Ann Arbor’s Shepherd Intelligent Systems Hopes to Move to the Front of the Bus in GPS Fleet-Tracking Biz

12/16/10

If you’ve ever taken a bus … anywhere … then you know all about an unwritten Law of Motion that goes something like this: A body that arrives at a bus stop tends to stay at rest. A long time. A Second Law might state that the velocity of the bus’s arrival is in inverse proportion to how urgently you need to arrive at your destination. The problem, of course, is one of perceived loss of control. You’re at the mercy of the bus schedule, the weather, traffic conditions and numerous other unknown factors. And here is where Ann Arbor, MI startup Shepherd Intelligent Systems steps into the picture, giving bus riders precise knowledge of when that bus will arrive.

The underlying technology, which is of course called the Magic Bus, was developed at the University of Michigan and spun off into a company just last year, with CEO Adrian Fortino in the driver’s seat. Shepherd provides real-time vehicle information directly to passengers who use smart phones and to managers of bus and limo companies. And, so far, Shepherd’s system is being used, among other places, at the University of Michigan Transit Fleet and the bus system at the Indiana University-Purdue University joint campus in Indianapolis.

Targeting college campus fleets first—largely because of their tech-savvy, smart-phone-wielding riders—Shepherd just received a second microloan from Ann Arbor SPARK and is getting ready to embark on a national sales push in the middle of January.

It’s happened relatively fast for CEO Fortino, who took the helm of the company just a year ago. Fortino studied mechanical engineering at U-M, graduating in 2000 and then went off to become an automotive engineer at Ricardo, a global engineering company with offices in Van Buren Township, MI. During his eight years at Ricardo, he was very much an old-school, nuts-and-bolts engineering guy. But he learned a few important lessons about management that he would use in the future. He was a young guy who was given a great deal of responsibility, taking on the initial hybridengine development program for the Ford Escape.

“That was something that prepared me, that gave me the confidence to say, ‘Yeah, I can do this. I can manage a number of different things, a number of different people, a number of different personalities.’”

All the time he was there, though, he knew that being a small part of a large machine like Ricardo was not for him. Fortino began the MBA program at the University of Michigan in 2005 and caught the entrepreneur bug big-time. “By the end of my time there, I was either going to start a company or join a startup,” Fortino says.

So, in 2008, he jumped ship from Ricardo and joined a startup out of downtown Ann Arbor called Boomdash, founded by Silicon Valley startup veteran Cesar Nerys. The company did search-engine marketing for local lawyers and doctors. It went well for a while, but at the end of 2008, it hit the wall, like the rest of the economy, Fortino says.

After that, he was back to square one. He knew he did not want to go back to Ricardo. So, in early 2009, he launched Novitas Advisors, which provides business consulting services to manufacturers looking to enter the alternative energy sector. He works a great deal with the Michigan Economic Development Corp. and NextEnergy in Detroit to see if his clients are candidates for alternative energy diversification grants.

But it was in late 2009 that Fortino at last found the opportunity he was looking for. A friend of his at RPM Ventures, a VC firm based in Ann Arbor, told him about this startup out of U-M that needs a CEO. Fortino jumped, and what he got in the bargain was a few years worth of research by bright engineers into real-time bus monitoring.

A year later, the Magic Bus software has transformed into something much more sophisticated, he says. It takes into account many more environmental conditions, including weather, historical traffic data, time of day, and day of the week. Now, a student can send a text message directly to a bus stop and find out when, exactly, that bus will arrive.

His target market is small- and mid-sized bus and limousine fleets. He says there is a great opportunity here because most municipalities and university campuses are driving with more-expensive, proprietary, and “unnecessary” hardware that had been cobbled together by local contractors. Shepherd can do it all cheaper and more flexibly.

“If you already have a GPS system? Great. We’ll integrate with what you have and make it work,” he says. “If you don’t have one, great. No problem. We will specify the most appropriate GPS hardware for your budget.”

What also differentiates the system is that it is user-centric, as opposed to simply a tracker for the bus companies. University communities are an early target for Shepherd because, in general, they do not have firmly entrenched vendors with firmly entrenched political relationships. This system might not work in Chicago, New York or San Francisco, he says, but would be perfect for, say, the University of Toledo. In fact, he says, the company just had a conversation with the University of Toledo and found out that a competing bid came in several times more expensive. “It was a great confirmation of what we’re saying, a confirmation of our business model. Nobody else is doing this right now,” Fortino says.

So, the company is gearing up for a national sales push next month and Fortino believes he’s been training all his career for this moment—from his years at Ricardo on.

“We’re out there, we have validated customers, we have a validated product and we’re out there trying to build revenue,” he says, adding that the company will likely seek funding early next year.

But no matter how big the company gets, Shepherd will not become just another company that begins in Ann Arbor and moves elsewhere. Fortino says he is thankful for the “incredible support” the company has received through Ann Arbor SPARK and would not think of abandoning the city. So, for the record, here’s Fortino’s statement on whether he will add to the Michigan brain drain.

“I am from Michigan. I grew up in Alma, MI, I have been in Ann Arbor since I got here in undergrad. I am staying here. We will not move under any circumstances.”

If he does, well, we can always use GPS to track him down.

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