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There's so much dumb money floating around that too many "unicorn" failures are being propped up.

In the self-driving car area alone, we have:

- Cruise Automation. Showed a video of simple lane following and hyped it as self driving. Got acquired by GM for 1 billion. Claimed to have a production-ready car in 2017.[1] GM now trying to dump them.[2] Being propped up by funding from Softbank.

- Otto. Showed a video of a self-driving truck.[3] Turned out this was on an isolated road with lead and trail vehicles preventing any interference. Acquired by Uber. Valuation only 680 million, though. Used to hype Uber valuation. Self-driving technology so fake it killed a pedestrian.[4] Being propped up by funding from Softbank.

- Tesla. Showed a video of a self-driving car in 2016.[5] Turned out this was the one successful run from many tries. Full self-driving never seen again from Tesla. Softbank and Tesla discussed funding but Softbank declined.

[1] https://www.businessinsider.com.au/general-motors-cruise-pro... [2] https://www.bloomberg.com/news/articles/2018-06-15/gm-is-sai... [3] https://www.youtube.com/watch?v=Qb0Kzb3haK8 [4] https://www.economist.com/the-economist-explains/2018/05/29/... [5] https://www.theverge.com/2016/10/20/13343828/tesla-fully-aut...




Let's consider what would happen if self-driving started to really work. Take a look at Navya [1] and Local Motors [2], both of which sell electric mini-buses which can cruise around an small controlled area such as an airport parking lot or college campus. They're slow and limited, but they are actually carrying a few passengers without a driver on board.

Are those companies unicorns. No. They seem to be valued for what they actually do. Which is replace a small number of low-wage employees with expensive hardware that requires extensive support infrastructure.

Think of what it looks like if this really works. They get a few major airports signed up for "transportation as a service". Their mini-buses go between terminals, out to long-term parking, and out to rental car lots. Fine. So now, at each airport, you have to have a garage, maintenance staff, a control center, and some arrangement for dealing with problems. All the same plant as a regular bus operator, plus the high-tech part, plus it has to be close because these things can't drive some distance on regular roads to a garage or parking lot.

It's "transportation as a service", which means you have to pay for all problems. Which will happen. You'll have people cleaning off graffiti, fixing corroded sensors in winter, towing in failed vehicles, and dealing with angry riders who missed their plane. All you've saved is the cost of the drivers. So you're probably not making big money off this.

It's so much easier at the hype stage. You don't even have to perform, let alone survive on your own cash flow.

[1] https://www.youtube.com/watch?v=TAAm-wLInkE [2] http://www.buffalo.edu/ubnow/stories/2018/08/olli-debut.html


While I don’t think self driving cars have much of a near term future, I do think this technology can be applied to infrasucture with dedicated right of way like Bus Rapid Transit (BRT) to greatly improve headways. Sure transit operators might have the same level of staffing, but now they can run much more frequent service. And that more frequent service means more ridership and fare revenue that can go to offsetting the technology cost.


BRT will never be a major factor regardless of whether humans or computers drive the buses. Urban areas lack the space for building new dedicated bus lanes. And outside of a few limited areas like New York City and San Francisco, most voters are also motorists who are unwilling to sacrifice their existing car lanes.


Tesla has media presence, an existing customer base and an existing distribution network. Even if they come to the party late, they're not unlikely to take a slice of the market. Therefore, if I were investing in that sector I wouldn't discount them as a meaningful contestant, remembering they can always buy their way in to third party tech.


Blackberry has media presence, and existing and very loyal customer base, and an existing distribution network...

Oh wait...that didn't work out so well for Blackberry (or Palm or Microsoft). Does anyone remember when Creative dominated the media player market? Or when everyone thought Sony would take over the electronics world? When everyone thought Yahoo needed to be broken up before it threatened the internet?

if I were investing in that sector I wouldn't discount them as a meaningful contestant, remembering they can always buy their way in to third party tech.

One thing most of Tesla's competitors all have in common is that their business interests are opposed to Tesla's business interests. This means that a licensing of self-driving tech is extremely unlikely.


One thing most of Tesla's competitors all have in common is that they don't have functional self driving tech either. Tesla will buy from a startup, if it buys at all. So I don't think your line of reasoning is valid.

Remember: having tech is one thing, getting it to market at scale and sorting out legal and regulatory issues, cross-border issues, distribution agreements, etc. is quite another. Tesla has done this before and thus presents a nontrivial value-add for tech holders, quite aside from "money on table now".




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