Ridesharing 2.0: Autonomous v. “autonomous;” Google v. Uber; technology v. marketing
Well, that was quick.
No sooner did Google actually start to compete in ridesharing by launching a new carpooling version of Waze, than did the media anoint Uber the winner of the self driving car era. Folks, put down the popcorn. It’s over.
From Bloomberg: “Google’s Self Driving Car Project Is Losing Out to Rivals”
Wow! A few days in, and Uber is winning! Impressive!
There are a few obvious omissions in these stories, or at least the breathy headlines. One being that Uber’s cars aren’t actually autonomous. The New York Times headline blares “No Driver? Bring It On”but then explains in the story there is a human behind the wheel of each vehicle Uber simply doesn’t call “a driver.” Essentially these are modified Volvos with a person in the driver’s seat, being championed as a tech innovation.
Perhaps the most apt headline was from the Chicago Tribune: “Uber’s self-driving car: Prepare to be thrilled and bored at the same time”
Well done, Uber!
And also, the spin and gulping up of it should surprise no one.
Uber is a company that has long valued swagger, marketing, “story”, and bravado over much else. It is the ultimate manifestation of the brogrammer. The ultimate fake it ‘til you make it company. Uber is the guy at the party who is always in your face saying he’s “crushing it.”
Even late night talk show host Seth Meyers asked once if Uber’s Travis Kalanick was a man or Axe Body Spray pumped into a suit “until it became sentient.”
Which is not to say Uber won’t win this battle. (More on that in a sec.)
But consider the “fake it ‘til you make it” evidence first:
- The second highest ranking person at Uber-- a “steal” from executive-fleeing Target-- is Jeff Jones. He is Target’s former CMO, given reign over all global ridesharing or some 99% of the company and charged with re-crafting Uber’s “story.” What clinched the job? His objection to Kalanick’s anti-government rant which was 1) inauthentic in the early days2) in no way backs up how the company has operated since.
- The utter optimization for valuation at the expense of anything else. This is a company whose self worth is attached to immediate term metrics and headlines that go with them. to the internal screams of one of the only traditional VC investors on its board. Not a sign of a company that wants to deliver more than it promises.
- Uber’s utter unwillingness to go public. Remember when we argued that the rest of the press was wrong to suggest settling China was about prepping for an IPO? Well, Business Insider-- a virtual adjunct of Uber’s PR team--now agrees.
- Uber has invested heavily in political operatives to destroy critics rather than rebutting them, its $1 “safety fee” was admitted to be just marketing, and it even apparently bought off MADD. It consistently leads with potential headlines over actions.
- Uber spent more than a year bragging to the press that it was “crushing it” in China, despite all evidence to the contrary. Earlier this year it abruptly exited the market.
Meantime, Google has a multi-year lead on autonomous cars. Actual autonomous cars. It’s taking the harder way. From Bloomberg:
Still, rolling out partial autonomous technology can be risky. Tesla’s driver-assistance features, known as Autopilot, have been in the spotlight since a fatal crash in May. The company released an update of the software Sunday with enhanced radar and a GPS database and said that might have saved the driver’s life.
In 2012, Google let employees test a partially autonomous system for automated highway driving and discovered the attention of the human drivers quickly drifted, leaving them incapable of taking back control quickly and safely. That persuaded the company to pursue full autonomy, even if it took longer.
“Full autonomy, although much harder, is the right route,” [Google’s John] Krafcik said in a recent interview with Bloomberg Businessweek.
And Google is prudently trying to eschew the battles Uber is currently mired in. In that recent Waze roll out, Google is pricing the service -- and driver payouts-- so that it only reimburses them. It does not want to “disrupt cabs” or create a furious army that relies on Google for income… or starts a union uprising. That’s particularly unsavory given Google’s rep as the place with free massages and free food for staffers… and its previous fights with the Department of Justice over wage collusion.
To the extent Google is trying to fight Uber, it’s doing so quietly. Consider the roll out of the Waze carpooling service.Stealthy, leaked and with Google mostly not commenting. Certainly no blitzy press events. Not a single puppy delivered to a journalist. None!
We know the game is going to change when it comes to self-driving cars. It’s been a game about money to date. Whoever had the cash advantage has won: Uber in the US, Didi in China. If Lyft had the cash of either, it would be able to buy more market share. Its growth slowed when it capped spending.
The one thing we know is Google has way more cash than Uber, and is already public with a half a trillion dollar market cap. What’s the other thing Uber is good at? Marketing and spinning. It’s theDonald Trump of startups. Lying so many times to the press, that the press just starts to shrug when it happens and present the truth according to Uber. There’s no longer even any outrage about it.
But that doesn’t mean that Uber doesn’t have serious advantages. Many have argued this is a commodity product, and technology edges rarely win with commodity products, marketing and buying favors do. One of the best articulations of Uber’s advantages was Ben Thompson’s. Tellingly, in that defense, Thompson himself gave Google the tech lead-- particularly in maps and cars-- and he made surprisingly little mention of the financial lead, given cash has been pretty much Uber’s only advantage so far.
But he does point to the biggest plausible reason Uber may have an edge. It’s not that their modified Volvos that still have a human sitting behind a wheel rolled out in one city today. It’s that Google may simply not go after this fight hard enough. Uber, comparatively, has never not gone after a fight hard.
As I argued recently on Twitter, “balls” only get you so far. “Balls” -- after all-- recently delivered Uber a multi-billion dollar loss in China. But it also gave them a sweet concession prize in 20% of China’s ridesharing monopoly.
Uber is talented at many things, but the biggest thing in their favor has nothing to do with them. It’s that Google seems to be going through a bizarre mid-life crisis as Kevin Kelleher detailed earlier this week.
In the first half of 2016, Other Bets saw revenue of $351 million, operating loss of $1.6 billion and capex of $560 million. From an investment standpoint, those numbers seem to be moving – inching, really - in the right direction. Revenue is tracking higher than in 2015 while the operating loss is on pace to be a slightly lower $1.2 billion. Capex began 2016 at a higher pace. Assuming for a moment that Alphabet maintains its $280 million per quarter rate of investment, the figure would be about 30 percent higher than it was in 2015.
Again, all these numbers look just encouraging enough to keep investors happy, especially since Google has said ever since it went public it would spend heavily for long-term growth. But in the past few months, more and more anecdotal evidence has been emerging from Google that signals a possible retreat from some of these other bets. The clearest example is Google Fiber, the most cost-intensive of the Other Bets, and potentially the most disruptive one in the next couple of years.
The Bloomberg story with the fawning Uber headline I mentioned above makes a similar point, quoting former insiders:
Chris Urmson, the mild-mannered robotics expert who ran Google’s self-driving car project, used to say that when his son reached driving age in 2019 the technology would be available so the teenager wouldn’t have to take a driving test.
In August, less than a year after auto industry veteran John Krafcik took the helm of the project, Urmson left with much work remaining: Google has yet to launch an autonomous vehicle service for the public.
Other top technologists have also departed and progress has been slow. Once considered a leader in the field, Google has lost its first-mover advantage to other companies pursuing more practical, less-ambitious self-driving car services, said former members of the project and other people familiar with the situation. They asked not to be identified because details of the effort are private.
“They need a partner, a sales force, a strategy,” said Roger Lanctot, associate director of Strategy Analytics’ Global Automotive Practice.
Need more evidence? Just look at Google’s news this week that it’s expanding Google Express in its battle against Amazon Prime from twenty states to the entire country by the end of this year….. But, doing so by making the “hard decision” to stop selling perishables.
It’s exactly the bizarro “less with more!” hedge that Kevin described with Google Fiber:
On the one hand, Fiber keeps making modest strides forward. It launched in Salt Lake City, pushed for faster access in Nashville and charted expansion plans in cities like San Francisco. All of this has irked telecom incumbents that have long smiled at their consumers even as they pushed aside their best interests. Fiber - more than Verily, the hapless Nest, or any of the X moonshots – is a flagship for the new products, righting an industry full of wrongs and pushing for the Internet access we always knew we deserved.
The thing is, Alphabet is putting the brakes on Fiber, ostensibly to focus more on wireless, and renaming its connectivity initiative Google Access. The move smacks of the “do more with less” thinking that companies try to peddle when they are primarily interested in cutting costs.
There have been similar Google retrenchments with Robotics and the shit show that has been Google Ventures.
I want to give Google this pep talk right now:
That’s right, Google. You are worth half a trillion bucks. Stop acting like Jon Favreau.