Tech Optimist Episode #44: Meet the AI Start-Up Bringing AI to Town Infrastructure

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  Sam Herrick:
  Do you ever wonder how all those potholes get fixed nowadays? A company using AI has figured out a modern way to do it.

  Daniel Pelaez:
  What I observed in one of my first jobs is that there’s no good data on the physical world to make the right decisions. There actually is a better solution for these governments. It’s really overlooked. It’s not like kids are graduating college and jumping out of their seats to go reinvent public works technology. That’s not really a sector that people think of.

  Mike Collins:
  How you create value is you take something that is not obvious, not easy to do, and you work your ass off and solve it.

  Sam Herrick:
  Hi, welcome back to this episode of The Tech Optimist, Meet the Startup. Today, we meet Cyvl.ai, a company that’s helping public infrastructure and local governments improve their communities’ infrastructure.

  Today, our host for this episode is Mike Collins, Founder and CEO at Alumni Ventures. He’s back in the interview seat. Our guest is Daniel Pelaez, Co-founder and CEO of Cyvl.ai. You’ll also hear me—I’m Sam Herrick, the guide and editor for this podcast at The Tech Optimist.

  A little bit about the interview today: Daniel and Mike discuss how Cyvl helps local governments improve and rebuild infrastructure within their sectors. Daniel talks about this massive recurring problem where engineering and construction companies have a hard time getting correct, accurate, and modern data on the physical world that they work in. This is where Cyvl.ai comes in.

  They have a device that can be attached to a car—just drive, and it scans the environment around you, converting that into a digital model for local governments and engineering firms. It measures cracks, bumps, fallen trees, faulty signs—it’s some really awesome technology. I can’t wait for you to hear Daniel talk about it.

  Welcome back to this episode; we seriously hope you enjoy. Sit back, relax, and enjoy.

  As a reminder, The Tech Optimist podcast is for informational purposes only. It is not personalized advice and it is not an offer to buy or sell securities. For additional important details, please see the text description accompanying this episode.

  Mike Collins:
  It’s a lonely job, my friend.

  Daniel Pelaez:
  Yeah, I know. And people told me that from the start, so I’m not surprised.

  Mike Collins:
  Listen, it’s all good. I’ve been doing this for 35 years. You definitely want to develop a cupboard of people that you can talk to.

  Daniel Pelaez:
  Yeah.

  Mike Collins:
  That can take some time, and it changes as your life develops. You just learn to deal with things.

  Daniel Pelaez:
  Yep.

  Mike Collins:
  Over time, you just do it enough. We could have some major crisis going on, and I’ve been married for 35 years—the bar for me even talking about it at home now is so high.

  Daniel Pelaez:
  Yeah.

  Mike Collins:
  It’s just another normal day of life.

  Daniel Pelaez:
  Yep.

  Mike Collins:
  You build up calluses and scar tissue. You just have to grind it out. My experience has been that what’s helped me is saying, “Hey, are we 1% better today than we were yesterday? Can I make two or three really good decisions today that move us down the field a little bit?” That compounding is the most important thing—not the big, splashy stuff.

  Daniel Pelaez:
  Yep. Yep.

  Mike Collins:
  All right, welcome to Alumni Ventures and our Tech Optimist podcast. We have another episode today of Meet the Startup. This is Cyvl, one of our 2024 new investments. I’m here with the CEO and Founder, Daniel… I’m going to mispronounce this. Is it Daniel Pelaez?

  Daniel Pelaez:
  Pelaez. You’re close.

  Mike Collins:
  Pelaez.

  Daniel Pelaez:
  Pelaez.

  Mike Collins:
  Yeah. All right, I’m here with the founder, Daniel Pelaez of Cyvl. Super excited to be an investor. Nice to meet you, Daniel, and welcome to the show.

  Daniel Pelaez:
  Mike, it’s great to be here. Appreciate you having me.

  Mike Collins:
  All right, let’s hop right in. Tell me about Cyvl. What’s the elevator pitch?

  Daniel Pelaez:
  Yeah. Really, our mission as a company is solving infrastructure for the US. It’s something that everyone can get behind. If you look at our roads, sidewalks, bridges, tunnels—they are in a state of disrepair. The country is investing literally trillions of dollars to fix it. But the problem we observed—what I observed in one of my first jobs—is that there’s no good data on the physical world to make the right decisions.

  Daniel Pelaez:
  So that’s really what we’re doing—enabling communities with better data by digitizing their infrastructure very quickly, very easily, and making it simple to understand where they need to prioritize repairs to rebuild infrastructure for the better. We do that with 3D mapping sensors that we deploy on vehicles, either through civil engineering firms or through government vehicles themselves.

  We 3D map every single centimeter of a roadway or sidewalk, identifying cracks in the roads, deficient signs, trees that could pose hazards. Then, we report everything in a very easy-to-understand, digestible format for governments to use in their day-to-day planning operations and capital improvement budgeting as well. Ultimately, it’s about building better infrastructure for towns and cities across the U.S.

   

  Sam Herrick:
  All right, I think everyone who listens to this podcast knows the general rule of thumb for how things go here. Cyvl spent some time really investing in a demo video for their technology, their company, and their mantra on why and how they do business. It shows the sensor, how it works, and the accompanying software.

  I’m going to play that now. You can see the visuals on all of our socials, or just listen to it here in podcast form. After that, we’ll hop into an ad and then return to the interview where Mike talks to Daniel about where Cyvl is as a company. So let’s hang tight and keep going.

   

  Speaker 4:
  Welcome to Cyvl, where we make manual infrastructure assessments a thing of the past. Our nation’s infrastructure has been overlooked for a while now, but it isn’t too late to start making the necessary changes in the way we manage it. Current methods of infrastructure inspections can be time-consuming, costly, and produce inconsistent, fragmented data. Cyvl has solved these problems with proprietary technology that makes infrastructure asset management simple, quick, efficient, and cost-effective.

  By using 3D mapping technology and artificial intelligence algorithms, they have developed the perfect solution for any civil engineering firm or government agency. The Cyvl sensor is shipped in an easily transportable package. Simply mount the sensor to the roof of any vehicle to get started. Once mounted, all you have to do is turn it on and drive. As you drive, the Cyvl sensor scans the world around you, creating a 3D digital twin of the built environment while capturing high-resolution imagery and laser scan data.

  When you’ve finished collecting data for your project, simply upload everything to Cyvl’s secure web-based platform. Then kick back as the algorithms do all the heavy lifting—processing the data and delivering actionable results. Once the data is analyzed, log into Cyvl’s platform to review results in depth. You can also export all data and integrate it into your favorite geospatial and engineering software.

  By leveraging Cyvl’s technology, engineering firms gain operational efficiencies, reduce project costs, and deliver better results. Firms can also win more business by submitting better, lower-priced bids than competitors. Reach out today to learn more and set up a demo. Better data, better decisions, better infrastructure—that’s what Cyvl is all about.

   

  Matt Caspari:
  Hey, everyone. Just taking a quick break so I can tell you about the Deep Tech Fund from Alumni Ventures. AV is one of the only VC firms focused on making venture capital accessible to individual investors like you. In fact, AV is one of the most active and best-performing VCs in the U.S., and we co-invest alongside renowned lead investors.

  With our Deep Tech Fund, you’ll have the opportunity to invest in innovative solutions to major technical and scientific challenges—solutions that can have a hugely positive effect on society. These companies have the potential to redefine industries, create a more sustainable future, and deliver significant financial returns. If you’re interested, visit us at av.vc/funds/deeptech. Now, back to the show.

   

  Mike Collins:
  And you’re an early-stage company. Tell me a little bit about where you are in your journey.

  Daniel Pelaez:
  Yeah, we’re definitely early-stage. I don’t know if there’s a single metric that defines that, but we’re now three years into our journey. I went full-time on this in 2021 after fiddling around a bit following college graduation. We started generating real revenues in 2022, and here we are today.

  We’ve already worked with over 200 towns and cities across the U.S., pushing close to 300 by the end of this year. That’s all been done in the last year and a half. We’re also working with a couple dozen large civil engineering firms nationwide. We’ve been able to scale up a little—currently, we have about 20 employees based in Boston, Massachusetts. Of course, there are thousands of municipalities and governments we can still help, but we’re seeing strong traction.

   

  Mike Collins:
  Excellent. Tell us a little bit about the origin story. I mean, you’re on the younger end for being a founder and entrepreneur. How did Cyvl come to be?

  Daniel Pelaez:
  I think it’s a fun story. After my freshman year of college, I didn’t have a cool internship. I was working a manual labor job at the local public works department in Southbury, Connecticut, one town over from where I grew up. I was driving a pickup truck, starting at 6:00 A.M. every day, just finding things that were broken—that was the job. Drive around, find broken things, fill potholes, fix signs, cut down trees.

  I remember asking the director, “Do we have a better way to prioritize how we handle this—maybe a list?” He said, “No, Daniel. There’s no way to track these things. Stuff breaks, someone calls, and we go fix it. We wish there was a better way.”

  Back at school, I was studying electrical engineering at Worcester Polytechnic Institute in Massachusetts. I was learning about self-driving cars, robotics, computer vision, and low-cost LiDAR sensors and cameras used for autonomy. I kept thinking about that summer job experience and realized what this technology could do, how far research and investment had come.

  I thought, “There’s a better solution for these governments. This sector is overlooked.” It’s not like college grads are jumping to reinvent public works tech—it’s not a hot sector.

  I saw it as a big problem worth solving and caught the entrepreneurial bug, even though I had no idea what a startup was back then. Fast-forward a couple of years, with great mentors and tons of customer discovery while still in college, we validated the idea with many towns in Massachusetts. Shortly after graduating, we raised our first small angel round and pursued the idea full-time.

  Mike Collins:
  Tell me what you think is on trend—what are the big tailwinds behind Cyvl?

  Daniel Pelaez:
  Yeah. Again, with startups, everyone knows a lot of it is just luck, and it’s not like we knew this was happening. But when the Infrastructure Bill—the Bipartisan Infrastructure Bill—was signed and passed, I believe in 2020 or maybe 2021, that certainly made the greater public and even the venture community aware that major dollars were going toward fixing this massive, massive problem. And there really was no good way to do it. So that definitely helped build awareness.

  Because I remember in undergrad, we would talk to angel groups and they’d say, “Public works departments and roadway infrastructure? Why do we care about that? I want a SaaS platform that has nothing to do with the physical world.” That changed a little bit, and I think everyone has seen the last few years’ trend in venture: people are not really scared of big hairy problems that have to do with the physical world anymore.

   

  Sam Herrick:
  Okay, I want to add some info on the Bipartisan Infrastructure Deal and the bill that Daniel brought up, and how it really helped streamline the success of Cyvl. An article published by The White House at whitehouse.gov on November 6th, 2021, from the Briefing Room, discussed this.

  It said: “Today, Congress passed the Bipartisan Infrastructure Deal, a once-in-a-generation investment in our nation’s infrastructure and competitiveness. For far too long, Washington policymakers celebrated ‘infrastructure week’ without ever agreeing to build infrastructure. The President promised to work across the aisle to deliver results and rebuild our crumbling infrastructure. After the President put forward his plan to do exactly that and then negotiated a deal with Members of Congress from both parties, this historic legislation is moving to his desk for signature.”

  Some highlights of this legislation:

  • Deliver clean water to all American families and eliminate the nation’s lead service lines.

  • Ensure every American has access to reliable, high-speed internet.

  • Repair and rebuild our roads and bridges with a focus on climate change mitigation, resilience, equity, and safety for all users.

  • Improve transportation options for millions of Americans and reduce greenhouse gas emissions through the largest investment in public transit in U.S. history.

  • Upgrade our nation’s airports and ports to strengthen our supply chains.

  • Make the largest investment in passenger rail since the creation of Amtrak.

  • Build a national network of EV chargers.

  • Upgrade our power infrastructure and make it resilient against climate change impacts.

  There are a lot of ambitious goals here that we should now, three years later, evaluate for progress. Cyvl could probably tell us how much progress has been made because of this bill.

  Specifically, in the section on rebuilding roads: “In the United States, 1 in 5 miles of highways and major roads, and 45,000 bridges are in poor condition. The legislation will reauthorize surface transportation programs for five years and invest $110 billion in additional funding to repair our roads and bridges and support major transformational projects. The Bipartisan Infrastructure Deal makes the single largest investment in repairing and reconstructing our nation’s bridges since the construction of the interstate highway system. It will rebuild the most economically significant bridges in the country as well as thousands of smaller bridges. The legislation also includes the first-ever Safe Streets and Roads for All program to support projects that reduce traffic fatalities, which claimed more than 20,000 lives in the first half of 2021.”

   

  Daniel Pelaez:
  So, we’re still a data analytics software company at the end of the day. There is a hardware aspect, which enables the connection of the physical world to the digital world. Software has eaten the world, as everyone knows—that’s been the trend over the last 20 years. But someone said something I really like: “That’s already happened, but hardware is really what gives software the ability to sink its teeth into something meaningful.” And I see that as kind of the next trend that is gaining popularity—and maybe we were toward the beginning of that.

   

  Mike Collins:
  I just want to agree with you on that. I think there’s much more open-mindedness now toward other sectors.

   

  Daniel Pelaez:
  Mm-hmm.

   

  Mike Collins:
  Going way back in time, there were three segments of society that were considered venture-backable, right?

   

  Daniel Pelaez:
  Yeah.

   

  Mike Collins:
  Software. And now, it’s more and more sectors, more and more niches—public sector, private sector.

   

  Daniel Pelaez:
  Yep.

   

  Mike Collins:
  Defense. Hardware and software, I think, are now viewed as a positive.

   

  Daniel Pelaez:
  Yep.

   

  Mike Collins:
  Hard things are viewed much more as a positive. It’s how you create value: you take something that is not obvious, not easy to do, and you work your ass off and solve it.

   

  Daniel Pelaez:
  Yep. Yep.

  Mike Collins:
  And people said the same thing, Daniel, about my approach to venture capital—working only with co-investors and going after retail customers. People said, “That’s so hard to raise.” But we’ve raised nearly $1.5 billion from individuals.

  They said, “Oh, just go get it from the likely suspects.” But then you’re like 3,000 other venture firms. So…

   

  Daniel Pelaez:
  Yep.

   

  Mike Collins:
  The fact that you’re doing something physical, dealing with government—it’s hard.

  Daniel Pelaez:
  Yep.

  Mike Collins:
  Go solve hard shit. I mean, I’m all for it. So congratulations to you.

  Daniel Pelaez:
  That’s what our team loves most. We’re talking about what makes a good employee. Our employees are not scared to solve these big, massive, hard problems. There are unknowns too at the end of the day. But if we’re successful, there’s just such massive opportunity for impact in the communities we live in—real-world impact. We’re solving real-world problems here. They are hard as hell. But if/when we figure that out, it’s really going to be pretty special and really be differentiated and valuable too at the end of the day. So hopefully, it’s something everyone can get behind.

  Mike Collins:
  And listen, I think it’s one of the reasons we see young people being successful entrepreneurs.

  Daniel Pelaez:
  Mm-hmm.

  Mike Collins:
  You know, this is a question I get a lot. And obviously, you have great entrepreneurs who start companies at every age, stage, and background.

  Daniel Pelaez:
  Yep.

  Mike Collins:
  But doing hard things takes a bunch of energy. And frankly, it takes being open-minded—not being like, “Oh, this failed in 1999, so it’s going to fail again.” The energy and open-mindedness of youth shows you the importance of that versus relying solely on experience.

  Daniel Pelaez:
  Yep.

  Mike Collins:
  So, an ask—we have a big community of people who have invested in our funds and a lot of other entrepreneurs. How could people help Cyvl? What’s your ask?

  Daniel Pelaez:
  One ask would be, if you’re involved with your local government and you really care about the decisions they make—and honestly building a better community and quality of life for everyone—encourage them to be aware of what’s out there for gathering data on critical infrastructure assets like roads and sidewalks. If Cyvl is one of those options, just building awareness helps.

  These government agencies, I know a lot of people like to poke fun at them and say, “They’re slow. They don’t know what they’re doing.” But they truly have super limited resources. They’re understaffed. They’re really trying their best. So it’s hard for them to go out, research, and even figure out what they need to do. I’d say that would be one ask: help make them aware of how they can be running a better city or town.

  The other ask is that I love to learn all the time. If anyone has started a company working with governments or local governments before and had some level of success, I’d love to chat and hear about your experiences. One of my favorite things to do as a founder is hear from people who’ve succeeded or even failed and see how I can do a little bit better with my business at the end of the day.

  Sam Herrick:
  One more ad, and then we’re going to wrap up the episode. Hang tight.

  Speaker 6:
  Do you have a venture capital portfolio of cutting-edge startups? Without one, you could be missing out on enormous value creation and a more diversified personal portfolio. Alumni Ventures, ranked a top-twenty VC firm by CB Insights, is the leading VC firm for individual investors. Believe in investing in innovation? Visit av.vc/foundation to get started.

  Mike Collins:
  Excellent. And last question, Daniel: what have you learned personally, having jumped into the deep end right away?

  Daniel Pelaez:
  Yeah.

  Mike Collins:
  What has been a surprise to you?

  Daniel Pelaez:
  A surprise? I think I learned this pretty quickly early on. It was funny—I heard Jensen from Nvidia talk about this the other day and thought, “Oh yeah, I had the same feeling.” As the company becomes more and more successful, it really doesn’t get easier.

  In the early days, I thought, “Once we hit this milestone, have this many employees, this much revenue or funding, it’ll get easier.” But in reality, it just keeps getting harder. We talked before about getting numb to it. If I knew from day one the problems I’d be solving three years into it… Well, that’s where being a young founder helps—you’re pretty naive to everything that can happen.

  Mike Collins:
  Yeah.

  Daniel Pelaez:
  So, that was a little bit of a surprise, but now I know it’s reality. The more successful you are, the harder it’s going to get—but in a fun way. If you don’t enjoy pain a little bit as a founder, you’re probably in the wrong line of work.

  Mike Collins:
  Yeah. It’s finding that sweet spot of being challenged but feeling like you can tackle it. There are definite days as a founder where it’s like, “Oh, shit,” right? But usually, you get a good night’s sleep, get with your team, and just start tackling the problems.

  Daniel Pelaez:
  Yep.

  Mike Collins:
  You’ll develop those muscles, those calluses, and your network of support. I think the job is always hard.

  Daniel Pelaez:
  Yep.

  Mike Collins:
  And it is a damn hard job being an entrepreneur. I think people who’ve done it understand that. If you haven’t, you don’t fully appreciate how hard it is.

  Daniel Pelaez:
  Yeah.

  Mike Collins:
  But it’s also very, very rewarding.

  Daniel Pelaez:
  Yep.

  Mike Collins:
  And I think it’s awesome you’re taking the journey. We’re super excited at Alumni Ventures to be supporting the company. Again, I encourage our audience to reach out. Young companies need customers. If you know someone who might be interested in looking at the product, please reach out. We’ll put info in the show notes. Other entrepreneurs in our network who’ve sold into municipalities and have tips—please reach out.

  Thanks for your time. We look forward to following Cyvl and your progress. Keep up the great work, Daniel.

  Daniel Pelaez:
  Awesome. Appreciate it, Mike. The support Alumni Ventures has given us so far has been tremendous. I really appreciate everything you guys have been doing for us.

  Mike Collins:
  Excellent. All right. Have a good week, Daniel. Thank you.

  Daniel Pelaez:
  Thanks, Mike.

  Mike Collins:
  Super.

  Sam Herrick:
  Thanks again for tuning into The Tech Optimist. If you enjoyed this episode, we’d really appreciate it if you’d give us a rating on whichever podcast app you’re using, and remember to subscribe to keep up with each episode. The Tech Optimist welcomes any questions, comments, or segment suggestions, so please email us at [email protected] with any of those. And be sure to visit our website at av.vc. As always, keep building.