in front of you. You need to understand if this is what you need or not. You look from the road to the map and compare two buildings - real and virtual, ”explains Andrey.

This is a mental work that a person must do very quickly in order not to get into an accident. It takes up to 90% of our thinking resource, leaving only 10% for the road. But this is not enough. Whereas earlier the roads were quite simple, today in megacities such as Shanghai, Los Angeles, Tokyo or Kiev, the road infrastructure is very complex. Exits, junctions, tunnels, heavy traffic.

When we are distracted by the map, we lose control over the situation in front of the car, and it changes dynamically: someone is rebuilding, someone slows down, someone crosses the road in the wrong place.

    “The main cause of accidents in the world is distraction from the road. In the first place among all the distractions - those associated with the use of navigation systems, including a smartphone. In the UK alone, according to a study carried out several years ago, more than 300,000 accidents involving the use of GPS navigation systems were recorded, ”says Victor.

And if you closely follow the road without looking into the navigator, you can miss some tricky exit - you will have to go around 20 minutes to get back on the route, and as a result, be late for an important meeting.

The movement process has become more complicated, but navigation has remained at the same level. Navigation companies create a digital copy of what you see through your windshield. It is as detailed as possible - so that the comparison of the two pictures in the driver's head is as quick and easy as possible. But the terrain is changing all the time: renovations have begun, the markings have been changed or a new sign added ... And although companies spend billions of dollars on regular map updates, the two pictures will still be different.

    “Why create a digital copy of what we already see? Instead, on top of the real picture, you need to superimpose digital information that will tell you where to go. Thus, leveling the mental task of comparing two pictures, ”says Andrey.

First steps of Apostera

In 2014 The Luxoft team made a number of prototypes of such a system. We actively interacted with the customer - Daimler, which already had its own internal developments.

Today, there are two working AR-HUD navigation systems in the world with reference to the real world (simpler options can also be found in VW and Skoda): the first one is from Audi, it was developed by the Ukrainian Apostera. The second one is from Daimler, it is an internal development.

Apostera was founded in 2017 by engineers and managers with extensive experience in the automotive industry. “Me and a crowd of men,” Olga Mirkina laughs. Most of the founders are still at Apostera today.

They immediately decided to found the company in Munich - the capital of the German car industry, since they were guided by it. The company was registered in a notary office on Marienplatz (Independence Square in Munich), and the founders saw a certain symbolism in this. “Almost Maidan Nezalezhnosti,” says Andrei.

The team from the first days consisted of about 30 people (together with the founders). Quite a lot for a startup, but the product is very complex, and Apostera understood that they could not achieve anything with less effort. Investments helped to hire the best engineers and developers - the Ukrainian SMRK fund invested in Apostera. The seed round was $ 1 million, plus the funds of the founders - the company used these funds to develop a demo version of the platform. It took 1.5 years.
First rejection and first contract

During their 10 years at Luxoft, the founders of Apostera have grown into acquaintances in the automotive industry. During the creation of the company, they secured agreements with a potential investor, who was to become the very first buyer of the system. But as often happens, the partner changed his mind. It was a big blow for Apostera. But the Ukrainians did not intend to surrender.

Apostera implemented its first project in China, in a market that was not initially targeted for the company. It was an AR HUD prototype augmented reality in conjunction with a major Tier1 in a Chinese automaker's car.

    “In Shanghai, we got to know the Chinese style of work,” Olga smiles. - I arrived all in heels, in a suit, and they took me to some garages. Wild heat, a bunch of Chinese workers, the test car is covered in dust in a dirty, semi-dark garage. And I crawl along it on my knees between the disassembled seats to find and photograph the cable that is needed to connect our system. An interesting experience.

    And when it came time to test the system on a test car, their engineers had to put a navigation display in there. And to secure it, they blew it out with polyurethane foam. Foam, Karl! "

Despite the peculiarities of the Chinese corporate culture, the cooperation turned out to be successful. For Apostera, this project was a confirmation of hypotheses and a test of its design in real conditions. Now she had to conquer Europe.

In 2018, Ukrainians took the product to the Consumer Electronics Show in Las Vegas. They showed the system on a real car, and Audi representatives became interested in the development. In the same place in Las Vegas, Apostera held its first meeting with them and decided to participate in the upcoming Audi tender. The automaker was looking for an augmented reality navigation system developer.
The company's booth at TechCrunch Disrupt Berlin 2019, where Apostera was selected as "Top Five AI Startup"

     “Imagine a small unknown start-up that bursts into a tender for an automaker and tries to compete with world-class suppliers like Bosch and Continental,” Olga smiles. - But we had a very serious advantage: we were the only ones who were ready to show a fully working prototype. Sit down and drive. "

Test car Apostera. Photo courtesy of the company

Several people with a strong accent and unpronounceable surnames drove their test car to the Audi representatives. A couple of weeks before that, other suppliers presented their developments - huge companies with a worldwide reputation. Give credit to the Audi engineers - they decided to give the startup a shot. And they did not lose: the systems of world suppliers that were shown to them earlier did not stand comparison with what the Ukrainians demonstrated.

    “One of the engineers, who was sitting in the back during the demo, broke through between the seats and, pointing at the screen, shouted:“ This should be in our production! ”, Says Olya.

As a result, Audi signed a contract with Apostera to supply the technology in the new Audi e-tron Q4. The car was released in May 2021. From that moment on, the cooperation of the Ukrainian team with the German auto concern became public information.

    “We were impostors. It was very difficult to get there. And we couldn't tell anyone about it for so long. That is why now we are talking so emotionally, ”admits Victor.

Thanks to the deal with Audi, Apostera gained market recognition. Now the company has a counter 

certificates with 4 car brands and tenders for 4 more contracts. The company does not yet have the right to disclose the brands, however, according to Andrey, these are the leaders of the premium segment of the German and American automotive industry.
What is Apostera technology

In the picture that the driver sees through the windshield, Apostera adds information that shows where to go. As if someone had drawn clues over the road. Looks like augmented reality, but not really.
Apostera-16
Image: Audi

Classic augmented reality is not suitable for navigation. It complements reality without understanding the physics of the environment. Imagine that you are driving on the road, and an important hint pops up on the windshield - and completely covers the pedestrian who crosses the road right in front of your car. Behind the classic augmented reality, you will not see this pedestrian and will not have time to brake.

Therefore, Apostera uses what is called Mixed reality. Before displaying anything, the technology recognizes and analyzes what is happening ahead: cars, pedestrians, the roadway. Based on the current situation and various probabilistic patterns, the system makes a forecast - how the situation will change when a prompt appears on the screen. And with these calculations in mind, seamlessly blends augmented objects on top of reality.

There is another nuance. While driving, you look not at the windshield, but through it, into the distance - your vision is focused about 15 m in front of the car. Therefore, it is important that the superimposed information pops up on objects more distant. Classic augmented reality doesn't take this into account. Mixed - how.

    “Our technology stack is comparable to companies that are engaged in autonomous driving,” Andrey says. - The only difference is that we do not drive a car. We recognize the environment, build its 3D model, make a prediction of where the cars will be in order to get such a beautiful picture. This is actually a very difficult process. "

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Image: Audi

Looking at the renders of the working Apostera system, you might think that the arrows and hints are drawn directly in the windshield. In fact, this is the result of a complex projector. In the industry, it is called heads up display or head-up display.
The design of a projector that is embedded in a car to project mixed reality onto the windshield. Image: Audi

The image originates in such a box (photo below), after which it is projected onto the windshield in such a way that the picture is clear, correctly superimposed on reality and is not distorted due to the curved shape of the glass and other factors.
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Demo equipment assembled in Apostera based on car SoC, microcontroller, camera and sensors. Photo: Olya Zakrevskaya / AIN.UA

Apostera makes only software - hardware is supplied by Japanese, American and European companies - heads up display market leaders. But in order to integrate such a display into a car, you need to make serious changes to its design. The projector is complex optics, so it is quite large, and must be placed in front of the steering wheel in order to project onto the windshield. To do this, Audi had to replace the steering column with a drive-by-wire system and put a projector in its place.

    “Now there is no direct connection from the steering wheel to the wheels - it is powered by electronics, which transmits a signal to the chassis via wires,” explains Viktor. "Our feature is seen as very interesting, they just don't do such reformatting."

Note the design of the steering wheel: it has been moved to the left to accommodate the heads-up projector. Image: Audi

The costs of design changes are borne by the automaker. Every centimeter is a lot of money. In total, these are millions of euros. But the concerns are ready to do this, because otherwise they can lose for a long time to their competitors. The car market is changing very quickly, the price of delay is bankruptcy.

“Cars are becoming shared: one car can be used by me, you and another stranger. They become electric with high mileage. Accordingly, over time, cars will be produced in units of less and less. This leads to the fact that the market for the automaker could shrink 10 times over the next 10-15 years. And 10-15 years in the automotive industry is a very fast revolution. They lose their profits from the sale, meanwhile the companies, which, having not a single car, sell software on them, take this profit for themselves, - says CTO Apostera. -

    Which automaker will not be affected by these changes? Tesla, because it already makes software for its electric vehicles. Here she presented a new version of the firmware, and most of the drivers paid thousands of dollars to update to it. And they will continue to pay. "

Apostera-6

Of course, head-up displays are far from being ex cars are quite expensive equipment. For models without them, Apostera offers its technology in a different version. This is a navigator, but on it the driver sees not a digital copy of the terrain - but the same thing as through the windshield: a video is transmitted to the display, which is filmed from the front of the car. On top of this video, Apostera overlays a mixed reality with tips. Closer to the usual navigators, but the problem of comparing two pictures is leveled.

In addition, Apostera is developing a passenger solution. Imagine that you are driving through the center of Kiev and see a new restaurant. With your mixed reality tablet, you can quickly find it on the map and can order food or reserve a table. That is, to interact with reality through the screen.
Certification and recognition by Apostera

Let's go back to Audi. Such contracts for a startup that is less than 2 years old (at the time of signing the contract) is an achievement comparable to a flight to Mars. Apostera managed not only to create a working and popular technology, but also to obtain a very important status in the automotive industry - a Tier1 supplier. Such a status is held by global international experts like Valeo, Bosch or Continental, and little Apostera is on the same level with them.

Let's take a look at what Tier1 is and why it matters. The entire automotive industry in the world is divided into three categories:

    Car manufacturer, or Original equipment manufacturer (OEM). For example, General Motors is an OEM. It manufactures cars: designs, engine, gearbox, etc.
    Tier 1 suppliers. These are companies that work directly with car manufacturers, supplying them with their individual solutions or equipment. Typically, Tier 1 is large companies with tens of thousands of employees with offices around the world. They take on huge responsibilities and responsibilities.
    Second-tier suppliers, or Tier2. They are subcontractors of the first echelon. Among them, in particular, service companies and outsourcers who supply software to Tier1 companies.

    “To be Tier1, you need to have a number of certificates and permits,” explains Andrey. “There are large companies in the automotive industry that have been operating for decades and they are still not in the first echelon - they just cannot get a certain certificate.”

Certified companies - units. How did the Ukrainian startup manage it? While still at Luxoft, the founders of Apostera understood how important certification is for automakers and how to get it.

Automotive is a highly regulated area along with medicine and aircraft manufacturing. Because the slightest mistake in the code will hit millions of cars and become a threat to the lives of drivers, passengers and pedestrians. Therefore, before something gets into production, it goes a long way through strictly established processes. The chaos that often reigns in startups is not tolerated here. Every process that takes place in a company must have a very precisely written policy that proves that the company knows what it is doing and is responsible for the result.
Photo: Olya Zakrevskaya / AIN.UA

To obtain Tier1 status, it is necessary to certify development processes - at least 9 processes from the group of ASPICE processes adopted in the automotive industry. Apostera certified 11: 6 engineering, 4 support processes and 1 management process - each for dozens of policies. From the first days, up to 10% of the work of the entire team was devoted to building these processes and competently drafting policies.

To obtain certification, we hired a German audit company with a good reputation in the market. The certification process itself takes a week: the auditors come to the assessment, they sit with the team, ask questions, see if the process really exists and everything works. It costs 10,000-15,000 euros.

    "Compared to the fact that the entire company spends 2-3 years, 10% of its time is spent on creating processes, this is not much money," says Olga.

It is important to note that at the time when Apostera signed a contract with Audi, we did not yet have certification. But the automaker was so impressed with the prototype that it gave the unknown startup carte blanche and allowed it to show the certificate a year later. “This is a lot of trust,” concluded Victor.
How much does Apostera earn

Apostera has several sources of income.

    Each vehicle is charged by Apostera for the use of its technology under license.
    The so-called service non-recurring engineering fee (NRE), in simple words, an integration fee. Each car model requires significant platform modifications for the correct integration of software with hardware: everyone has different sensors, maps, technical requirements.

The customer pays for the integrations in tranches throughout the project, and Apostera receives the license fee after the cars are put on the conveyor. It takes 2-3 years from the start of the project to the release of the first car. “Previously, it was generally 4-5 years old, so this is very good very fast for automotive, ”notes Olya.

Any contract for Apostera starts with a tender. For example, in November 2020, Apostera applied for tenders with three companies - European and American automakers. If the Ukrainians win them, they will start working around the beginning of 2022. The product will go into production in another 2-2.5 years. That's how long the sales in the automotive industry are. Because of this, there is a gap in the cash-flow.

    “You can imagine, in a startup with all sorts of technological issues, the question arises that your cashflow will be positive only in a few years,” says Victor.

But this is the specificity of the auto industry, and Apostera was ready for this. To close the financial gap in the project with Audi, in April 2019 the company attracted investments from ICU on the terms of a convertible loan. The amount of the deal was not disclosed, but it allowed Apostera to cover operating costs in the debut project and to achieve positive cash-flow.

The company's revenues are growing rapidly. “If you do not look at last year, where we received the same revenue as the previous one, we can say that we grew twice year-on-year,” says Andrey.

    We are a profitable company since the end of 2018. Since the beginning of the company's existence, we have already earned more than 14 million euros. "

To date, Apostera has successfully won all tenders in the field of automotive Augmented Reality systems, in which it took part, ahead of competitors in a number of indicators. The technology that Daimler made is an internal development of Mercedes, and the concern will most likely not sell it outside. For him, this is a unique advantage over competitors. In turn, for Audi and other automakers, Apostera is an opportunity to compete in the market by introducing fundamentally new approaches to navigation. And here the Apostera product has advantages, namely the linking of the image to the real world.
Apostera-5
Image: Audi
Big responsibility, big ambition

Now Apostera has 3 contracts in addition to Audi, and participates in 4 tenders. Victor estimates the chances of winning as very high. Meanwhile, according to his estimates, the load of the team is already 150%. Apostera should increase its staff very quickly, because the responsibility for it, as at Tier1, is very high. Despite the fact that work on one project has been going on for several years, the product must go into production within the deadlines strictly agreed with the automaker. Disruption of deadlines in a car is unacceptable.

“If production is postponed, this is millions of euros in financial losses,” explains Olga. - For example, a manufacturer has planned to produce 5 million vehicles over 3 years. A shift of several months is 200,000 undelivered vehicles. And the losses are not only in the margin. People who have been waiting for these cars can go and buy from someone else. Accordingly, this is a failure of further marketing campaign. "

    “The first car will go to the conveyor and will be delivered to the user on time. It's like a full moon - it will happen at a predetermined time, no matter what happens, ”concludes Victor.

The company currently employs over 100 people. Apostera has 4 physical offices plus a representative office in Shanghai. Three of them are R&D: in Kiev, Odessa and St. Petersburg. The main part of the development is carried out in Ukraine - about 80 people, of which 55 are in Kiev. the rest are in Odessa. In St. Petersburg about 10. Also open a new office in Detroit.

Ukrainian R&D plans to hire more than 50 new employees by the end of the year. These are requirements engineers, developers of various profiles, testing specialists and management. “This is taking into account the multiplication by the coefficient of modesty, because by and large we need about 90 people. That is, to almost double the staff, - says Victor. “The state that we have will allow us to simultaneously conduct production projects for 5 different car brands, but next year there will be 7 of them, and we want even more.”

    “We have come together to solve a specific problem, and for us the goal is very important and why we come to work every day or turn on our laptop early in the morning, working remotely. We are constantly looking for like-minded people and those who are ready to fundamentally change the automotive industry together with us. When someone chooses a new company, it is very important to ask yourself the question: "Why?" What does the company do, why was it created? Life is short to do what you don't like or to solve a problem that someone has already solved, ”adds Andrey.

Apostera-4
The company has a very good diversification - many women work in Apostera in engineering positions.

Most employees work remotely, but test engineers have to go to the office to test all of these systems on automotive equipment. In addition, Apostera engineers have a unique opportunity to test new vehicles even before they enter the market. To do this, you need to obtain special rights and skills that quite difficult, but can be compared to an extreme hobby.

“This is an extreme driving test. Because test cars are not always in the correct technical condition, respectively, the driver must be prepared for the fact that something will fail - brakes, steering wheel, some kind of system - and know exactly what he will do, - says Olga Mirkina. - Our engineers go on a business trip to Germany for several weeks to drive cars that have not yet gone on sale. They are interested in it. It seems to me that few companies in Ukraine can boast of such a thing. "
Apostera-3
Dogs are allowed in the office. Here, for example, a pet of one of the Apostera engineers "works". Unfortunately, on the day of the photo session, the girl and her dog were at a distance.

Olga was the first to receive this special extreme driving license at Apostera. And she was the first to debug the system on a test Mercedes S-class.

“We turned off some of the car's systems - the parking sensors, the screen that had the rearview mirror, the rearview camera - to turn on our system. The car itself is huge, heavy, difficult to maneuver. As a result, I crashed this car, - says Mirkina.

    For a day I was setting myself up to call the customer and tell them that I had crashed their car. I gathered all my courage, sent a photo and said: "How are we going to show your top management a demo now?" To which they reply: “Oh, it's okay, is this the back door? Well, someone will get up and close it. "

Apostera has at least a dozen of these test machines on its account. All of them are somehow remembered. For some they exceeded the speed limit and received about 10 fines in the name of the customer. On the other, the disc was damaged and all over Austria they urgently looked for a replacement, because it had a specific standard size. And one was accidentally filled with oil so that the battery stopped charging.

The only thing that always worked flawlessly was the Apostera demo system.
What's next

Today, Tier1 suppliers come to Apostera with a partnership proposal, and automakers are consulting even before a tender is announced.

    “America, Europe, Korea know us. We participate in almost all tenders from car manufacturers on AR, ”says Olga.

Apostera-1

When asked whether the founders received offers to buy Apostera, Viktor and Olga look at each other, but do not immediately answer.

    “Of course,” Victor finally says. - Just imagine, the automaker is ready to pump millions into AR navigation technology - and it does it. On the other hand, there is Apostera with strategic R&D, which is on the market with a current offer both today and in three years. The market for heads up displays is in its infancy and it is predicted that this market will grow rapidly in the next 5-7 years for devices for automotive. "