Why Uber & GM (& CarCos) will have a head-on collision
Every morning, I wake up and make a promise to myself — write, don’t just tweet. And yet, I find myself tweeting and getting dragged into conversations where the brevity of the medium leads to unfinished thoughts, poorly constructed sentences and more importantly an increased odds of being misunderstood and/or getting dragged down into a conversation with half life of a bubble on the surface of a pond.
The one and perhaps the redeeming quality of blogging is that you can stretch and flex your writing muscles, and finish a thought. Some people say that the deeper you go, the longer there are odds that people will read, re-read and absorb what you have to say.
And then on the other hand you have this world where we are in such a rush that we barely read anything – often convincing ourselves that just because we have shared, retweeted, liked or saved (to read it later), we have read an article, watched the video or listened to the music. We are all active participants in the blood sport of numerical social validation, unable to distinguish between understanding and skimming, knowledge and awareness.
I was reading this news announcing a new program – Express Driver program- which is result of a partnership between Lyft and General Motors where Lyft drivers don’t even need to own cars — they can rent from the car maker for upto eight weeks and if they exceed 65 rides, the Lyft driver doesn’t have to even pay for maintenance and insurance. Upon reading that bit of news, I tweeted something about GM and Uber and how they will eventually become competitors – it might take ten years, or it might be sooner. I wasn’t able to articulate my reasoning as well in 140 characters.
Between its $1 billion acquisition of Cruise and $500 million investment in Lyft, GM is hedging against major long term macro trends in the transportation business – on-demand mobility and autonomous navigation systems.
These two trends disrupt the established 20th century industrial automobile complex: where lead times are in years, cars are bought and sold through an increasingly inefficient distributed system of dealerships. The cars which were not-networked and not connected are now connected, and upgradable over the air – a trend that is only going to become remarkably commonplace.
The world of tomorrow is about sensors, vision systems, machine learning and smarter battery management. It’s about an in-car experience that is adaptable and personalized — which is very far removed from the idea of what is a car today. Uber, at some point decided to chase the self-driving car dream, not because they want to make cars, but instead they want to make machines that make Uber more efficient and profitable.
In a column I wrote for FastCompany magazine, I compared Uber and Google. They are both obsessed with optimized efficiency of their system. After being frustrated with server and switches made by others, Google decided to invest in crafting and industrializing its own hardware, married it to its own network fiber and built a remarkable infrastructure which allows them to do magical thing with the services it offers.
If Google shunts around bits, Uber shifts atoms, and Uber’s equivalent of vertical integration means building its own driving software system, building its own mapping and geolocation systems and creating its own connectivity network. Like Google, they will get an Asian contract manufacturer to assemble their hardware.
If GM isn’t thinking of Uber as a competitor, then they should be. In a world where demand is more predictable and elastic, the world would need fewer cars and that is a scary proposition (or it should be) for anyone which is selling the old fashioned mobility. GM (like other automobiles) is dealing with a reality where demand declines in addition to sharp decline in car rental markets, which consume a considerable amount of automaker’s inventory.
They say money speaks louder than words and GM’s $1.5 billion is speaking loudly. I applaud them from understanding the inevitability of the Internet, but I remain mildly skeptical of their ability to splice their cultural and business gene pool with a radically different way of thinking about mobility.
Just as iPhone made us rethink what we should expect from a phone and changed our behavior, a company like Uber is slowly changing our relationship with the car. Much like Tinder, which has changed the perception of what is romance, on-demand mobility is essentially training us for a future where ownership is a luxury.
A recent survey conducted on behalf of Kelly’s BlueBook (whose whole business is helping sell cars) found that “Uber or Lyft are primarily used as substitutes for taxis and traditional rental car companies, and have very limited impact on current or future vehicle ownership,” and nearly “74 percent of those asked about the subject – 1,900 US residents said their expected transportation method is to drive themselves in the next six months.” After that?
So there you have it – I couldn’t have said this in a tweet, or a even a dozen.
March 17, 2016, San Francisco