Xeal's Vertically-Integrated Payment System Could Provide Reliable EV Charging Everywhere

Forbes

In 2019, when Zander Isaacson and cofounder Nikhil Bharadwaj, 28, started selling commercial electric vehicle chargers—the sort you see at airports and in shopping mall parking lots—the problems started almost immediately. If the devices lost internet connection or a server went out, they couldn’t process payments, and drivers were stranded. Irate customers sent hate mail: “ ‘I hope your CEO dies, I hope your company goes bankrupt,’ ” Isaacson recalls. In response, the Penn State alums built a payment system that bypasses the internet, letting drivers use a cryptography-protected smartphone app to tap and pay at the charger. It has enabled them to place chargers in places like large apartment buildings and campus housing. Backed by $54 million from investors, Xeal is building a network of over 10,000 chargers in more than 60 metro areas, in partnership with real estate developers like Brookfield, AvalonBay and Harrison Street.  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00I was always very entrepreneurial. In high school, I used to buy these watches from Amazon and I'll

00:04resell them. And then when I got to college, that's when my motivation really took off of

00:09I'm capable of anything. I put my mind to. I'm here with Xander Isaacson, the founder and CEO

00:18of Zio. Xander, thanks for joining us. Of course. Thanks for having me.

00:21Give me a 30-second pitch. Who are you and what do you do?

00:24I'm Xander Isaacson. I'm the co-founder and CEO of Zio. And what Zio is, we created the first

00:30self-reliant protocol, which makes payments, authentication, all of that work without the

00:37cloud computing or the server, which basically means we just make electric vehicle charging

00:41stations work without any dependency on the internet. So no driver gets stranded. Building

00:48managers never lose money on transactions. And we can accelerate the future with just

00:52a reliable charging experience. Now, you're into the world of electronic EV charging.

00:57Make it exciting for me. Pull me in. So when I first joined the industry,

01:04I don't belong in the industry. I was working in investment banking and I saw this really cool

01:10race that goes on in all these different cities, Tokyo and all throughout South America and

01:16Brooklyn. And it's sort of like F1, but it's called Formula E. The E stands for electric.

01:23So when I went to this race, I didn't even know what electric vehicles were besides a Tesla and

01:28those clunky cars. Were they racing like Nissan Leafs? What was going on? No, these look like F1

01:33vehicles. They were lean. They were sharp. I didn't even know that. I had asked someone if

01:37these were electric. And then when the race goes off, they're going 200 miles per hour. You don't

01:41hear a thing. And the reason why they get these permits in these cities is because there's no

01:45noise pollution. Nobody hears it. So it doesn't annoy anybody. And then when I'm sitting there

01:52and I'm looking at these vehicles go like humming and going 200 miles per hour, they look like

01:56literally normal race cars. One of them hovers over this like blue glowing light in the road,

02:01and it got a huge power boost that allowed it to accelerate faster than the other vehicles.

02:06So when I'm reading all these things, preparing for like a research commentary and everything,

02:11it made sense. It wasn't just these buzzwords, autonomous, and connected,

02:14and electric all moving together. It was the fact that this is literally a computer on wheels

02:19that can do anything. It's the future smartphone with unlimited processing power.

02:23What was the blue thing that went over? Bluetooth connected, powerful.

02:27Wow. So it's like literally like a video game.

02:30Merocart.

02:30You hit the speed boost.

02:31They literally modeled it after Merocart.

02:33Yeah. So that got your mind of like, OK, this EV thing is-

02:37It's not just vehicles. It's the modern day iPhone times 1,000. It's the idea that

02:44it's the same transition from horses to cars as now you're in the spaceship,

02:48that you don't feel the road at all. You can do unlimited things. And most of these new models,

02:52the Hyundai, the Kia, the Ford F-150 Lightning, they have self-driving,

02:58they can move their own lanes, and it's exciting.

03:01So what made you think, go from seeing that moment of seeing the EVs racing,

03:06to I'm going to be an entrepreneur, to this is what I'm going to do? Tell me that evolution.

03:10That goes a little bit back. I was always very entrepreneurial. I think in elementary school,

03:15I was buying Yu-Gi-Oh cards and putting them in a white little paper, folding it up.

03:20In high school, I used to buy these watches from Amazon and I would resell them.

03:24And then when I got to college, that's when my motivation really took off of,

03:30I'm capable of anything I put my mind to. And that came from the wrestling world.

03:35The wrestling days in high school. And to go a little more back, I was off wrestling. The worst,

03:42worst. I lost every single match. And there was this quote on the wall, and it was from

03:46Dan Gable. And it said, he who says he can, and he who says he can't, are both usually right.

03:52So I brought the mentality when I got to school. And Penn State is 50,000 students.

03:57And I found out about this little fund called the Nittany Lion Fund. And it's a student-run

04:02hedge fund where they manage real investor capital, no endorsements at all, no endowments

04:06at all. It's $13 million now. And 10 people get in in a semester. And I went for my freshman year.

04:14I didn't get in. And then I went for it again my second year. And I got in. And then the next

04:19three years was just about finance and getting a job on Wall Street. When you're in that fund,

04:25are you supposed to invest in fellow students or alumni? What was- No, so we operate very similar

04:29to like a mutual fund. So we have all the different sectors of the S&P. And there's the

04:34IT sector. There's the oil and gas sector. There's the energy sector as part of that,

04:40the health care sector. And you basically manage real portfolio funds from alumni investors.

04:45Gotcha. So you're managing public money. I mean, sorry, public investing from-

04:49Yes, exactly. So I put my head down for three years. And then I finally got the job. And I

04:53got back to senior year at Penn State when everybody's not going all out anymore. And

05:00I looked into the startup community. And I brought back that childhood passion of mine.

05:06And there was not a student-run venture capital fund or an accelerator at the time. So I just

05:11made it my passion project my senior year to build this ecosystem of entrepreneurship where we would

05:16help students get jobs in VC or startups and help foster the startup community.

05:21And that little project turned into a contagious passion of mine where the easy part was starting

05:29it. The hard part was recruiting students that all across different schools, like

05:36engineering school. And I would go to blockchain events and hackathons. And I would just recruit

05:40these students. And then one of the events I went to was this- it was a TED Talk at Penn State.

05:47It's about 2,000 student auditorium. I go in there by myself. It's in the back row.

05:52And this student walks on stage. And I didn't expect that there would be a student. And the

05:57student goes on stage. And he says, my name is Nikhil Broadwash. I'm a 19-year-old Indian

06:01immigrant. I moved here with no friends or family with one life mission to solve climate change

06:05without bothering people. And he became our head of technology. That's quite a statement right there.

06:10Yeah. And I was like- What a goal.

06:12I was like not shoving it down anybody's throat, making it interesting objective.

06:15So we became really good friends. And he joined my little club. And then fast forward, when I

06:20started investing in banking, I was always keeping in touch with the engineers and founders of my

06:23network on the weekends, talking through some of their ideas. So it was a mix of seeing this,

06:30knowing my buddy on the West Coast was working at Schneider Electric, doing EV charging and all

06:35this stuff. And I called him up. I felt like a little kid again. And I'm like, what's going on?

06:40I see there's 500 new models coming out. They're all supposed to be autonomous driving.

06:43This is way bigger than just transportation. This is the future of computing, how we

06:52connect with how we do computing different things. It's a revolution. And that's when I did what any

07:00practical person would do. I quit my job a couple weeks later. I moved out to California. And I

07:06lived on Nikhil, my co-founder's couch, for six months. And two naive founders building Zeal.

07:11And tell me what Zeal is. What did you guys build? What was the mission? And what did you guys

07:16create? Yes. So the mission is we put our personal values and mission statement into the company.

07:22So that solving climate change without bothering people was our mission going into it. Being a

07:28first time founder, you don't really know what you're doing. So when we first started, we were

07:33just a reservation app, helping cars reserve chargers. And they would do it at times when

07:40it was cheap for the building and good for the environment. Tried selling that. Lesson learned.

07:48You got to have a product, not a feature. Gotcha. So it was like an open table for chargers

07:51kind of thing. If you're playing Mad Libs here. Yeah. Without making any revenue or having a

07:57salary or anything like that. So then I put on the sales ad. Never thought I'd do sales in my life.

08:02And I'm going out there. I'm talking to these folks, property owners and managers. We sold to

08:07commercial real estate and multifamily properties. And they told me they want payments and energy

08:11management and access control. Being able to get to choose who uses the charger. So like a hotel,

08:16I can take your key away. And I could charge you for the candy at a margin. So we had to build a

08:22full connected system that works like your Uber app. And you can turn it on, turn it off, and pay

08:28for your sessions. So we built that. We put it inside the charging station. And we started selling

08:33the charger, the software. And we went to market. And super exciting. We got about 12 different

08:38properties right away. We're off to the races. I thought we're finally going to fundraise and

08:42maybe have a salary once again. And that's when all hell broke loose. And that was the moment when

08:48the app wouldn't connect to the charger. The charger wouldn't connect to this

08:54cloud, which we found out later. It's not this imaginary thing above our heads. It's a physical

08:57server that sits in the middle of the country. And everybody was getting stranded. I was getting

09:03death threat emails because I was the customer success email. I hope your CEO dies. I hope your

09:07company goes bankrupt. Some other things. You're getting company threats. I think they thought

09:12they were talking to a robot. But it was like, I hope your CEO dies. The company's like, I'm

09:17stranded again. So we realized it's not just a social media app or something like that. These

09:23are people's lives. And they're depending on us to get around and do their things. So in 2019,

09:28three things happened. Our back was against the wall. We didn't have any money.

09:31COVID happened. So there was this little popularity growing with contactless payments.

09:37And the second thing that happened was that there was this new concept that instead of sending

09:41information to that physical server across the country that we call the cloud, you could send

09:46information through devices directly, just like a TV remote. And it was called distributed ledger.

09:54Just think of it as just packets of data. So we knew that. And then the third thing that happened

09:58was it just became possible to send this through smartphones and smart devices like a charger.

10:05So we made it our mission to eliminate the internet, eliminate the cloud, and build a

10:11truly self-reliant experience where you go down there. It works 100% of the time. The payments,

10:16there's no loss. And a driver is never worrying about their car not working and being stranded

10:21again. Yeah, so you're building chargers, but each one is independent. So it can do it all.

10:27It can charge, pay, connect without having to connect to a server, like you said, somewhere

10:31in the country. It's its own vertically integrated system right there. And that gives you reliability

10:39and precision and all that stuff. Right. The way I like to think about it, because

10:44I'm not technical. The technical knowledge I know is from being around very intelligent people.

10:50It's sort of like being a kid, where currently today, when you depend on the cloud,

10:57if you ask me a question, I would have to go run back to my mom and dad and say,

11:00do you know the answer to this? And then run back and tell you the answer. Sort of like that scene

11:04in Good Will Hunting, when the guy is just plagiarizing the words of someone else from

11:10a textbook. And he's like, do you have any thoughts of your own? But we call these things

11:14smart devices. But they're only smart if they have a connection to their mom and dad across

11:19the country. So what we've done is we took that brain across the country, the server,

11:22and we put it inside all of the devices, not just one of them, so they could all think,

11:26act, and process on their own. So the idea behind it is that, yes, it works in underground garages,

11:31but it thrives in places that have good connectivity, because it's just faster,

11:35more reliable, and it always works. Do you guys make the units yourself,

11:40manufacture them yourself, design them yourself? So we're AssetLite. We work with different

11:44manufacturers. And we essentially make a custom product with them, where we put our computer

11:49inside of it, either through a digital computing layer, or we put a physical board that acts like

11:56a computer. Cool. How do you make money? That's a good question. So we focus on the largest real

12:01estate institutions in North America. The reason why we went that path is because when everybody,

12:08all these EV charting companies were selling to the path of least resistance, where the subsidies

12:13and rebates and places that they're welcome. We said, if Zio didn't exist today, what wouldn't

12:20exist? And with 40% of Americans living in apartments, we wanted to create that access.

12:25So we focused on the real estate market, going to the top owners and operators that own the majority

12:30of land. And we sell to them a hardware charting station, which we make a little margin on.

12:37And then we have a software subscription that the building manager pays. They can manage

12:41all of the charting sites. They could change the rates. They can make custom access, like the staff

12:47might get a discount on charging, while the residents might get this. When someone was out

12:52of the building, they can kick them off, so nobody's going back there and using it. So that's

12:57a subscription. And then we have a revenue share, where think of it as like they paid $10 for a

13:02session, and we'll make a piece of that as well. So it's a SaaS model, right? So you can make a

13:08little money on the hardware. You get that great recurring revenue for them to use your software.

13:13And then the more they're being used, the more you make, because you get a piece of that too.

13:17Exactly. And then the last component, which we sell as a software protocol,

13:21is our computing layer. That's the thing that makes it work. So a lot of people have this idea

13:27that software runs the world, but it's what runs software. And that's the thing you don't see,

13:32the computing layer that allows the functions to work. And because we own that, which is

13:38similar to Amazon having Amazon Web Services, that part of the value chain is one that makes us

13:44unique, where we're the only ones that have that stack, and we're the only ones, so we sell that

13:49to the customer as well. How many employees do you have? Our lean team, about 45 to 50. So we

13:55have an ops team, engineering team of about 14 all in-house, and then a sales team. But we're not

14:01going door-to-door. We take a very thoughtful, holistic approach. We have a territory team

14:06that they work with, our real estate partners. And then we also have a franchise model,

14:10where we have channel partners that resell our chargers. What do you see as the end? Obviously,

14:15you're all in on EV. You're excited about EV. A couple of years ago, there was a huge push,

14:19even from the manufacturers, saying they have all these companies, American, you name it,

14:25are going to build electric vehicles. And there's been a big blowback now, and a lot of demand has

14:30fallen. What do you see right now? Do you see that as people being, is it hype, people being

14:36overly negative? What's right now the snapshot of the market? I'm ecstatic.

14:41Obviously, you're ecstatic. No, I'm saying because back in 2019, 2020,

14:46there was no press. It was all in the press that came out. It was just from the clean tech

14:51industry. So how are you going to get someone from outside the industry without an objective source

14:58and get them to come in for different reasons? I like to think of it as politics. It's not an

15:04exciting topic unless there's two sides of it. So I think it's great for the industry. But

15:10the reality is the EV industry has more EVs selling than they've ever had before.

15:16And last year alone, in 2023, there was 1.6 million EVs sold. Fast forward, it took 10 years

15:24to sell the first million EVs in the US. So when you think about that, it took 10 years. And then

15:29it took two years for the first million. And it took one year for 1.5 last year. And we're still

15:33ramping up with all these new models we haven't had before, with the Hyundai Ioniq, which is the

15:37cheapest lease in America now, beyond gas cars. It's just kind of nonsense. What are you focused

15:46on? What is the company aiming for in the next year? Yeah. So we're very grateful for our investors

15:53and what it allows us to accomplish. The real things that we're excited about is our partnerships.

15:59We have this white glove approach with some of our biggest real estate leaders.

16:02And these aren't just groups checking the ESG box. These are groups that they want to

16:07be bold. They want to be a pioneer. And they realize that they are the people that have the

16:11keys to accelerating the future. So we believe the rate of the future is not decided by an expert

16:17opinion. It's decided by the people that have the market and will feed into the technology

16:24that's going to accelerate it. So for us, next year, in the next 18 months, we're looking to

16:29expand our real estate partner community. We're looking to expand our channel partners. These are

16:34the ones that are experts in electrical and lighting. And now they're reselling ZO as their

16:40top EV charging choice. And then in the background, on the technology side, we have some really

16:44exciting things going on. We're leveraging our core technology, the self-reliant protocol that

16:52allows you to do internet-free payments and all that fun stuff. We're going to be working with

16:57one of the largest manufacturers to embed it inside their chargers. And then outside that,

17:02we have another exciting pilot, which I can't talk too much about. But we're licensing our payment

17:09to a completely different vertical. And that's kind of the future of our technology, where

17:14EV charging is our first application. We want to accelerate that future. But beyond that, we see

17:18any shared smart device, whether that's payment terminals, smart access control, turn it on

17:23through the phone, even like Uber, DoorDash. You don't have to get beer delivered to your home.

17:30You don't need to show your license and wait for the load. It just does it right away. And our goal

17:37is to accelerate that self-sufficient smart city, where it just uncaps the possibility for smart

17:44cities to grow anywhere, regardless of the resources they have. Outside of charging, what are you

17:49excited about in the EV world right now? Everyone's hearing about like, oh, the next couple of years.

17:55Like, I will never buy an EV. I'm always leasing one. Because like I said, it's like you're buying

17:59a very expensive computer. And the technology, I feel like it's like you're buying the last tube

18:03TV before the flat screens come out. I feel like in the next couple of years, there's going to be a

18:08huge explosion of technology. Maybe it's like crazy fast charging on the car. Maybe it's extreme

18:14range and that sort of stuff. What's happening right now that you're excited about? And I know

18:19there's a lot of rumors. But again, this is not about your company. This is about the EV community.

18:22No, no, no.

18:23What's going to blow our minds in the next two years?

18:25So I think first, the market. When I was reading all those little articles and getting excited

18:31about the EV race, what blew my mind wasn't the US manufacturers. It was that this was already

18:36happening on a global scale. The Hyundai, the Kias, the Mercedes, BMW, 15% of their car sales

18:48in the US as well is electric. They're better selling. People are liking these things. So

18:53they're flooding the US markets. And while it's great for the US-based manufacturers to be scaling

18:58as well, it's going to happen regardless. So when I look at this market, I think of it as

19:05the first BlackBerry. And it's like the naysayers, skeptics are, what do I need to send emails on my

19:10phone for? That seems just inefficient. Or when the first iPhone came out, there was long lines,

19:17and people were excited. But the other side, the laggards, were like, what is this app store?

19:21Am I going to play video games my whole life? They didn't think about the unlimited applications

19:27from Uber to DoorDash to Robinhood. So when's this big adoption going to happen? When's the

19:32iPhone moment going to happen? So I'm saying that unlimited possibility is how I see electric

19:37vehicles. They're going to be self-driving. You don't even need to drive. It will park itself.

19:45You can even have it go out and do almost like ride sharing, and picking people up,

19:49and then making money on the side. Then it's a resource, not just for that aspect. It's a

19:53resource for transferring communications. We view telecom as all these different physical

20:00towers that communicate. Well, these are all distributed mobile servers, where they're now

20:04able to communicate in a distributed fashion, which just leverages the resources in the world

20:08instead of just depleting it. And then beyond that, there's just really, really cool things

20:14on the energy side, where the vehicle itself, when you use a portable iPhone charger,

20:20it basically discharges energy from that stored thing. And that comes in handy when there's not

20:27an outlet nearby. I have one in my backpack right now. There you go. So the idea of electric

20:32vehicle is not being a strain on the grid or utilities, but they'll actually be an asset,

20:37where if you're plugging in overnight, and you already have the full tank, you can now

20:41discharge that back to the grid or other vehicles, your neighbor, and things like that.

20:45And you build this kind of a distributed marketplace, where we're actually able to do more

20:51without adding physical larger resources, but just optimizing the system entirely.

20:56A lot of bold predictions, my man. I like it. Zander Ad System, thank you so much for joining me.

21:00Yeah, thank you.

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