This morning I woke up to rumors on Blind and r/Selfdrivingcars that a layoff happened at Waymo, with contributors positing that it had impacted roles across the board. It’s a move that, frankly, makes sense as a terrified Alphabet tries to grapple with a newfound threat to their core assets from Open AI.
Welcome to 2023: A bittersweet year for the autonomy industry: headlines and pundits will continue dunk on the once infallible autonomy industry all the while missing some of the most interesting robotics work will happen (just, absent the boisterous fanfare).
A Waymo stuck in traffic – it’s progress blocked both by the challenges of the tech AND a shift in … [+]
Rather than slippery-slope articles predicting the industries successful replacement of all manual labor, in 2023 you can expect to see any autonomy progress dismissed out of hand. Instead the narrative will be anchored by ‘I-told-You-So’s and bad headlines (often written by the same sorts of people who loved to quote Chris Urmson’s prediction of kids growing to not have a drivers license.)
Some of the bad headlines will be earned. In cities with robotaxi deployments, we’ll see more videos about confusingly stopped vehicles. At least one more erstwhile autonomy unicorn will go the way of Argo, folding without the legendary $10m/head acquisition of yore. A number of ‘autonomy bull’ investors will see these headlines and write off the industry entirely, with their attention to “AI” focused more on generative than mechatronic.
The remaining autonomy investors will be more focused on results, than AI Lab credibility. ‘What will prevent this autonomy company,’ they’ll ask, ‘from being a multi-billion dollar science experiment?’
Autonomy has lost its Field-of-Dreams premium. Instead, new robotics companies need to prove to investors that they can build something people want.
And luckily there’s a whole new cohort of robotics companies ready to shine under that microscope.
Chandler, Summer of 2018
For many in the self-driving industry the summer of 2018 was a scary time – an Uber autonomous vehicle had just struck and killed a woman. Brilliant minds who had spent their career trying to save us from the tragedy of automotive deaths worried their life’s work would be regulated out of existence before it even started.
But I saw a far more fundamental reason to be scared for the industry: normal Arizonans had gotten to see autonomy up close and personal. Their response?
“Meh.”
That’s what the response was from my now in-laws, who stayed with in Chandler in 2018. Still very much absorbed by the hype of the autonomy I asked them how cool it felt, being in the center of gravity of global testing for this breakout technology.
“What? It isn’t like everywhere? I thought cars just drove themselves now.”
“I thought it was like this everywhere,” [I just don’t care enough to use it] – my Chandler-based … [+]
I looked for the faintest trace of sarcasm and came back empty. They were used to seeing self-driving cars in the neighborhood. Every day they saw the robotics miracle that is a minivan navigating a grocery store parking lot without a person inside of it – and dismissed it as if it were of little more consequence than a smart device for a pet they didn’t have. Neat, but not worth buying.
Within their frame of view, but insufficiently interesting to change their 3-car household way of life. Even worse – insufficiently interesting to justify a new app on their phone.
San Francisco, Summer of 2019
It wasn’t until the next year that I really absorbed the lesson. I was trying to raise a Series B for my self-driving trucking startup, Starsky Robotics, and running against an eerily similar phenomenon.
Going into the raise we were confident it would be a doozy. At Starsky we had just accomplished a world first – the first driver-out test on a live highway in the world (it would take another 30+ months for another company, publicly traded TuSimple with 20x our staff, to replicate the feat). To boot we had built a $7m/yr trucking business whose customers thought we were hauling their freight autonomously.
We had proved, we thought, we could both solve the relevant portion of autonomy and get the market to pay for it sustainably. But instead we mostly convinced investors why they should stay out of the market.
A autonomous truck by Starsky Robotics, the author’s previous company, which performed the worlds’ … [+]
Investor after investor seemed confused to realize that a single unmanned test didn’t mean that we could drive anywhere, unmanned, infinite times. That proving safety for unmanned vehicles became easier over time, but that the curve wasn’t nearly as sharp as they had been promised by TED talks.
Upon looking at our autonomous trucking business, the investors responded somehow even more confusingly. They compared our unit economics to that of public trucking companies and seemed surprised to learn that we were less efficient. What had seemed like a boon to our usecase ended up as a deadweight on our prospects – if investing all this money on autonomy only enabled us to clamor to fight for similar top line as incumbents, why even work on autonomy?
Rather than build every part of the solution ourselves, why wouldn’t we just buy the components from whoever “solves the hard parts,” and focus on just building a great tech-enabled trucking company? After all, that’s what the best software startups do: Uber didn’t rebuild google maps at the start, Shopify didn’t re-invent credit card processing at the start, OpenSea didn’t start off with in-house data centers to store their vaults of NFTs.
In Starsky’s cohort of autonomy companies, nearly everyone built nearly every part of the stack from scratch (calling everything from sensors to ML pipelines and dispatching apps to vehicle integrations core). Good startups focus on building the one thing that makes them special and buy everything else.
Which is exactly what this next cohort of autonomy companies is doing: focusing on the core tech that creates value in their niche and buying everything else.
And rather than loudly posturing to enable gargantuan rounds (that are less likely to happen), they’ve mostly raised modest Seed and A rounds and are heads down getting themselves from pre-product to $1m ARR before emerging from their cocoons.
Cutting Open the Cocoon
When most people thing about a caterpillars metamorphosis, they assume assume that it wraps itself up in a cocoon (actually called a chrysalis, cocoons are what moths come from) and then grow wings. Similarly incorrectly, you could be forgiven for assuming that when a market like autonomy shifts from speculative puffery to performance that it’s just a matter of the companies changing their priorities.
Most cocoons are unexceptional, and what goes on inside them looks much more gooey and destructive … [+]
Instead, if you were to cut open the cocoon you’d find that the caterpillar had fully liquified and that the butterfly is growing from the goop that remains. That’s what I see happening in the autonomy industry at the moment – many of the people currently working in autonomy will be the people who make this next shift happen; and many of the components and tooling will carry over, but not all of the entities will continue on.
Some of the last cohort of autonomy companies are in the midst of this transition right now. Those unfortunate enough to go public during the SPAC-crazy days are subject to wild speculation of LBOs monetizing their negative enterprise value, all while trying to figure out any path towards sustainability. Others who went full-in on full stack are trying to figure out just how much they can cut while still making progress (I remember those discussions at Starsky, concluding that with only a staff of 10 and 18 months we could barely continue testing the product we had already built.)
What 2023 Looks Like
Recently, Polymath had a customer with only two full-time people run a demo. It went well – they landed them a seven-figure LOI, all without them having $20 million in fundraising, and without so much as a peep to the press. That’s what the next 12-24 months looks like.
It’s companies like them buying whatever they can to move fast enough to thrive. In their case integrating Polymaths safety-critical autonomous navigation with custom mechatronics engineering, off the shelf infrastructure and sensors to build solutions that solve a real customer problem.
Despite what this year will sound like, the autonomy industry is not dead, but it’s definitely not yet a butterfly. There’s a group of people laying the groundwork to build real, value-driven businesses (that just happen to use robots).
These companies won’t have the luxury to build everything in-house but, instead, have the opportunity to stay close to their customers and thus build products the market really wants. That’s where we’ll start seeing true adoption in the industry.
As these businesses grow, we’ll get to see what’s in store for the future of autonomy. I truly am excited to see as things evolve over the next 12 months and as the autonomy butterfly emerges to be a more value-driven, results-based industry.
