Will ride-hailing players Uber and Lyft be more like Netflix or Blockbuster?
There will be winners and losers in the transition to autonomous vehicles.
Investor Steve Jurvetson — an early investor in Hotmail, SpaceX and Tesla — has a long career witnessing technology transformations. Recently, he raised a fascinating question about the future of the ride-hailing players and the automakers in the face of the rise of autonomous technology.
Here's the gist: When Netflix pivoted from selling a subscription of DVDs-in-the-mail to selling content over broadband, the company was uniquely able to maintain its position and user base despite the disruption. Back in the day, Netflix CEO Reed Hastings had argued that Netflix could, indeed, make this transition, because Netflix's consumer interface was sticky enough — using data on personalization and simplicity — to hold onto consumers during the shift.
Hastings proved correct. Unfortunately for Jurvetson, who passed on Hastings' pitch and didn't invest in Netflix, Jurvetson was proven wrong, as he thought Netflix wouldn't be able to nimbly make the transition to streaming.
There appears to be an analogy in mobility, said Jurvetson, as the world transitions from cars driven by humans to autonomous vehicles. The big question: Will Lyft and Uber be able to make a similarly graceful shift (as Netflix did in the video universe) from managing fleets of traditional cars to piloting self-driving ones?
Learn more about the future of mobility at VERGE 18 in October in Oakland, California, where we'll have a specific track focused all on transportation.
And what about the automakers? Will they be like Blockbuster and completely miss out on building out their own version of transformative technology? Companies bolting on advanced driver assistance systems to traditional passenger vehicles are "like Kodak building digital cameras," posited Jurvetson.
Well, Uber certainly dominates the ride-hailing landscape in most cities, and its name has become synonymous with the emergence of this mobility service around the world. Still, the company has had serious problems with its brand and culture as of late. Uber would benefit from doing much more to fix those perception issues before this looming autonomous transition occurs.
Let's also not forget that Uber was also in the unfortunate position of having the first high-profile death of a pedestrian due to a collision with a self-driving vehicle occur within its fleet. Competitors have said the pedestrian death could have been avoided through the use of a more robust autonomous driving detection system.
Yet, to follow the Netflix analogy, Uber doesn't necessarily have to create and own the core autonomous driving tech in order to succeed in creating a business model around it. Remember, Netflix didn't invent broadband. It just developed an impressive, adaptable system that could ride off of the limited, emerging version of the service and that since has continued to evolve. Uber probably will have to do the same thing.
Jurvetson, who left Draper Fisher Jurvetson and launched his own fund over the past year, is an early investor in Zoox. Zoox is a well-funded startup that's building a ride-hailing service from scratch using autonomous robotics technology. So, it sounds like he thinks a new ride-hailing player that's starting with autonomous technology at its core will be able to go head-to-head with the incumbent companies Lyft and Uber.
If I'm not mistaken, this sounds like a similar bet to the Netflix one that didn't work out. Jurvetson bet that Netflix wouldn't be able to make the transition and that a digital native would have a better shot at streaming. Now he's betting against Lyft and Uber that an autonomous native will be able to lead in ride hailing.
So why would the transition be different for autonomous vehicle tech versus the video streaming (r)evolution? Jurvetson stated in his blog post: "I think the autonomous driving experience is the closest thing to magic we have in the consumer landscape; I find myself betting on product differentiation, where quality and reliability are essential."
Streaming video is closer to a commodity, he said. Watch the video of Zoox's self-driving robots, and you'll see how different it is from the sort of self-driving car that presumably would be used by Lyft and Uber.
I'll guess we'll see. And now for the automakers. It seems as if the lesson is that those incumbents that are taking autonomy very seriously and investing heavily in their own R&D will be in a better position than those buying and developing additive driver-assist systems.
That would suggest that General Motors and its Cruise division, racing to be the first company to bring fully self-driving vehicles to market, represents an automaker's best attempts to not go the way of Kodak and Blockbuster. GM bought startup Cruise for $1 billion, and it's now valued at $11 billion after an important SoftBank investment.
GM is looking to launch a ride-hailing service powered by autonomous electric Bolts, and it's a player that's both ahead in the autonomous space and also making its own cars. Pretty impressive for an incumbent from Detroit.
But again, we shall see what the future will bring for the transportation transformation — execution, and a variety of unforeseen events, vastly could affect these markets.