Transportation

Sidewalk Labs Spinout Replica Raises $41 Million Series B


When the Covid-19 pandemic hit New York City, the Metropolitan Transportation Authority (MTA) was faced with a difficult question: how to handle a rapid decline in ridership, logistically and financially. The MTA relied partially on its partnership with Replica, an AI-powered data platform the city hired to help model congestion pricing, in deciding what to do. Using Replica’s models—which harness AI and machine learning to generate “synthetic” populations whose behaviors can be tracked in order to simulate real-life scenarios—New York was able to adapt: it cut the hours of 1 a.m. to 5 a.m. from its schedule, and the MTA survived. 

Today, the vestiges of that modification are still intact (Subway schedules remain limited, and will reportedly stay that way for the foreseeable future) and Replica, for its part, is thriving. On Wednesday, the company announced that it has raised a $41 million Series B. The round is led by billionaire investor Peter Theil’s Founders Fund, whose other portfolio companies include Elon Musk’s SpaceX and the data giant Palantir. Replica’s past investors have also renewed their participation. 

“I don’t think I’ve ever seen a company accelerate government revenue at the speed that they have,” says Founders Fund Partner Trae Stephens, who is leading the deal, and will join Replica’s board as an observer. 

Nick Bowden, Replica’s CEO and cofounder, has developed an on-hand adage to explain what the status quo that Kansas City-based Replica, which originated as part of Alphabet’s Sidewalk Labs, seeks to disrupt. “The business model of the public sector historically has been to use ‘long-ago data to forecast a far away future,’” he says. 

In other words, in deciding how to make operational or infrastructural changes, institutions like the MTA, the New Jersey Transit, the Chicago Transit Authority and others of Replica’s customers have relied on the data they could glean from sources like censuses and household surveys, which have significant lag-times. When Replica produces its models, it doesn’t discount these data sets, or any others that its customers provide, but it does incorporate new, of-the-moment information, like that which is collected by digital resources like cell-phone apps. 

Importantly, Replica does so with an eye towards privacy. When it inputs data, it does so not necessarily with the goal of commenting on that data in particular, but in order to generate an imaginary, but possible scenario: a simulated urban environment through which “synthetic populations” move, behaving like real ones might. 

“A public agency can look and say, ‘What percentage of shopping trips uses an Uber or Lyft or taxi?’ And because it’s all simulated, it’s an accurate representation,” Bowden explains. “But it’s not literally, Joe Smith took an Uber from point A to to point B. Nobody needs to know that Joe took the Uber from point A to point B.”

That a small, high-tech company like Replica has penetrated the government space is already a feat, and is what attracted Stephens, who specializes in businesses operating in this area. As it looks to use its newly raised funds to grow, Replica will have to continue to convince public sector entities to set aside old habits for new solutions. 

“This team actually understands the problem space,” Stephens said of Bowden and his cofounder Alexei Pozdunkhov, who has taken on the title of Chief Scientist. “They understand the difficulties of the sales process. They’ve figured out how to break in and get these contracts across the finish line.” 

While neither Stephens nor Replica CEO and cofounder Nick Bowden would reveal the company’s valuation, both underscored that its revenue growth has outperformed expectations: the company “grew to about 400% last year,” Bowden added.



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