Even if Alphabet was reluctant to invest their own profits, can't they borrow cheaply too?
Employees of Google that work on GoogleX projects that graduate no longer technically work for Google, but for the new company and they no longer receive Google shares, but new company shares (in this case Waymo, Loon is another example [0]).
This forces the company and employee incentives to be aligned since the value of the employee equity is tied to the success of the specific GoogleX project and not Google itself.
When a company graduates if a lot of employees don't want to stay on the project and choose to stay at Google, that itself might be a bad sign (though it could also just be employee risk preference).
I think companies graduate when they're less pure R&D and closer to marketability. If they can't survive on their own at that point it may be because there isn't a market, the timing isn't right, or any other reason that can cause a startup to fail.
This system prevents Google from pouring money into something that's never tested in an environment where it can actually fail. It puts moonshot projects in an environment where they're truly tested and don't just become places where money is spent without any ability to measure success.
It's my understanding that graduated companies have their own hiring methods and can make their own independent decisions in general. They would also need to raise their own money.
[0]: https://loon.com/
Alphabet can (and will likely) invest $xB more money for initial business ramp-up but if you want to create the next Google probably money from their own pocket might not be enough. This is particularly important as they need to heavily invest into physical assets with very high upfront costs.
FYI, Uber has 10 millions of drivers across the world and if you want to match that number, you're gonna need $100B even with super conservative assumption of $10k per car (and the actual cost will likely be much higher). Doing something like this by Alphabet alone is extremely risky given that the technology is still in a very young stage.
Cars will quickly start paying off, even if each car only pulls in 10 rides of $10 each every day, it'll probably pay for itself in a year.
Even founders who can self fund, raise money from investors as you don't want to own all the risk in any risky endeavor.
* Free version of Uber/Lyft based on a Google ad/maps referral as described by this patent [1]
* Free up peoples commute times so there eyeballs are free to use Google more (watch Youtube, use Google Search, read Google News). Perhaps even access free in-Waymo wifi that only allows Google domain access.
They have monopolies in these two areas and therefore neither requires 100% ownership in Waymo.
[1] https://techcrunch.com/2014/01/23/google-awarded-patent-for-...
It's not just about getting money, it's also about getting money from the right people. Investors with the pull/clout/insight/etc they need. Investors who know people or who know people who know people. Perhaps people who have political connections or regulatory access. People with insight in the automotive industry. People with ties to media for favorable coverage. It's about getting money from people in position to help them. It's like a movie production that bring in producers who has connections to local governments that can expedite the process of shutting down a bridge or highway to film on for a day.
Alphabet has "limitless" amount of money but there is also a "limitless" amount of money outside of alphabet wanting to buy into waymo. So for waymo, it's really not about getting money but getting the right type of investors. It's a two way street. Investors want to buy into waymo and waymo wants to buy into investors.
If you can get money from someone else it shows that it has value in the marketplace generally.
A few confounders I haven't seen though:
1) Waymo is its own entity, but its brand is linked to Google/Alphabet. A reader of this article will be clear on that by the time they have gotten through the sub-headline.
Any success or catastrophic failure of Waymo/self-driving will have Google spoken of in the same breath as Waymo.
2) Capital Allocation & Diversification - Google had $119 Billion of cash on hand at the end of FY2019 earning no return. More than any other company.
- Alphabet is not Berkshire Hathaway waiting in the wings to deploy its capital in a downturn or buy up unrelated businesses.
- Diversification is a fine strategy, but when you have this much capital to allocate—and ostensibly Alphabet has this much because they don't know what to do with it—not fully funding Waymo itself doesn't make sense.
3) The Waymo blog post about this that Rutledge linked below gives a possible alternative [1]
> “Today, we're expanding that team, adding financial investors and important strategic partners who bring decades of experience investing in and supporting successful technology companies building transformative products. With this injection of capital and business acumen, alongside Alphabet, we’ll deepen our investment in our people, our technology, and our operations, all in support of the deployment of the Waymo Driver around the world.”
Building technology is hard, but building out a car company that can produce vehicles on any scale is also hard. Tesla and Elon now know this.
So maybe by opening up to outside investment they allow strategic partners to share in the risk and outsized reward of success.
Curiously though, only one of the six outside investors listed seem to be "strategic." That would be Magna International, "a leading global automotive supplier."
The other investors are:
- AutoNation: a used/new car buying/selling website
- Andreessen Horowitz: VC firm
- Canada Pension Plan Investment Board
- Silver Lake: private equity
- Mubadala Investment Company: United Arab Emirates sovereign wealth fund
From the outside looking in, I have further questions as to how those are "strategic" investments that could help develop and/or bring Waymo cars to market.
tl;dr Alphabet/Google has so much capital it needs to deploy not using it to fully fund Waymo is curious. Waymo is not a distinct brand from Google/Alphabet. It's not readily apparent how six of the seven outside investors chosen for the "strategic" investment add value beyond capital.
The ability to raise money is itself a test - if you can't get third parties to invest then that's not a great sign. Google's judgement may be impaired by being so close to it.
They could easily self-fund, but then they wouldn't get that signal. Forcing a company to survive out of the nest will influence the decisions the stakeholders make, they can't relax knowing that Google will just fund things no matter what, they have to be focused on shipping something people want.
At least that would be my guess.
It's a clever way to try and prevent the lethargic energy that comes from being a big company along with the inability for large companies to innovate outside their narrow domain (often even within it).
- Mubadala Investment Company: United Arab Emirates sovereign wealth fund
Couldn't these also be considered strategic in the regional/political/regulatory sense? Access to people with strong connections having skin in the game.
By keeping Waymo separate, shareholders can make their own choice as to how much they want to invest in search/advertising vs. self-driving cars. They're drastically different risk/reward profiles.
Obviously this isn't something a company usually does, but that's because either a division is small, or it has significant links to the rest of the company, or there's a clear joint strategy.
But Waymo is expected to be huge, and there's really essentially zero link to the ads/search/cloud/media that is Google's bread and butter.
As I said a couple months ago, the "Waymo" name is a sign. If they really believed in the product, it would be called "Google Self-Driving Cars".
It'll look bad on the brand when the news is reporting how, "Google self-driving car kills family en route to Disneyland".
I'm not saying self-driving cars are dangerous, but it's just the numbers. People will die and self-driving car deaths will be shocking news and make headlines for a long time. I wouldn't want my brand name anywhere near them.
"Waymo Adds $750 Million to War Chest as Driverless Cars Prove Tough to Deploy"
If I were a investor that invested in individual stocks (which I am not), my money would be on Tesla over the long run here.
Yes, Tesla may be getting more data in the field, but Waymo is still much further ahead with actual fully self-driving car without anyone at the wheel (within a small region + good weather). Also worth pointing out that the quality of the data also matters, not only the quantity.
Tesla is ahead where it counts, sales. it feels like waymo was already 'successful' in small regions with good weather not requiring complex thought situations in 2018. meanwhile tesla is improving designs, expanding capabilities, and selling cars.
I'm not a tesla fan boy, but I definitely prefer their approach in terms of iteration (not sure if I agree with the tech choices).
Source?
Comparing the amazing capabilities of Waymo cars to the Tesla toy is very misleading.
It’s way too early to know which approach will be the “winner”.
Personally, if i were invested in these companies my money would be on the ones developing autonomous car tech over the ones who aren't. Tesla and Waymo can both be leaders here.
On the other hand I think with the collapse of the economy and skyrocketing unemployment, the price for a human driver may plummet. Remains to be seen if the increased demand in deliveries is enough to offset the voids left in the rest of the economy.
Not quite perfect, but does the job for me :)
Not available on AMO or Chrome Webstore, unfortunately, but is very easy to install on Firefox, and requires just a bit of effort on Chrome.
They are not building their own cars, haven't partnered with any automakers either. In fact they discussed with a bunch of them and couldn't convince any company to partner with them. Most of the automakers already are investing heavily in their own autonomous tech stack. Unless they blow everyone out of the water with their technology I don't see them selling their stuff to automakers.
The only path then is an Uber competitor. That means they have to acquire a fleet custom made for their solution. That is a huge investment a large undertaking, not sure Waymo has it in them to do it. This is not Google wave to abandon so I am sure they will not do so, however I will not be surprised if people grow frustrated by the lack of clarity.
A self-driving car company will have to own a huge depreciating asset, and they’ll still need staff to clean & take care of the cars in addition to an enormously expensive engineering team and/or licensing payments.
What business model are these companies trying to fulfill? It seems like they are trying to solve a problem that doesn’t exist.
If all cars are self driving we can eliminate red lights and traffic signals because of machine coordination.
Better utilisation of cars will lead to a 5x to 10x decrease in traffic, and route planning algorithms will optimise pickups and simultaneous package delivery.
Your car can go and ferry people around rather than sit idle taking up parking spaces while you’re at work (copy paste this for 200,000 workers in the city) and make you money
The car can go fuel and charge itself and drive itself to servicing and cleaning.
A more efficient service (algorithmic operation) which costs 40% less seems to be a no brainer.
A lot of the Tesla robotaxi fleet would be people that still own the cars but just deploy it to the fleet to make money for them.
It was all fine when they got free money from Google to power their experiments (cars, people, time). Now they're borrowing from their own value to pay investors for the loan.
I'd want to see some belt tightening from what is sure to be an overly large engineering team and lots of support staff, if there were ever to be the promise of becoming profitable (and to eventually pay for these loans from investors).
I predict they end up focusing on semi-autonomous trucks instead of cars for regular people.
https://www.wired.com/story/waymos-self-driving-jaguars-arri...
20,000 seems like a proof of concept. If you have 20,000 cars and they're mostly on the road, you could open your own Uber in a city...
The pandemic has proven that these goals and many more can be accomplished without any complicated, speculative AI technology, simply by taking full advantage of telecommuting and delivery. Obviously there is no profit to be made so it would make no sense for investors to do so, but I wonder what $3B could accomplish if it were put to the purpose of reducing the need to travel, rather than finding new ways to burn gasoline.
Besides, delivery would also benefit from this.
I wouldn't buy a car from Google because of this [1]. Even if Google promised not to collect data I wouldn't believe them.
[1] https://www.theverge.com/2017/11/21/16684818/google-location... Google admits it tracked user location data even when the setting was turned off
Despite the glut of subprime car loans, the newer generations are buying less cars, and Waymo is probably not going to try to sell vehicles.
You're clearly extremely paranoid and not a car owner and also Waymo does not sell cars to consumers. They aren't trying to sell someone like you anything.
No one cares that you don't trust Google or that you wouldn't buy a car that's not for sale.
https://en.m.wikipedia.org/wiki/Event_data_recorder
Yeah, a Waymo car is a whole different kettle of fish, but modern cars keep logs- if not location, then other data.
I offer that it's entirely possible that the tracking you are attempting to avoid, you may be already entirely subject to, via things like Uber or your mobile phone.
I doubt there's any meaningful way to avoid IC/Telco/FAANG location/movement surveillance these days.
This is not to say that your decision is wrong (it's the same reason I cancelled my Cybertruck preorder!), just that I think people like us may be out of luck.
With a subcription for the trams/trains/busses in my area. I use taxis sometimes, but not Uber. On holidays I like to share a car with others. If you share the costs, cars aren't even expensive.
>This is not to say that your decision is wrong
Thanks!
[1]https://www.baublatt.ch/kommunal/datenschutzproblem-bei-tesl...
Waymo would have all the same problems, except I doubt Waymo is targeting cars people would buy at all. Google seems set on delivering a transportation service. It's questionable if they'll ever sell their system at all.
