
Amazon to pay $1B+ for Zoox - mmettler
https://www.axios.com/report-amazon-to-pay-1-billion-for-self-driving-tech-firm-zoox-719d293b-3799-4315-a573-a226a58bb004.html
======
achow
How did Zoox start?

 _In 2012, Kentley-Klay stumbled on a blog post about Google’s self-driving
car project, then pretty much the only one in the field. He saw the company’s
prototypes as unsightly half-measures.. Then, one day, he walked into his
Melbourne office (animation, video production) and announced he was off to
America to fulfill his driverless dreams._

 _In a move that some will call devious and others will call ingenious,
Kentley-Klay reached out to some of the biggest names in the field and told
them he was making a documentary on the rise of self-driving cars. The plan
was to mine these people for information and feel out potential partners. His
first “interviewee” was Sterling Anderson, then a robotics researcher at MIT
and later Tesla Inc.’s self-driving car chief. “I played the oldest trick in
the director’s book: the vanity card,” Kentley-Klay says. “I showed up at MIT
with a Canon and a bullshit microphone and interviewed Sterling for two hours
in a grassy field... "_

[https://www.bloomberg.com/news/features/2018-07-17/robot-
tax...](https://www.bloomberg.com/news/features/2018-07-17/robot-taxi-startup-
zoox-has-800-million-and-a-wild-pitch)

~~~
mFixman
That's the most Silicon Valley way of doing things.

For one, I'm glad to live in a world where those kind of things still exist.

~~~
tonyedgecombe
_I 'm glad to live in a world where those kind of things still exist._

Lying your way to success?

~~~
smallnamespace
Have you noticed that the _Odyssey_ is one long celebration of doing exactly
that?

~~~
duncanawoods
I'm not sure Greek myths are great sources of ethical behaviour given, you
know, all the rape, incest, bestiality, cannibalism and more.

~~~
arkades
Quite a lot of Greek myths, when not stripped down to the "simplified for
story-telling to kids" versions, are straight-up case studies / moral lessons
_to adults_.

I'd never look at the Odyssey and mistake it as something to emulate. That
people do is kind of surprising.

------
whoisjuan
Zoox raised almost a billion so terrible exit for the investors, who basically
just parked their money for several years. Zoox likely ran out of money and
nobody wants to keep dumping money in this space given the anemic progress in
the last couple of years.

But here is an interesting take. Amazon is an formidable acquirer and probably
the only big-tech that knows how to squeeze from their M&A activity.

They probably saw this years ahead. Many companies were going to develop
technology in this space and it was likely better to acquire one of those than
to develop in-house. And the reason is very simple: Amazon doesn’t invest in
greenfield projects that are not customer facing. Look it up. Almost all the
behind the scenes impressive tech they have was acquired at certain time.

For example. AWS proprietary chips come from their acquisition of Annapurna
Labs. All their warehouse robotics come from their acquisition of Kiva
Systems.

All their modern video tech comes from their acquisition of Elemental.

Their customer facing acquisitions also play a similar playbook but in a more
-fill the market gap- kind of way. “We need a supermarket, let’s buy Whole
Foods”. “We need routers for the Alexa ecosystem, let’s buy Eero”.

Also kind of interesting that they are an opportunistic buyer (almost
vulturous) that most of the times only pulls the trigger when the acquisition
target is in their lows.

~~~
mav3rick
This is clearly just cherry picking. They did NLP + Echo + Alexa in house.
Cloud / servicification on their own.

~~~
whoisjuan
That’s customer facing. Read my comment again. I’m talking about non-customer
facing / utilitarian technology that is used to facilitate their customer
facing services and products.

~~~
discodave
Annapurna is customer facing now with Graviton. Also, we don't know how much
they invest _after_ acquisition.

I think Annapurna was more strategic than you think.

* James Hamilton in 2010: [https://perspectives.mvdirona.com/2010/10/datacenter-network...](https://perspectives.mvdirona.com/2010/10/datacenter-networks-are-in-my-way/)

* Annapurna acquired in 2015.

* In 2017 they reveal that every EC2 server has a Nitro (Annapurna) chip for networking: [http://www.brendangregg.com/blog/2017-11-29/aws-ec2-virtuali...](http://www.brendangregg.com/blog/2017-11-29/aws-ec2-virtualization-2017.html)

~~~
whoisjuan
Yeah. I guess you could say that’s customer facing. In any case is not a
purely customer-facing acquisition like for example AWS acquiring Cloud9 so
they could offer a Web IDE.

Chips are peculiar because they matter a lot in a customer facing way but they
are not a 100% transparent feature. I think AWS customers couldn’t care less
what their instances are powered by as long as they are 1) Fast 2) Cheap 3)
Secure. But the chip happens to influence those things heavily, so they become
almost like referential values to aggregate those characteristics in a way
that’s easy to market.

------
broken_symlink
I work in an office that shares space with Zoox. I've never told anyone this
but I find them incredibly annoying.

Whenever they take their cars out for a test drive, they sit in the middle of
the road in the parking lots. If you aren't going to be driving around anytime
soon, just pull into a parking spot, instead of blocking all the empty spots
and making it more difficult for people to drive around you.

~~~
taway912
I had the displeasure of meeting the Zoom executive team at their booth at
CVPR some years back. They were cocky, sized me up, and completely ignored me
and acted like I didnt exist. This all happened after I told them which
Department at UCBerkeley I was studying at (which apparently did not meet
their standards.)

I've been on booth duty and sales duty before and you should never snub people
like this - ever. It is hurtful and people remember it, I remember it still so
many years back. There are always more graceful ways of doing things.

~~~
lukevp
Sorry that happened to you. You never know who people are or where they will
end up, and everyone has value and should be treated with respect. I have had
similar things happen to me at conferences.

nit: You should edit this and change Zoom to Zoox before the edit window
closes.

------
kiernanmcgowan
I lived along one of the Zoox test routes in the North Beach neighborhood of
SF. My corner (Filbert and Grant) was also a tourist hot-spot to get up to
Coit Tower with families, segway tours, and other meanderers being common
place.

Suffice it to say that I don't think self-driving car tech is ready for city
streets. Zoox never put anyone in harms way, but damn did it hold up traffic
if there was an "out of place" person.

Self-driving tech may be close to cruise control 2.0 - that is highway exit to
highway exit navigation - but I have yet to see a self driving car handle a
city street with actual people on it.

~~~
joncrane
>Self-driving tech may be close to cruise control 2.0 - that is highway exit
to highway exit navigation

This is why the main first application of autonomous driving is going to be
long haul trucking.

The current regulations about duty time for humans in long haul trucking
create inefficiencies. Now imagine that there are facilities just off of
highway on- and off-ramps where truck drivers hang out. The autonomous vehicle
pulls off the highway into a lot. A human then gets in and guides the truck to
it's final destination.

Truck drivers get an immediate lifestyle increase (no more multiple days on
the road, having to sleep in the truck, etc), labor costs drop dramatically,
and travel times for cross country trips also drop dramatically.

The driver market for CDL truck drivers will turn into the "harbor pilot"
model they have for large ships.

~~~
sailfast
SOME truck drivers (the ones that keep their jobs) will get a lifestyle
"increase" because it will be local, but demand will drop substantially.

Even so, these "lifestyle increase" jobs would only exist until autonomous
driving gets better. Even if that's two decades it's not something you'd want
to rely on as an occupation.

Not saying it's the wrong way to go - it absolutely is the right way to move
logistics forward - but there will be significant impacts in a country where
"Truck driver" is one of the top jobs in just about every state that can't be
explained away with "lifestyle improvement"

~~~
smilekzs
A truck driver's job is more than, uh, driving the truck. Inspection of the
cargo and the conditions of the truck are things unlikely to be automated any
time soon even if feasible (there will be regulation resistance at the very
least). Yard maneuvers too, or you would have seen fully automated airport
ground traffic management by now. The job would pay less, not sure by how
much, but my take is that the job will not go away entirely. In fact there
might be more drivers hired with each driver serving fewer hours per week.

Disclaimer: I am waiting for my CDL Class-A test ;)

~~~
xxpor
I think that's what OP was basically saying though. All of the 'local' jobs
(driving in a yard, dropping off trailers at customer warehouses, inspecting
cargo, etc) will stick around. The bulk 'driving across the country' jobs
might start to go away. So I'm imagining a truck driver, who lives in NJ, will
still pick up a container at the Port of Elizabeth, do their inspection, load
the container on the truck, and drive it out of the port. They'll get as far
as the entrance to the NJ Turnpike, and then set the truck up for autonomous
driving all the way to Nebraska on I-80. The truck drives to Nebraska, where
it's headed to a warehouse. At the exit from the highway, a new driver will be
waiting to hop in. He'll then drive it the rest of the way.

In between, gas stations will have full service again for diesel. There will
be some way to automatically charge the truck for fuel.

------
samcampbell
This isn't a good outcome for Zoox, which raised its Series B at a $3.2B post-
money valuation in July 2018. The company also raised ~$200M of debt in 2019
and nearly $1B in total funding. Meaning it's likely only investors will get
paid out for this $1B exit.

~~~
sukilot
Investors get their money back, employees get their wages, and Amazon gets
their non depreciated capital goods and work product

~~~
taway912
Employees do get their wages, but most were probably working on depressed
wages in lieu of equity compensation -- which will now be zero. Further, if
anyone left/laidoff, and they forcibly exercised options due to windows, they
are underwater.

~~~
s17n
I'm assuming that Amazon is offering retention packages to the employees,
otherwise, why would they bother acquiring the company?

Early employees who were dreaming of a windfall aren't going to get one I
guess, and anyone who left the company or was fired and exercised is totally
screwed.

~~~
fuvkthisguy
Right, but how great are those packages gonna be when Amazon (renowned for
their stunning committment to worker's rights and freedoms, /s) knows that
anyone who doesn't take their offer will join the ranks of the 'totally
screwed'?

The typical result of M&As is, by and large, that the workers lose.

~~~
s17n
If you're buying an established business, then yeah most likely it's not gonna
go well for the employees, since your whole thesis is that you can extract
more profit post acquisition then pre acquisition.

That's not what's happening here, though - Zoox's assets are worthless without
their employees, so its in Amazon's interest to not screw them over
completely.

------
anon102010
Interesting.

These guys are supposedly launching their ride hailing fleet this year on
public roads.

"unorthodox entrepreneurial zeal of Kentley-Klay, an Australian native with no
prior automotive experience." was the key mover on all this and "touted Zoox’s
strategy of building its own vehicles for full autonomy as wiser than the
standard approach of retrofitting existing cars that Alphabet Inc.’s Waymo and
others are taking."

Their CEO did attack silicon valley for choosing the path of fear "at the
expense of profound progress for the Universe."

Heady stuff! Will be very interesting to see their launch if all this talk
pans out! Full new vehicle assembly from scratch PLUS autonomy! Very
impressive.

~~~
Gatsky
Apparently he added the ‘Klay’ to his name because he wanted to add a ‘maker’
element to it.

I mean, this a bad prognostic sign if there ever was one in an engineering
company.

~~~
bosie
what do you mean by 'add a maker element to it'?

~~~
apengwin
It’s a reference to Klay Thompson, a shooting guard for the Warriors who
“makes” a lot of three point shots.

~~~
wodenokoto
Ha! I thought it was a reference to clay, the material as being a substance
for "making stuff"

------
discodave
Did everybody forget that Amazon invested $700MM in Rivian last year?

Whether or not Zoox is a bust from the investors perspective, the synergy with
Amazon seems obvious.

[https://www.theverge.com/2019/9/19/20873947/amazon-
electric-...](https://www.theverge.com/2019/9/19/20873947/amazon-electric-
delivery-van-rivian-jeff-bezos-order)

------
baron816
What’s the logic of them selling to Amazon? Why didn’t they just continue on
and try to raise more money? I assume this was purely a move of desperation
and they couldn’t. Is this just a full blown acquihire?

Also, what happens to employees? Presumably, their stock is worthless. Will
Amazon just give them all new stock packages to keep them on?

~~~
jariel
They sold for what they raised so it's a loser for investors.

Likely they didn't have a business model and so were a fire sale.

Amazon will almost assuredly eye this for autonomous delivery. They have the
cash, the legit need, the ambition ability to make it work. So it can be
commercialised 'internally'.

Unlike Google who have to build a business around their self-driving cars.

This is one of those 'tech may eat the world' things that should legit scare
FedEx because I doubt FedEx will be able to compete on terms like this.

------
kdamica
Wow, so anyone without preferred shares (i.e. all employees) will get nothing
in the deal.

~~~
Rafuino
Good deal though for Aicha Evans, I'm sure!

~~~
jedberg
Sounds like even the preferred holders are getting less than 1x return.

------
goshx
> Zoox has been by far the most ambitious self-driving tech company as it's
> been working on developing a fully integrated vehicle, not just the core
> autonomous technology.

> Zoox planned from the beginning to develop the technology, build a car and
> operate a robotaxi service. Not even Waymo is trying to bite off that much
> (although Cruise is).

Is Tesla intentionally omitted or am I missing something?

~~~
csours
Disclaimer up front: I work for GM, this is solely my opinion and it is my
opinion alone.

I think the tech press doesn't believe that Tesla is building a self-driving
product.

I don't know if camera based computer vision by itself will ever be enough for
full self driving. I think we can demonstrate that it is not enough at this
time, and we can also demonstrate that human vision also fails at times; human
vision has the benefit of some extremely specialized "software"

~~~
DavidFerris
"I don't know if camera based computer vision by itself will ever be enough
for full self driving."

Rebuttal: If you had a 3D camera sitting in the driver's seat of a car and
hooked up the control to a remote controller, I believe that car could be
drive-able. A sufficiently advanced perception/control system could
theoretically use the same 3D camera feed and replace the driver. Not saying
it's easy, just that all the necessary info to drive a car safely can be
contained in camera feeds.

~~~
randcraw
A camera-based self-driving autopilot is also capable of driving without
hesitation straight into an overturned truck on a sunny day less than a month
ago:

[https://www.autoblog.com/2020/06/01/video-tesla-
model-3-cras...](https://www.autoblog.com/2020/06/01/video-tesla-
model-3-crashes-into-overturned-truck/?guccounter=1)

------
agakshat
This is such a ridiculously good deal for Amazon. The collection of talent
alone is worth more, let alone the tech Zoox has built up which Amazon can put
to so much good use starting from inter-warehouse deliveries, and slowly
getting closer to the consumer as the tech matures.

------
1024core
Self driving cars will fit in well with Amazon's quest for last-mile delivery.

Take a look at how long it takes to deliver a package today. The driver drives
up, parks. Gets out, goes to the back and finds your package. Grabs it, walks
over to your door, drops it off (and takes a pic), then walks back, closes the
door, straps on the seat belt, looks up directions to the next stop, and then
drives off.

With an automated truck, you wouldn't have a driver; you'd just have a
delivery person. While the truck is driving, the delivery person (DP) would
grab the next package. As soon as the truck stops, s/he hops out with the
package and drops it off. Then, the moment s/he climbs back on and and sits
down, the truck is off to the next stop.

By my estimate, it would cut down the delivery time to half of what it is
currently. IOW, a DP + truck could deliver 2x as many packages. You can expect
the tech to pay for itself in just a few years.

------
almost_usual
So some self driving car companies might not escape Covid. Not surprising, the
space is saturated, expensive, and not market ready.

~~~
wutbrodo
Zoox was already in trouble. Covid was just the nail in the coffin. The other
big names seem pretty OK so far, though that depends on how GM does and how
much Cruise depends on them.

------
saos
It also looks like Amazon's investment into Deliveroo for a 16% stake will be
concluded soon too [1]. I wonder what Amazon are planning.

[1]
[https://www.bbc.co.uk/news/business-53169889](https://www.bbc.co.uk/news/business-53169889)

------
alex_duf
Zoox meet Rivian, Rivian this is Zoox.

Curious to see how that pans out.

------
0xDEEPFAC
The masochist in me wants to continue to see these giant tech corporations get
bigger and bigger, so that next time there is a tech bubble we get to watch
them squirm under their own weight. Or, perhaps, finally lead to some anti-
trust enforcement...

------
mavsman
Very Amazon move to wait until a company's valuation is chopped down
significantly due to the market or other circumstances and then purchase it. I
guess this is the move of any major company or smart investor though.

------
remolacha
Did anyone ever figure out why the original founder/CEO of Zoox was removed?

~~~
diiaann
[https://www.axios.com/zoox-fired-ceo-tim-kentley-klay-
fe6f06...](https://www.axios.com/zoox-fired-ceo-tim-kentley-klay-
fe6f068c-4465-42f0-b027-03bdfab782e0.html)

His previous experience was running an animation studio in Australia...so
there's that too...

~~~
opportune
I always find it amazing that people like this are able to finagle their way
into meaningful positions in SV (this is also partially in response to the
bloomberg article sibling comment).

~~~
onion2k
In the SV investor mind he went from running a company of creative people to
running a different company of creative people. What those people actually do
doesn't really matter. "CEO skills" transfer between companies quite well.

~~~
wutbrodo
The task of a CEO in a pre-product research company is pretty different, I'd
imagine. The fact that he was replaced is weak Bayesian evidence in that
direction.

------
hevelvarik
What’s Amazon’s plan? The article says something something Amazon delivers
lots of things something, but I don’t see how building their own driving
systems follows naturally from that.

Further, I would think a firm promising enough to seed a self driving program
to power Amazon’s delivery fleet would be worth more than a billion dollars.

Would love to hear some thinking on this.

Update: There’s a comment up thread to the effect that buying seed a growing
their own program to support their internal operations is standard operating
procedure for Amazon that provides a number of good examples.

~~~
numpad0
To me the future of SDC tech is clear:

General public expects driverless cars, car companies want level 3 automation,
Google says there is only level 2 and 4 which is probably right, and the
technology is going to stay level 2 for at least better part of next decade if
not couple decades.

What’s working is Level 4 betas in Level 2 mode with driver monitoring for
safety, what I would call a “driving simplification”.

“Simplification” applied to delivery vans offloads what used to require driver
competence to machines thus improve consistency, and that will work for
Amazon.

~~~
jedberg
I rode in a Zoox car two years ago. It was already at level 3, almost 4. The
driver took over once but didn’t even have to. The car was about to do the
same thing the driver did, he just got nervous.

~~~
numpad0
Zoom is Level 4, any experimental SDCs is Level 4 and all production SDC
technology is Level 2. Few manufacturers thought L3 is simple enough to at
least try, but all were abandoned for above reasons. By definitions,

Level 2: driver always pays attention

Level 3: car pays attention, may request driver

Level 4: car do not require driver

This seems simple enough, but Level 3 requires car to be able to drive
entirely by itself + be able to predict situations minutes into the future,
including situations that cannot be predicted. That requirement far surpasses
Level 4, or laws of physics known to humans, Level 3 classification is thus
invalid and there are only Level 2 and 4.

~~~
hevelvarik
Thanks for defining. I’m missing something: what is the purpose of level 3.
Isn’t level 4 all you could ask for?

~~~
csours
If you're a consumer, you probably don't want level 3. If you're a company
selling self driving cars, you probably don't want level 3.

If you're a research organization developing self driving cars, you will find
yourself stuck at level 3, because level 4 is really really hard. Going from
level 3 to level 4 means getting rid of any problem that would keep you at
level 3.

Disclaimer: I work for GM, not on SDC, this is solely my opinion.

~~~
mynameisvlad
As someone who owns a Tesla, I think a lot of people want level 3 even if they
don't realize it. Obviously if level 4 was available, people would go for it,
but perfect is the enemy of good, and even with Tesla's L2 technology, it
makes driving _significantly_ easier. Continuously being ready to take over
control vs controlling is a huge leap already.

~~~
csours
I think a lot of people would use and enjoy level 3, but some people would
have a _real bad time_.

~~~
mynameisvlad
Right, so why do you think consumers wouldn't want level 3 if you think a lot
of people would use and enjoy it?

I definitely agree it won't be perfect, some people would indeed have a _real
bad time_ , but that still doesn't mean an improvement over the current status
quo wouldn't be a seller. Perfect is the enemy of good, after all.

Current level 1 and 2 systems wouldn't have been nearly as popular as they are
if consumers didn't want them. Honda wouldn't have made it standard on all
their cars, etc.

------
leesec
This is a cheap way to for Amazon to get into SDC, same way with their
investment in Rivian. Neither have much of a shot but it's worth it to try if
you're Amazon

~~~
yowlingcat
$1B is a drop in a $1.3T bucket.

------
ponker
The founders may not get anything depending on cash remaining and liquidation
preferences. The company has raised ~$800m.

~~~
krasin
According to crunchbase, zoox raised $955 mln:
[https://www.crunchbase.com/organization/zoox](https://www.crunchbase.com/organization/zoox)

~~~
ponker
Huh, a $200m convertible note. Never heard of such a thing.

------
sytelus
Amazon is the biggest logistic company in the world. It has never seized to
surprise me that they don't have any presence in this space. Even if things
are 10 years away, you want to be in this space if you were claiming to be
biggest logistic corporation.

~~~
dingaling
> Amazon is the biggest logistic company in the world.

Not even close, Alibaba handles 200 million packages per day and is building
out for one billion.

Amazon is barely a tenth of that current volume.

~~~
kevin_thibedeau
They only have to get from warehouse to airport.

------
csours
Is $1B a lot? It would certainly be a lot for me, but:

> "Zoox has already raised about $1 billion in funding — and once was valued
> at $3.2 billion"

More and more I'm reminded to search for context when presented with a big-
looking number.

------
simonebrunozzi
Reminds me of Amazon's acquisition of Kiva (the robot company).

------
starskublue
Sad for the Zoox team, but not too surprised. Running out of money was always
going to be a huge risk for them (even without am economic downturn) given how
ambitious they were.

------
readhn
By 2027 all amazon delivery vehicles will be fully self driving. Cost savings
due to logistics improvements will be enormous!

