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Amazon to pay $1B+ for Zoox (axios.com)
334 points by mmettler 11 months ago | hide | past | favorite | 186 comments

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..."


This reminds me how shoemaker Kenneth Cole started, who also used "making a film" as a cover story:

> Wanting to preview his line of shoes at Market Week at the New York Hilton, but unable to afford the purchase of a hotel room or showroom to display his items, Kenneth Cole inquired about parking a trailer two blocks from the Hilton Hotel. Upon discovering that permits for trailers were only granted to utility and production companies, Cole changed the name of his company from Kenneth Cole Incorporated to Kenneth Cole Productions, and applied for a permit to film the full-length film, "The Birth of a Shoe Company". In two and a half days, Kenneth Cole Productions sold forty thousand pairs of shoes, while chronicling the beginning of the company on film. [1]

Which is why it's still called Kenneth Cole "Productions" to this day.

[1] https://en.wikipedia.org/wiki/Kenneth_Cole_(designer)#Birth_...

Fake it until you raise 1 billion and then sell your company for 1 billion?

The sale was a distressed sale. Their earlier valuation was over thrice the acquisition price, so a $1B exit was not the intended outcome, and probably leaves many investors/employees underwater depending on liquidity preferences.

Ahh yes, the ol' buy high, sell low strategy!

Well years ago the joke was Amazon sold at a very small loss but made it up in volume, and we can see how that turned out... Maybe they're going to blow up this business model as well!

Amazon’s “losses” have mostly been a tax dodge. They would for example invest in software R&D without presenting it as an investment from profits but rather an operating expense.

Losses are negative income. If I paid you $100k and then paid you -$50k you would be rightfully upset if you were taxed like you made 100k

Companies losses are just spending.

If I pay you 100k then you spend 50k buying land that’s not a “loss”. When a company spends 50k on R&D that’s generally an investment not an operating expense. Plenty of other dodges exist for physical assets via depreciation games etc. Even just buying more brand averting is an option to increase capital without being taxed on it’s creation.

Buying land would technically be a capital expenditure where you can only claim a deduction if the land becomes less valuable. If you're talking about more "normal" business purchases like computers or equipment you get to deduct a portion of the expense every year as it depreciates. So if you buy a $2k laptop for a developer and in 1 year it's now worth $1500 then you can deduct $500.

For a business that really doesn't make a difference. If you have $1 billion in revenue but spent $999,999,999 in order to generate the revenue then your business income is $1.

Or the complete logical extreme. If I sell a dollar bill for $1 that's not income that should be taxed.

> If I sell a dollar bill for $1 that's not income that should be taxed.

You always have overhead so you can’t actually sell 1$ for 1$. Breaking even requires selling assets for more than their worth to cover transaction fees. We let companies deduct those fees, but what’s a fee and what’s an investment gets blurred. Especially when most companies don’t suddenly get destroyed after a single transaction. The classic razor and blade model being a prime example for hiding profits.

Sure, cash flow may make it seem minimally profitable, but that’s only relevant in this quarter or if you run out of cash. Spend X million on software development or brand advertising and can have a tax free transfer from income to capital. Leverage that for a few decades and suddenly your business is worth 10x as much without any apparent profit. Clearly an asset was being invested in.

Maybe this speaks to a need to tie taxes to income AND revenue. Not that I think the tax code should get any more complicated (quite the opposite), but if Amazon is selling at a loss to decrease the amount of tax they pay, while they starve out other companies in the market, there should be at least some benefit to society.

I’m working on my fifth $Billion...

I gave up on the first four...

"You always seem to play the vulture @Kvogt — we all know the @cruise Origin’s origin is @zoox . While flattered, you do make a valid point in seeking the best: Zoox engineers are better than yours, and soon better funded :)"


Wow that's pretty funny, but what's the context for that tweet? Did Cruise try to poach talent from Zoox ? The tweet definitely gives me an early 2000's Dotcom over the top rivalry/ceo vibe!

Vogt personally sent out an email to various Zoox engineers encouraging them to work for Cruise.


This will go over very well once they are eventually sued for patent infringement.

He's going to fit in great with the rest of Amazon leadership.

Even if that’s only half of the truth, it makes a great story that people will tell

Unfortunately, if you look at his pattern of behaviour, it's probably entirely untrue. It's most likely something he thought would be a good story to tell. It's an exploitation of the silicon valley game - since everyone else is embellishing their stories and achievements you can just make things up entirely and pay no price for it.

SV is hardly the only corner of business prone to fish stories/dick waving. It's the same as the Hollywood gossip circuit, serving the same function.

High school lunch-table politics don't end at 18, unfortunately.

Even the Obama-Os story is 90% fake, the story PG tells (and is repeated) is not even close to the story that the founder himself told on a startup podcast

What's the story? I thought they sold novelty cereal boxes as a fun side project and PG admired their creativity.

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.

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

Lying your way to success?

there's a better world out there, believe me. you are alienated by living in such a pool of sharks. you won't believe how relieving it is to live in a world where you can trust people

Have you noticed that the Odyssey is one long celebration of doing exactly that?

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

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.

If you have to go back to the time of the writing of the Odyssey to justify for your behavior, you're probably doing something wrong.

if you become successful at the venture, then was it lying in the first place?

It obviously was still lying, even if you are successful. How is there any question? You either lie and are unsuccessful, lie and are successful, or lie in a legally material way and are sued or fined, and are either successful or unsuccessful. All outcomes still started with a lie.

It also reminds me of Shenzhen, with their fail fast, fail often, chabuduo for now grit.

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.

> Amazon doesn’t invest in greenfield projects that are not customer facing

I don't think this is very true, they are just very good at turning around and selling the internal tech.

The underlying technology for AWS was developed internally and it was not customer facing at first.

Similarly if you look at their internal data platforms, they have invested heavily even though it's not customer facing (yet, because eventually they will start selling services inspired by the internal systems via AWS).

I remember watching a presentation on how they invested large amounts of money into prototyping FC robotics technologies.

If you look at AWS Kinesis or EventBridge, the technologies were developed for internal usage before they were sold. There is also considerable investment into distributed consensus technologies that hasn't been turned directly into products (yet).

You're kind of right in that Amazon doesn't spend much time working on greenfield projects that don't have any forseeable business value (in contrast to say Google), but that is in many way a product of their organizational structure where two-pizza teams are supposed to do 'research' as part of their product work rather than having a pure R&D division.

The underlying technology for AWS was developed internally and it was not customer facing at first.

Will this myth ever die?


I think the internal tech is definitely part of original AWS, but of course, quickly it grows beyond that, and the majority of aws has no relevance with other Amazon tech. But the statement is definitely right at the beginning.

Plus, AWS no longer use such narrative anyway.

No it never was. AWS was always built from the ground up to be an external service. A number of publicly available interviews say the same thing.


Edit: that’s not the right podcast. This was before he went to AWS. I can’t for the life of me find the interview.

Did Amazon internally dog-food it before it went public? Maybe that's the confusion.

I can’t speak for how it worked in the past, but AWS and Amazon are run as two separate companies. AWS treats Amazon Retail just like any other customer and Amazon treats AWS like a third party vendor as far as choosing whether to adopt an AWS technology.

But if someone with deeper insight than someone who has been working at Amazon/AWS for -3 days (I start Monday), I’m glad to be proven wrong.

Wasn't there an edict that amazon internal services have to be designed from the ground up to be externalizable. So even internal technology is designed with being customer facing in mind.

There is no mandate that I'm aware of (not that I know everything about everything), but it's definitely the case that projects with "externalization potential" (making up a phrase out of thin air) will generally be more likely to get funded and prioritized (of course, why wouldn't they be preferred?).

So, even without a mandate, the market forces at play in terms of proposing roadmap projects and choosing what to invest in, will naturally tend to favor those solutions with can pull double-duty (solve an immediate problem/pain-point that Amazon already has, and with a clear path/potential to be converted into or evolve into an external sell-able service too).

Here is Bezos' mandate from 2002. Quite prescient: https://jesusgilhernandez.com/2012/10/18/jeff-bezos-mandate-...

It's a little different from the idea of "all services must be something we can turn around and sell to customers", but yes it was a good idea to enforce service interfaces and forbid tight coupling at a architectural level.

I think this is what you are referring to[1]. I don't think the goal is making everything externizable, I think the goal is just to have good api's everywhere. Easy productization is a side effect.

[1] https://medium.com/slingr/what-year-did-bezos-issue-the-api-...

Does than mandate predate the creation of AWS?

According to the Yegge rant, it was some time around 2001/2002/2003, so yes.


> 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.

Unsurprising since Bezos himself worked in a Hedge fund. The Autonomous Driving hype train is slowing down, so this is the perfect opportunity for this move.

Interestingly, with this move, Bezos can soon rival Musk for the next 'billionaire super genius rock star' position.

They both want a planet. Musk wants to take over Mars. Bezos wants to take over Earth.

Actually if you pay a little attention to Bezos, it's clear that his focus has been outer space at least since he was a college student. IMO Amazon was an opportunity that Bezos saw while Blue Origin is the fulfillment of his lifelong dream.

So if it’s his dream when does he start actually focusing on it?

About 9 years ago when they started development of the BE-4. Up until then Blue Origin was mainly a think tank and research project.

I've been quite dismissive of Blue Origin in the past, their pace of development seemed so sluggish compared to SpaceX, but I think that was somewhat unfair. It seems Bezos only really started pouring money into the project a few years ago though. BE-34 does seem to be behind schedule, or at least the launch vehicles are by a year or two, but that's par for the course for big rockets.

Well, it a money burning venture, by making amazon bigger and bigger he is contributing to blue origin.

He funds blue origin with more than a billion $ every year from the sales of his own amazon stock. Without amazon filling his pockets he can't finance blue origin.

He puts more of his money in blue origin every year than the amount amazon will pay for zoox

What do you mean? Prior to COVID I thought Bezos had his full attention on Blue Origin

Bezos builds self regulating machines that use humans, Musk’s imagination stops at exploiting human labor efficiently and there lies a gap I think.

> The Autonomous Driving hype train is slowing down, so this is the perfect opportunity for this move.

Zoox in particular was a LARP of an autonomous driving company. Until any of these companies start manufacturing, they’re literally LARPing. At least Tesla shipped an actual product.

Tangentially, it seems like calling people LARPers has very rapidly become a universally-used cliche. Has anyone else noticed that? I've seen it used for months, sparingly, but in the last couple of weeks it's everywhere (I've seen it literally three times this morning, on different fora about vastly different topics).

It’s particularly applicable to startups that burn through a bunch of cash and then exit for a pittance.

Sure, I wasn't trying to make any point about your comment. I just thought it was a really fascinating example of how language spreads and evolves,slowly at first then all at once. Please excuse the musing haha

You point is interesting how speech patterns catch on and become the phrase 'du jour'. I think the internet has changed that dynamic, it used to be only withing people you saw face to face. Now we're exposed to a much wider range of people and styles.

Anyhow, I haven't seen the trend of calling out an entity as being a LARPer. But I have to admit, it's kind of funny. It does make me giggle :)

It has mostly hit the internet mind-brain because of tacticool cops larping has gun toting heros.

As someone who works for Amazon, I can tell you there is plenty of impressive technology built within Amazon that is only used internally to Amazon.

I doubt it, otherwise you would name it.

I imagine all the robots and logistics stuff.

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

Not really sure how you're using "squeeze" here, but Instagram and Whatsapp were both, with the benefit of hindsight, phenomenally successful acquisitions.

I agree with you. Instagram was an excellent acquisition. WhatsApp was an OK acquisition, not because is not a great product or good ecosystem play, but mostly because it came at a premium price and it hasn't been monetized yet.

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

>Amazon buys text-to-speech software company Ivona


>Amazon to acquire Yap, move into speech recognition?


>Amazon has reportedly acquired Evi for voice-guided search


> They did NLP + Echo + Alexa in house.


Your parent is specifically talking about greenfield projects that are not customer facing. Alexa/Echo is customer facing.

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.

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...

* 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...

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.

Those are customer facing mostly no?

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.

These are the hot takes I rely on HN for.

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.

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.

Funny, in their SF driving video, they tout their ability to go around 3 double parked cars in the road. They admit those 3 cars are Zoox cars.


Even if they are deliberately parked there, I don't think the fact that they are owned by Zoox makes any difference to the ego vehicle. It's likely they did it just to introduce this scenario predictably during the videoshoot. They could have used non-autonomous vehicles for the same purpose but arguably with more credibility.

Culture fit with Amazon delivery drivers then ;)

Only thing missing is the blaring radios.

These sort of behaviours never exist in a vacuum, I expect the ones doing this are arseholes in plenty of other ways as well.

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.

>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.

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"

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 ;)

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.

Right. There will be fewer jobs that will be more commoditized, therefore driving down wages and reducing hours so the outcome of that CDL may not pay as much as it otherwise would with human drivers. Companies aren’t just going autonomous for safety benefits - they want labor gone, which is where the real costs are these days.

I was watching an interesting video about this the other day [1] which suggested that one approach might also be a convoy of trucks, where the first one has a driver (even though it may be driving autonomously on the highway) followed by several autonomous trucks. The human driver can handle bad road conditions, mechanical problems, etc. It seems like a logical step on the way to fully autonomous, and significantly increases the capacity of freight per driver.

[1] https://www.youtube.com/watch?v=QlPrAKtegFQ

Well, I assume they err on the side of caution "too much". Sensible guidelines would be for self-driving cars to be approved by regulatory guidelines when they cause less accidents (and less severe at that) on average. But currently a single accident could cost a company its license to test on public roads, and that is basically a death sentence.

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.

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

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.

I'm hoping there will be a market shift where startups stop over hyping the value of stock options. Things like exercise windows and sparse liquidation events make stock options a raw deal.

IIRC, Zoox was out fundraising. From the employee perspective, a guaranteed gig at Amazon is better than being laid off. Equity value was probably a sunk cost at this point.

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.

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.

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.

Insanity, really on the wrong side of the reward curve.


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.

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.

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

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

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

Thanks, if that isn't a joke reply I can confidently say I would have never made that connection in a million years

My guess was because you use "clay" to make things? Seems pretty weak.

Klay and Clay sound similar?

Very much. Am not a native English speaker

And yet, everything you seen on the street from Zoox is a retro-fitted Toyota. I don't think their own vehicle ever made it onto the street.

That's kind of funny. Have they decided where they will be building their cars? Normally those types of announcements (new car plant) will get big coverage.

Hey, he has a dash in his last name. He must be, like, really smart and sophisticated.

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.


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?

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.

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

That's why people keep saying that stock options of startups are lottery tickets.

Why would they? It's well understood that when you raise more than what you sell for, the company has effectively been liquidated in a fire sale. This is the risk of raising a ton of money without having a functional business with real unit economics.

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

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

> 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?

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"

"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.

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:


I think it's a mistake to think that binocular or 3D vision is 'enough'. The visual cortex does a LOT of processing.

They don't seem to actually working toward L4 any time soon. It's just a steady drip of little features like "stops at stoplight" that are progress to fans, since none of the other self-driving companies are releasing anything, but what Waymo/Cruise/Zoox are stuck on (and have been working on for many many years) are much more nuanced problems that Tesla still have to face some day.

Having more data on the nuanced problems than any of the competitors is Tesla's most significant advantage, IMHO.

To me, it seems someone from Zoox wrote the article.

There are many tech and non-tech press which didn't believe in anything posted on the "master plans" published by Tesla, and they are still in denial.

Meanwhile, Tesla has been making huge leaps of progress and collecting billions of miles worth of data to improve their systems. What is available right now, and has been so for a couple of years, is unmatched by any of their competitors.

I am interested to see how Zoox and others will compete against massive amounts of data on corner case scenarios and real-world driving.

Tesla has millions of miles of experience with a level 2+ self driving system. Waymo has comparable experience with a level 4 system. Thus it makes no sense to claim that Tesla is closer to shipping a level 5 self-driving car than Google.

Billions of miles of actual data from real world scenarios. I am talking about the data they collect from the cameras and sensors, not how their system works or what level it is.

The data from real world is far more important than simulations.

"not even" in the sense that the leaders in self drive aren't doing it.

Tesla is doing exactly that.

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.

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

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.

Market's fine the technology isn't ready

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.

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

Zoox meet Rivian, Rivian this is Zoox.

Curious to see how that pans out.

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...

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.

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


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

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).

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.

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.

Isn't that kind of the dirty little secret of SV?

Interviewed there once, employees, leads and managers said the same thing about him being too micromanagey. Apparently they were glad to have him be gone.

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.

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.

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.

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.

I've had to explain this aspect of Level 3 to so many people before, and in my experience few people get it. I think there's a bit more nuance to it though.

How far it has to predict something into the future is however long it takes for a person to safely take over - let's say 10 seconds. The thing is though, a Level 4 system also has to be able to predict things into the future in terms of erratic drivers and pedestrians - so the problem is surprisingly similar.

If you want to know what's really going on with self-driving, talk to the prediction teams at any of the companies. It's pure research, because how can you predict the future? And it's not a hypothetical problem, because pedestrians do weird shit and you need to predict if they're going to walk in front of you 5 seconds from now all the time (at least for urban driving). Humans do this instinctively - we slow down in uncertain situations and are constantly monitoring it for changes. When the robots try to do this, they slow down and then just stop because they can't really guess what's going to happen next. For computers, I'd argue it's roughly equivalent to solving hard AI.

There's gotta be a level 3.5 here. Cars almost always don't require a driver and can safely stop and transfer to a driver when they do.

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

Automotive industry wanted a gradual transition from manually driven cars to fully robotic cars. That’s fine, but they didn’t ask for inputs from software engineers about how to do it.

So they worded that that you may have either:

1) no wheels, or

2) wheels that may shear off, or

3) wheels that may shear off but continue to support weight for a while, or

4) wheels that don’t shear off under normal conditions, or

5) wheels that don’t shear off under any circumstances.

Simple enough right?

The difference is simply non-realtime corner cases. Most of driving is relatively straightforward processing for the human brain. But every once in a while, something weird happens: humans controlling traffic in an unexpected way, something weird happens to the road and a new emergent order arises from communication with the driver, a cop comes to the window and tells you some detail about the way the road is closed.

I don't drive much, but I still hit cases like this periodically, especially when driving through the canyons. From the user's perspective it's effectively the equivalent of taking transit, with very occasional non-realtime takeovers. By contrast, L4 can do all the things that don't require a human in the car at all, like cargo or getting to their next pickup.

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.

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.

I think a lot of people would use and enjoy level 3, but some people would have a real bad time.

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.

Why do you believe that your anecdote will scale to every situation, ever?

He didn't say anything to that effect.

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

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

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

According to crunchbase, zoox raised $955 mln: https://www.crunchbase.com/organization/zoox

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

Seems like a very large gap (200m) to provide a parachute.

Investors often have 2x liquidation preferences, if not more. Exceedingly unlikely common stockholders would have any value.

Often is a stretch. 1x has been pretty market the last 5+ years for early stage and non distressed situations. It looks like the last raise was the Series B after the founder got fired, so it’s possible the B investors had a multiple liq pref if the company was in a weak spot then. But I’d still guess not.

Sorry for the naive question, how is this not illegal? I would understand if you get 2X after all the capital raised has been cleared, but in this case? You get 2x while other people lose their shirts off?

> Sorry for the naive question, how is this not illegal?

Because investors are assumed to be sophisticated adults who can read and do their own research, or hire lawyers to do so on their behalf if they are incapable. Every investor, those who put in money and those who put in labor hours are assumed to have gotten the best deal available to them.

Founders and employees aren't investors.

Freedom of contract.

Think about this situation: a company is in dire straights, and will likely go bankrupt and be worthless. The founders and the employees still believe they can turn it around, however. As an investor, you may be unwilling to invest with a 1x liquidation preference, given the high likelihood you lose all your money. So the company and the investor may negotiate a 2x liquidation preference as a way to sweeten the deal and induce the investor to invest in a riskier than usual proposition.

Similarly, right after the dotcom bust when many investors lost their shirts, terms became much more investor friendly because the risk was perceived to be higher.

At the end of the day, the terms are negotiated between the company and the investors, and it’s a market - if the environment is founder friendly and there’s plenty of capital looking to invest (like today), it’s almost always 1x. If capital is scarce, you take what you can get, otherwise, no capital.

The founders are well aware as they negotiate these terms. The rank-and-file employees may not understand the company’s liquidation preference stack, but they can always ask, and if not given or satisfied with answers, ask for more cash comp than equity. It’s again a free market.

I understand the general point, but that surely can justify any practice cloaked in pseudo-legal parlance.It is exactly the same thing that led us to the derivatives disaster.

Preferred stock is kind of halfway between a stock and a bond, and selling bonds for less than their face value is pretty normal for high-risk companies.

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.

> 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.

They only have to get from warehouse to airport.

They do have some presence (large investments in Rivian and Aurora.tech).

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.

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

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.

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

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