How a solution found a problem of scheduling service appointments

In 2003, Neal East, a Silicon Valley entrepreneur, was handed a solution and told to find the problem it would solve profitably.

Eventually, he found the right problem: scheduling auto dealership service appointments. The solution now is known as Xtime and processes more than 2.5 million dealership service appointments each month. The company, with ties to 23 automotive brands, was acquired by Cox Automotive in 2014 for $325 million.

But to get there, East and his team had to learn about, and then target, dealerships' scheduling needs.

East was introduced to the solution by Steve Jurvetson, a venture capitalist who now is a board member of Tesla Motors. Jurvetson had backed a firm that meant to use an e-commerce strategy to sell services rather than products -- an Amazon equivalent for services. But by 2003, the startup had burned through $20 million without gaining a market niche or a steady income stream.

Jurvetson called in East because of his success launching information technology companies in the financial services and utility industries. Perhaps East could figure out how to sell service.

"Steve said, 'The idea was profound and I don't know why it's not working,'" recalls East, now president of Xtime.

East went on the road to visit customers of the failed venture. When he came back to Jurvetson, he knew that the concept was valid and why the company had failed. Rather than trying to fit all kinds of services, it needed to focus on one large, vertically integrated market.

Most services sell a time-sensitive product -- often, hours that can't be regained if they slip by -- and in auto dealerships lots of shop time was going unsold. Responding to a request for proposals from Chrysler, East realized the enormity of the scheduling problem.

"We uncovered what looked to us like one of the most enormous greenfields we had ever run across: an unbelievable space where you had 20,000 dealerships in the U.S. and Canada," says East. A second request for help, from Renault, showed that the problem was international.

When East and his partners asked how automotive brands were solving the unused capacity problem, they were shown proprietary programs that opened a bewildering array of applications, few of which could talk to one another.

East, who says he loves cars but declines to call himself a car guy, set to work. In 2003, the first beta application rolled out to Chrysler dealers. By 2005, Xtime was robust enough for a multibrand version. Today, Xtime is used at 7,000 dealerships worldwide and manages nearly 3 million appointments a month.

Understanding what East calls the "core drivers" was critical to that growth. "Ultimately you had to address the customer concerns over, 'What do I need? What will it cost? And when can I get it?'" East says. Xtime developed tools for recommendations, pricing and availability that could reassure customers and, at the same time, line up appointments to use service bays efficiently.

Today, Xtime goes beyond scheduling service, with customer relationship management products and more. A version of Xtime now lets dealership staffers anticipate customer needs and matches them with service promotions and coupons.

In 2015, the company introduced an inspection product that uses automaker data to predict the need for repair parts based on mileage and multipoint inspections. If the data show that a water pump tends to wear out at a particular point, Xtime's system will help prompt technicians to alert the customer to get the repair done at a convenient time at a favorable price and before trouble develops.

The Cox acquisition united Xtime with other tech companies, and could lead to an expansion into sales from service. It also offered appealing protection from any future industry consolidation.

East, who stayed with Xtime through the acquisition as its president, sees huge potential ahead.

"Our mission was to radically improve the ownership experience -- not the sales experience, but the ownership experience," he says.