How Tekion grew to $3.5B in five years with a UX design advantage
Executive Summary
In 2016, ex-Telsa technology executives Jay Vijayan and Guru Sankararaman co-founded Tekion. Their vision: To disrupt the automotive retail industry with an end-to-end platform that connects automakers, dealerships, and customers, while putting user experience at the center of Tekion’s platform design.
Tekion quickly raised substantial funding and hired a world-class engineering team. Yet, generating design momentum proved a challenge. Tekion needed an external design partner that could handle the complexity of enterprise software, keep pace, and meet the startup’s high expectations.
In 2017, Tekion engaged UXReactor, initially to design just one module of the software. That eight-week project soon became a thirty-month partnership. UXReactor took the lead on design while also helping Tekion to build a high-performing experience design function inside the firm.
The Challenge
To understand the Tekion story, you must first understand Tesla, the world’s most valuable car company.
Tesla has achieved that valuation not only based on the brand’s stand-out design, innovation, and performance.
Unlike every other automaker, Tesla operates in a closed ecosystem. From manufacturing to retail to maintenance and repairs, Tesla owns and operates the customer’s end-to-end experience. And Tesla holistically manages every step using an integrated IT platform.
That’s why the Tesla experience feels unified. Seamless. Guided by a single intelligence.
Outside of Tesla, though, the automotive industry is far from unified. And it shows in customer experience.
Poor UX Is Holding
Auto Dealerships Back
In the traditional auto retail industry, dealerships are independent of auto manufacturers, and both use entirely different systems. As an auto dealership customer, you may also engage with separate service and repair shops.
Yet, most of your experience, positive or negative, is shaped by your dealership. And no matter how committed dealerships’ staff might be, conventional auto retailers are hard-pressed to compete with Tesla on experience. They simply don’t have an integrated IT platform like Tesla.
Instead, traditional dealerships have historically relied on complex, fragmented software systems that give dealers virtually no visibility into your complete journey as a customer.
Providers of DMSs built the technology long before the user experience (UX) field matured. Like most legacy enterprise systems, these applications have always been cumbersome to use and became even more so as DMS providers tacked on functionality piecemeal over time.
Today, most DMSs are the Frankensteins of the software world.
Co-Founder, CFO, and SVP of Operations, Tekion Corp.
As a customer, it’s not uncommon to spot the seams caused by the fragmented DMS infrastructure.
For example, if you inquire about the availability of a specific auto model not currently in stock at your dealership, sales reps can rarely give you a clear answer. And in the handoffs between sales, financing, and service, it can feel like no one truly knows your file.
These legacy dealer systems also eat into dealership profits. In part, that’s because DMSs have become too costly as providers have tacked on applications with additional fees.
Dealerships also lose revenue when their system doesn’t deliver the right information at the right time. For example, suppose a sales rep can’t price a car competitively based on the customer’s lifetime value.
The DMS problem is not unique. Most companies — even those known for design — focus their design efforts entirely on customer-facing experiences to the neglect of back-end experience design. Yet when employees have poor user experiences with those back-end tools, they can rarely (and only with great effort) deliver an outstanding customer experience.
Tekion’s Vision To Build
A User-Centric Alternative
Before co-founding Tekion, Jay Vijayan was CIO, and Guru Sankararaman, VP of IT at Tesla. They were directly responsible for building the seamless IT infrastructure that gave Tesla an edge in customer experience, operational efficiency, and profitability.
Guru explains,
Co-Founder, CFO, and SVP of Operations, Tekion Corp.
In 2016, Jay and Guru co-founded Tekion in San Ramon, California.
Their vision: To disrupt the automotive retail industry with an end-to-end platform that connects automakers, dealerships, and customers — replacing outdated DMSs and a host of integrations.
Tekion was determined to make the user experience as delightful as any leading consumer solution as part of that vision. Jay and Guru knew that experience would be a key differentiator for Tekion.
User experience is not given a lot of thought in enterprise software. Whereas at Tekion, we were determined to build our platform in the most intuitive way possible.
Co-Founder, CFO, and SVP of Operations, Tekion Corp.
That first year, Tekion raised $50M in Series A financing and hired an elite engineering team, including technical talent with Tesla experience. All Tekion needed? Design momentum.
The Tekion team had the highest expectations for design. And they were accustomed to executing industry-first innovation very fast.
However, as engineering leaders, neither Jay nor Guru had previously built or managed an in-house UX design team. So, they looked to external partners. With their Tesla credentials, Tekion could have hired any design team in the world.
Only, Tekion couldn’t find a UX design agency to meet their expectations and match the startup’s pace, given the complexity of the challenge.
Co-Founder, CFO, and SVP of Operations, Tekion Corp.
Tekion also soon discovered that the DMS environment and software are more complex than anyone initially understood. When the team started unraveling the competitor systems, they realized DMSs comprise 20-30 separate applications. Inventory, financing, payments, sales, insurance, service, and parts are only the beginning. The complexity was too much for other experience design agencies.
Managing Partner and Chief Experience Officer at UXReactor
Today, Justin Hou is Senior Director of Product Innovation, Design, and Learning at Tekion. Reflecting on Tekion’s experience with previous agencies:
SENIOR DIRECTOR OF PRODUCT INNOVATION, DESIGN, AND LEARNING AT TEKION
Jay and Guru were looking for a user experience partner to lead design when they approached us at UXReactor. Initially, they proposed that we take on a trial assignment: designing the “sales desking” experience, just one of many modules in the application.
Sr. eXperience Design Strategist at ux reactor
No problem is too big for us. No problem is too small for us. We’ll approach it the same way. At the outset, Tekion hired us for an outcome, but they just wanted to see, ‘Can these guys handle complexity, and can they design at a fast pace?’
The pace was accelerated by any standard. It can take months just to understand the DMS environment. Still, because Tekion needed to deliver results for investors rapidly, we agreed to deliver the sales desking module by the end of eight weeks.
Managing Partner and Chief Experience Officer at UXReactor
The Solution
With that one discrete project, UXReactor and Tekion began a partnership that would last two and a half years and take Tekion from the concept phase to a fully-functional flagship product: Automotive Retail Cloud™.
Here’s how we delivered.
UX Design for Tekion:From an 8 Week Trial Project to a 2.5 Year Partnership
Cutting short user research is never an option for us at UXReactor, even under tight timelines. Instead, we draw on research methods that let us generate insight faster.
In Guru’s view, the difference was distinct.
Co-Founder, CFO, and SVP of Operations, Tekion Corp.
SENIOR DIRECTOR OF PRODUCT INNOVATION, DESIGN, AND LEARNING AT TEKION
Within just two months, the UXReactor team led discovery, created a new experience, and designed new ways of showing the data — including one cutting-edge way Tekion would patent.
UXReactor delivered on deadline and to Tekion’s high standards for experience design. Tekion extended the engagement, contracting UXReactor’s services for a year and investing a significant amount of the startup’s Series A funding in our experience design work.
We took complete ownership of key software modules, from user research to prototyping. At the same time, we took responsibility for defining the style guide. That meant unifying the designs under a comprehensive design system, the single point of truth for all designers and developers.
The UXReactor and Tekion team collaborated closely, which was essential to our shared success. As Guru explains,
Co-Founder, CFO, and SVP of Operations, Tekion Corp.
By October 2017, just seven months after initiating our work together, Tekion beta launched their flagship product, Automotive Retail Cloud 1.0.
The first year became the second year. Our work expanded from designing a handful of modules to architecting the entire platform.
Co-Founder, CFO, and SVP of Operations, Tekion Corp.
By April 2019, Tekion went live with Automotive Retail Cloud and started onboarding dealers on its Automotive Retail Cloud platform in Q3 2019. Auto industry investors hailed Tekion as a trailblazer.
I’m so convinced that their technology and vision will transform automotive retail for consumers, dealers, and manufacturers that I wanted to be a part of the change by investing in the company.
President, Serra Automotive
Building Tekion’s Internal UX Capacity
From UXReactor’s perspective, the design problem was never, ‘How can we create a sales desking module and then get more work with Tekion?’ It was, ‘How might we establish a user-centric design culture and ecosystem that can help Tekion gain significant design momentum?’
Sr. eXperience Design Strategist at ux reactor
We had a two-fold goal: Deliver on the design outcomes and build Tekion’s internal capacity to lead and execute on design.
To that end, we coached the Tekion team in UXReactor’s PragmaticUX (PUX) process while evangelizing our user-centered design mindset. The goal: For Tekion’s team to internalize the habit of building requirements from a deep understanding of the user’s experience.
Managing Partner and Chief Experience Officer at UXReactor
Part of building Tekion’s UX capacity involved establishing user research as a function in the startup. At that time, we spent a great deal of time at dealerships doing user research, seeing where they work, how they work.
Managing Partner and Chief Experience Officer at UXReactor
Since then, Tekion has fully embraced user research. In fact, they’ve gone beyond classic customer research and acquired dealerships where Tekion can test and validate experiences in-house.
Beyond research and design processes, UXReactor also helped build the culture, environment, and team to give Tekion a lasting competitive advantage in experience design. It was a deliberate decision because we understand that our clients need to move beyond reliance on an external agency.
Guru explains,
Co-Founder, CFO, and SVP of Operations, Tekion Corp.
When we partner with an outcome mindset, our approach is that we'll do what it takes. Tekion asked for UI design, but they got what we call ‘experience transformation.’
And because of that experience focus, Tekion is very well structured and has tremendous momentum.
Managing Partner and Chief Experience Officer at UXReactor
The Results
Experience Design Disrupts an Industry
Since Tekion first went to market with a product featuring UXReactor’s designs, the platform has evolved. Tekion has tested and refined the offering, leaning on the user experience design processes UXReactor brought to the team.
In February 2020, Tekion released for general availability their flagship Automotive Retail Cloud™ — a next-generation cloud-native platform with a customer-centric design and simple, intuitive workflows.
Automotive Retail Cloud™ includes all functionalities of a DMS but uses true cloud-native, cutting-edge technology. It modernizes the end-to-end automotive retail experience and seamlessly connects consumers, dealers, and manufacturers.
With our platform, everything comes together from one source. Being on the cloud, we can connect all the pieces of data that could influence what you may need or want in your next visit to the dealership.
Founder & CEO of Tekion
Notably, the new product also enhances operational efficiency for dealers while removing complexity.
Guru explains,
Now, Tekion’s dealership customers can hire people with good business knowledge and customer skills, even if they don’t know the tools. They come in and focus on business without spending too much time learning the tool because our application is so intuitive to use.
Co-Founder, CFO, and SVP of Operations, Tekion Corp.
It’s an undeniable proof of concept for B2B enterprise software systems. Tekion has demonstrated that back-end enterprise applications don’t have to be complicated.
Instead, Tekion is as simple and delightful to use as the best social and consumer applications, yet powerful enough to seamlessly and efficiently run global businesses while delivering an unparalleled consumer experience.
Tekion & UXReactor Recognized Among Top UX Innovators
Tekion’s delightful user experience has earned acclaim in the design industry.
honoree, 2019
Months before the marketing launch, FastCompany recognized Tekion with UXReactor in the Innovation by Design Awards. We were included among the 40 best companies worldwide for superior UX designs out of 4,300 entries worldwide.
Tekion Now Valued at $3.5B — Just Five Years Later
In 2020, Tekion joined the unicorn club with a valuation of over $1 billion. Within just one year, Tekion announced $250 million in Series D financing that bumped the startup’s valuation to $3.5 billion as of October 2021.
Multiple auto manufacturers, including General Motors, BMW, Nissan-Renault-Mitsubishi, and Exor, have invested in Tekion, and dealers across the US have rapidly adopted Automotive Retail Cloud™.
Though the automotive world is known for spending lavishly on marketing and for aggressive sales tactics, just 17 of Tekion’s employees now 1,350 employees work in sales.
We don’t spend any money in marketing, or it’s very negligible. [We’re growing through] word of mouth.
Founder & CEO of Tekion
Tekion Gains a Lasting Experience Advantage
We didn't just design a product. We built a design organization within Tekion. When we went in, there was one designer who didn't have a team. Design could easily have been an afterthought to engineering.
But we were determined Tekion would deliver on the founders’ vision of leading with experience. So, we built UX design as the primary function.
Managing Partner and Chief Experience Officer at UXReactor
The Tekion case is a prime example of how UXReactor helps clients gain a lasting competitive advantage.
Leaders like Jay and Guru — executives who deeply value design and experience — often need support to create an experience-first company. We help those leaders build the capacity inside their firms to win on experience.
We guide them through hiring the right people, with the right user experience skills. We support leaders to create an environment and processes that prioritize experience. And through exposure to our team, we cultivate an organization-wide user-first mindset that yields a lasting advantage.
Just as it has at Tekion.
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