He Sold His Company To McDonald’s For Millions And Now Raised $15 Million To Automate Customer Service

In a candid interview, Itamar Arel, a seasoned entrepreneur originally born and raised in Israel, shares his fascinating journey from being a computer nerd in his early days to navigating the worlds of academia, startups, and corporate acquisitions.

With a rich background in computer engineering and a Ph.D. in hand, Itamar embarked on a path that led him to the forefront of artificial intelligence and machine learning.

This blog post explores his experiences, insights, and the evolution of his ventures, including the startup Apprente, its acquisition by McDonald’s, and his latest endeavor, Tenyx.

Listen to the full podcast episode and review the transcript here.

From Academia to Startup Land

Itamar’s journey began in Israel, where his passion for computers led him to early coding experiences on machines like the Commodore 64 and Commodore Amiga. He also did his Ph.D.in Israel and went on to do his postdoc at Stanford.

After pursuing computer engineering in college and graduate school, he delved into academia, where he spent a decade working on reinforcement learning, robotics, and the emerging field of deep learning.

It was an exciting time for machine learning, and Itamar was actively involved in both academia and entrepreneurial activities. However, he recalls that around 2012, the AI machine-learning revolution was a much smaller community.

At this time, Itamar ended up taking a faculty position at the University Of Tennessee in Knoxville, also a computer engineering program.

Venturing into Startups

The allure of startups and innovation in Silicon Valley prompted Itamar to explore the intersection of academia and entrepreneurship. He was driven by the desire to take cutting-edge machine-learning ideas and transform them into real-world products and services.

This led Itamar to startup land, where he was involved in companies like Bionatics, focusing on machine learning applications in financial analytics. He recalls that there were very limited tools available, so they needed to write their own codes and develop algorithms from scratch.

However, the experience gave him insights into machine learning applications in the real world.

As a visiting professor at the Stanford AI lab, Itamar worked with Silvio Savarese on a large DARPA project. At the time, Silvio was a professor and chief scientist in Salesforce but decided to leave the academia tenure.

Itamar also had the choice to stay in academia, particularly on the research side, and train graduate students to be the next generation of researchers. Or venture into the world of startups. Itamar chose the latter.

The Apprente Story

A pivotal moment in Itamar’s entrepreneurial journey was the founding of Apprente, an early company with a vision to automate the order-taking process at drive-throughs, particularly in quick-service restaurants like Starbucks, McDonald’s, Burger King, and more.

Itamar describes the challenges and excitement of working with McDonald’s and other major chains to implement voice AI agents for streamlined order processing. When Itamar started working with the company, it was an industry leader with around 11% of the market and more than $1B in revenues.

What was more interesting was that more than 70% of that revenue came from drive-throughs, which made perfect sense to automate the order-taking process. The system they implemented helped free up the staff’s time so they could spend more time making the orders.

McDonald’s saw several positives from implementing this SaaS model, and the cost reduction value proposition was just one of them. They also achieved a huge improvement in the customer experience, allowing the staff to multitask.

Itamar remembers raising $5M in seed funding for Apprente. When they were ready for another round, it was more about exploring how their relationship with McDonald’s would mature rather than running out of runway.

Apprente raised around $10M but was acquired soon after in a transaction initiated by Greylock Partners.

Silicon Valley Center of Excellence

Apprente’s success attracted attention, leading to the strategic acquisition by McDonald’s, a move that allowed Itamar to contribute to building the Silicon Valley Center of Excellence for intelligent automation within the company.

This center would be similar to Walmart Labs at Walmart and the machine learning group at Uber. its initial focus was on voice solutions with the potential to grow to computer vision robotics.

The underlying vision was what the McDonald’s stores of the future would look like. Apprente would be like a satellite organization with an annual budget of $40M.

Reacquisition and the Birth of Tenyx

After several years at McDonald’s, Itamar experienced a shift in leadership and direction. Recognizing his entrepreneurial spirit, Itamar and his team were reacquired by IBM Watson. However, the startup bug continued to beckon, leading to the creation of Tenyx.

Itamar’s vision with Tenyx is to leverage advancements in large language models to create human-like, robust voice AI agents for automating customer service functions, starting with call centers in industries like travel and hospitality.

The initial objective was for AI to handle all tasks like hotel reservations, car rentals, and more. Then, expand into real estate and other verticals. Itamar could see a lot of opportunity in the sector. They could replace the outdated IVR system with robust human-like AI solutions.

Itamar foresees a future where 80% to 90% of calls will be automated by intelligent voice AI. He emphasizes the importance of engaging with customers and refining ideas based on market feedback.

With a successful track record, he found it easier to secure funding for Tenyx, raising $15 million in a seed round. Investors were drawn to the vision of revolutionizing voice AI in customer service, with a focus on improving customer experience and operational efficiency for enterprises, a multibillion-dollar opportunity.

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The Future of Voice AI in Customer Service

As Itamar envisions, the future of voice AI in customer service is transformative. He sees a shift where the majority of calls will be automated by intelligent voice agents, allowing for enhanced customer experience and efficient handling of inquiries.

The potential impact extends across various industries, particularly in call centers where Itamar sees an opportunity for automation to bring about significant improvements.

Lessons Learned and Advice for Entrepreneurs

Reflecting on his journey, Itamar underscores the importance of frequent engagement with customers and the need for entrepreneurs to validate their ideas early on. Additionally, he emphasizes the role of storytelling, both in attracting investors and conveying a compelling vision to stakeholders.

Conclusion

Itamar Arel’s journey from academia to startups and corporate acquisitions is a testament to the dynamic landscape of artificial intelligence and entrepreneurship. His experiences with Apprente and Tenyx highlight the transformative potential of voice AI in customer service.

As Itamar continues to pioneer innovations in the field, the story of his entrepreneurial evolution serves as inspiration for those navigating the intersection of technology, business, and academia.

Listen to the full podcast episode to know more, including:

• Itamar Itamar’s journey showcases the transition from academia to entrepreneurship, driven by a passion for translating cutting-edge machine learning ideas into real-world applications.
• Apprente’s groundbreaking vision of automating drive-through order processing in quick-service restaurants led to its acquisition by McDonald’s, marking a significant intersection of technology and industry.
• Itamar’s experience underscores the resilience required in the startup world, navigating challenges and adapting to changes in leadership, ultimately leading to the reacquisition by IBM.
• McDonald’s acquisition of Apprente included the vision of establishing a Silicon Valley Center of Excellence for intelligent automation, showcasing the importance of technology in traditional industries.
• Itamar Arel’s entrepreneurial spirit continued with the creation of Tenyx, focusing on leveraging large language models for building human-like, robust voice AI agents for automating customer service functions.
• With a successful track record, Itamar secured $15 million in seed funding for Tenyx, emphasizing the importance of market validation and refining ideas based on customer feedback.
• Itamar envisions a transformative future where voice AI automates the majority of customer service calls, significantly improving customer experience and operational efficiency across various industries.

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