
SoftBank’s next bet: $940M into autonomous delivery startup Nuro - samaysharma
https://techcrunch.com/2019/02/11/softbanks-next-bet-940m-into-autonomous-delivery-startup-nuro/
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aresant
I had a really interesting meeting with a huge institutional investor last
week ($50b+ balance sheet) that has a ~$2b allocation to VC.

They said that softbank has almost had a "chilling effect" on their VC group -
especially around investments that are truly capital intensive.

Their strategy has shifted away from Series A and towards Series B / C where
they can either co-invest with SoftBank, or if wait and see where Softbank
invests before they pick a horse in a category they like so they at least have
that info in as part of their investment calculus.

EDITED last paragraph for clarity

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eanzenberg
That's a great risk-management strategy. Let's put all eggs in one basket and
not do any homework. Lol!

~~~
nopriorarrests
Well, consider that softbank-sponsored startup will outspend all the
competitors on client acquisition, and can bleed the competitors dry by
providing services below cost. Do you _really_ want to invest in startup which
is competing against some entity sponsored by softbank?

I mean, softbank investment is competitive advantage in itself, just because
of it's sheer amount.

~~~
eanzenberg
If it works. You also have huge companies (AAPL, GOOG, AMZN) who are in this
market and invest billions as well, but have massive amounts of revenue.
Raising $1b for a what, $3b valuation, puts you out of reach of m/a for
probably everyone and requires you to get in $300M revenue yearly at some
point with huge amounts of growth potential.

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lettergram
I feel like when ever you need to put that much money into an idea, it’s
likely not an effecient use of money.

For instance, if you invest in 200 startups at $5m each, you’re more likely to
get better returns, than betting almost $1b on a single company. There’s
higher risk with the one company (probably).

Further, and to the point on efficiency. There is diminishing returns to the
effectiveness of investment, in most cases. You can get to MVP for most
companies with very little, if any capital. Then the product in most cases
should sell itself (needing less investment).

At $1b you’re either artificially propping the market, blundering around for
an idea, or have a high capital intensive industry like building rockets or
railroad tracks.

I understand they may be building autonomous vehicles, but certainly the
winner of that race is going to Win using technology, not manufacturing the
vehicle. Perhaps I’m wrong, idk.

~~~
GistNoesis
Investing money disproportionately also have a self-fulfilling prophecy
effect. It gives your player such a disproportionate advantage over the
others, that others probably won't be able to compete, therefore improving
your odds of success.

~~~
subjectHarold
It really doesn't. You may be able to push up the price but higher prices mean
lower returns. What you are hoping for is that you will pile money in, for
some unknown reason other people will panic and try to bid, and then you sell
to them.

Just fyi though: I have worked in markets for about ten years...I have seen
this over and over. I studied economic history...I have read about this over
and over. And the subject almost never makes it out alive. Usually, this is
psychological. Most people get involved with clear heads but that clarity
doesn't survive the rush of the bull market/greed...they want more, they start
to believe their own bullshit, they end up fully invested at the top...they
get carried out of the market.

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Animats
Softbank again? They've become the world's largest source of dumb money.

There's a bunch of these things. Starship Technologies has a little stroller-
sized vehicle that's occasionally seen driving on Redwood City sidewalks.
Nuro's is sub-car sized and can operate on roads. Slowly. It can't unload
itself, so the customer has to go to it.

Remember Amazon Prime Air, drone delivery from five years ago? What happened
with that?

~~~
fierro
innovation takes time. There's no obvious reason to me that automated
deliveries can't materialize in the future.

~~~
Animats
Somebody needs to solve the "last 20 meters" vehicle to doorway problem.

~~~
d-sc
Presumably this has been solved. It’s a mailbox. Once the software
infrastructure for autonomous delivery vehicles is in place, I feel that
people will gladly install $100 ‘autonomous-delivery-ready-mailboxes’. We
gladly spend more than that on the gas, electricity, internet, and parking
infrastructure that’s in place.

~~~
anonymous5133
We are already going that route due to people stealing packages from front
doors....People are buying package lock boxes.

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dawhizkid
Surprised how critical comments are...IMO autonomous delivery vehicles are
much more likely to go to market sooner than autonomous taxis for the simple
reason that the barriers to getting regulatory approval are going to be much
lower because you aren't dealing with human lives. At the same time, food,
grocery, and same day delivery are becoming more popular.

~~~
mb_72
Starship Technologies has been going at this for ~5 years already, and I feel
extremely skeptical about this entire 'autonomous last mile delivery' thing.
Home delivery is a solved problem; we pay a few EUR for it and a human turns
up in their car, plus there's no need to have a valuable 10k EUR robot
delivering a 5EUR pizza. For packages, there's three different package locker
systems within 10 minutes walk of our house. To access any robot we'd need to
go to the front of our apartment building anyway.

I guess I must really be missing the point of all this, as a bunch of people
seem to want to throw a lot of money and effort at the 'problem'.

~~~
dawhizkid
No offense, but yes you are missing the point. The whole value of autonomous
taxis or autonomous delivery robots is that it eliminates the most expensive
thing about the business model of Uber/Lyft/Instacart/etc: labor.

Once you create a taxi or delivery service where you have no labor cost, then
your unit economics greatly improve and you have a killer business.

If you have a $10 Uber ride, ~$7.50 or so of that goes to the driver with
$2.50 to Uber. With an autonomous taxi model Uber could theoretically halve
fares, in this case to $5, and take in the entire $5 for themselves.

~~~
mb_72
Please try and convince me that someone operating a fleet of delivery robots
that costs many thousands of euros each is going to be 'cheaper' than
utilising the current model of people + their own cars. Where I live
(Estonia), delivery adds a few euros to the cost of food (for example). Even
if that was reduced to a single euro that wouldn't make any difference to if
we ordered food to home or not.

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samcday
> “We’ve spent the last two and a half years building an amazing team,
> launching our first unmanned service, working with incredible partners and
> creating technology to fundamentally improve our daily lives,” Nuro co-
> founder Dave Ferguson said in a statement.

Is anyone else getting really tired of hearing this kind of rhetoric? This is
a company that, if successful in its mission, is going to help eliminate a
whole bunch of jobs (delivery drivers, auxiliary grocery chain workers, etc).
Yes, it's gonna provide a cool upside - I can have robots deliver my toilet
paper to me without having to leave the comfort of my home! But do we really
need to describe that as "fundamentally improving our daily lives"?

~~~
useful
It moves the needle in ways that have not moved much since the advent of fast
food and microwave dinners.

\- It saves you time.

\- It reduces your need for expensive appliances and electric bills.

\- It reduces your need for an expensive car.

\- It reduces food waste/spoilage.

\- It allows cheaper access to delivery for all, especially the
disabled/elderly.

~~~
sonnyblarney
Instacart/deliveroo provide all of those advantages - plus - someone to unload
the groceries and bring them to your door, which is definitely better. And a
human to talk to if there's an issue.

Consumers don't care one bit that their groceries were delivered
'autonomously'.

The 'advantage' of the 'self driving' in the end _must be cost_ \- and frankly
a significant reduction in cost - or it won't pan out.

In this scenario, there still has to be a picker, a checkout, a loader, and
some human overhead on managing a live fleet of cars. The 'savings' will be on
the cost of the driver - and that's it. There's also a deficit in experience
related to the fact it might not work well for apartment buildings and can't
unload etc..

After all the fuss, ops and overhead, this tech has to take the average
grocery+delivery bill down by a fairly quantifiable amount or else it won't
make sense to use it.

It will happen eventually, it must may not be this company at this valuation.

~~~
mortenjorck
Nuro versus Instacart is the wrong comparison, in my view. Instacart is B2C,
while Nuro, if the Kroger pilot is how they plan to expand, is B2B.

With Instacart, you as a grocery customer decide it’s worth a significant
premium to have groceries delivered to your door, with full service. With
Nuro, the initial customer is the grocery store itself; to you as the grocery
customer, it’s stores with Nuro versus stores without Nuro.

With a service like Nuro, the stores probably hire an extra person or two per
shift so some of the floor staff can be assigned picking and loading,
spreading out the labor costs. As you say, getting the cost down is critical,
and if Nuro succeeds, I could imagine autonomous delivery eventually being
priced into part of the standard operating costs for a grocery store.

~~~
neuromancer2701
Kroger already has this with the ClickList grocer pickup service. So instead
of loading the groceries into your car the same employees will just load the
robot and it will drive to your house. No extra effort or overhead because the
same clicklist app will be used for both use cases.

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dmode
I believe another self driving car company, Aurora, also raised $500mn
recently [1] I don't really understand how these companies are attracting
these massive sums, given that even a company like Google has made limited
progress in 10 years after investing several billions. On top of that there
are heavy weight car manufacturers like VW and BMW who are also investing in
this technology.

[1] [https://techcrunch.com/2019/02/07/amazon-sequoia-invest-
in-s...](https://techcrunch.com/2019/02/07/amazon-sequoia-invest-in-self-
driving-car-startup-aurora/)

~~~
john_moscow
It might come with a sweet cashback, let's call it.

~~~
hermi
tbh might not even be that If you only charge the LPs on deployed powder....
well

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dmix
Looks like both of the founders were team leads at Waymo:

> I am one of the founding team members of the Google self-driving car
> project.

[https://www.linkedin.com/in/jiajun/](https://www.linkedin.com/in/jiajun/)

> I built and then led the computer vision, machine learning, behavior
> prediction, and scene understanding teams for Google's self-driving car
> project.

[https://www.linkedin.com/in/dave-
ferguson-565b974/](https://www.linkedin.com/in/dave-ferguson-565b974/)

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neosat
It's important to realize that Softbank's strategy may not be just to look at
the startup's chances in isolation but looking at the whole portfolio of
companies in a space (self-driving vehicles) and look at a range of
capabilities there. With their investments and their people on the boards of
these companies, they can 'do more' to accelerate and make things happen which
may not otherwise happen. So their view includes both the individual company,
but also how it fits into the entire picture and that may give them an
additional perspective and consequently a different notion of value than you
or me as individual investors or analyzers would have.

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oldgradstudent
How come every report on their "unmanned" delivery service fails to mention
that there is a chase car following their vehicle and (visible in some some
videos) a car driving in front of their vehicle?

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aezell
No one wants to talk about where all of Softbank's money comes from?

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TomK32
Put enough money into those startups and they can lobby to ban human drivers
and make AI drivers mandatory. That would solve so many problems!

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maxxxxx
I am a little afraid of that. This is probably the dream of all rent-seekers.
Have mandatory, IP protected tech that's mandatory to use.

~~~
dsfyu404ed
If you're wondering what that looks like then look no further than the post-
conviction alcohol and/or location monitoring industry.

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momentmaker
How does one get the grocery?

I'm assuming you'd have to be home in order get them and there would be an app
that tells you an estimated delivery time and location of the vehicle.

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Liquix
I'd be curious to learn how companies in this space are planning to address
the potential issue of physical robberies/hijackers/bad actors.

~~~
yunyu
I don't think most people would risk arrest for the possibility of scoring a
few heads of lettuce.

~~~
dsfyu404ed
In places where the police response to petty theft is basically "catch and
release" they will. Obviously the long term solution is just not to deploy the
service those markets.

Edit: People will steal anything if the risk/effort/reward numbers make sense.
People commit felony crimes against pizza guys for $50 and a few pizza all the
time. I can see people stealing groceries if the risk and effort dips low
enough.

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Judgmentality
Does this mean Softbank has lost confidence in their previous investment,
Cruise?

~~~
jamestimmins
SoftBank is pretty open about spreading their bets even within a single
segment.

~~~
Judgmentality
I obviously don't have access to their term sheets or whatever information
their investment companies are providing them, but the model of trying to
(over)fund the segment is not how VC succeeds. Granted, people are saying
Softbank is reinventing VC. But everything I've seen leads me to believe
they're going to lose money in spectacular fashion, just like how Masayoshi
Son lost the most money in history back when the dot com bubble burst.

FWIW I used to work at a Softbank funded company. It was a fucking shitshow
where the solution to every problem was to throw money at it, rather than
actually try to fix the underlying problem. People are still writing articles
about how this company is the future.

Lucky for me I have nothing invested and can just enjoy the show from the
sidelines!

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leowoo91
But are there regulation in place for such vehicles?

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sonnyblarney
So probably a 5-10B valuation - without a viable product, a customer, or a
dime in revenue.

It's one thing for FB to buy a massive social network for billions: they can
effectively calculate how much it's worth because they know how it would
monetize.

But this is getting bonkers because there are so, so many things that can go
wrong. Do consumers give a rats if their groceries are delivered by a person
or by a robot? Will they respond well to the fact they have to walk outside?
How do they deliver to apartments? Regulations? Safety? Theft? Service costs?
Operational performance? And all of this assumes the 'self driving' part just
'works'.

I get the market is 'monstrous' ... but this is a lot of money one would
expect when all of the above is taken care of.

~~~
muzz
$2.7B according to the Reuters article today. Sounds very dilutive-- SoftBank
got a huge chunk of the company.

[https://www.reuters.com/article/us-nuro-funding-
softbank/dri...](https://www.reuters.com/article/us-nuro-funding-
softbank/driverless-delivery-startup-nuro-gets-940-million-softbank-
investment-idUSKCN1Q01MI)

