Archive for October, 2016


So Who’s Really Going to Own Autonomous Cars? There’s Four Scenarios.

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Above: Mercedes Benz Autonomous Car

Two mega trends are coming together: The Collaborative Economy and the Autonomous World, which means shared mobility from self-driving cars.

Early this year, we published a research report on the Business Models of Self-Driving Cars, and we’ve presented our findings at a number of industry events. A commonly asked question is: “In the future, will we even own cars?” I want to share a few scenarios that are likely to emerge.

Today’s 3-year-old toddlers are unlikely to ever learn how to drive. With autonomous cars already making their debut now, and then en masse in 2021, per Ford and others, these toddlers are unlikely to require driving skills in the year 2031.

Here are four scenarios of car ownership that could play out:

  1. The on-demand model, a.k.a. “Uber/Lyft” model. In this model, autonomous cars would be like a “utility” where most don’t own them, certainly in cities; they are summoned on demand.  John Zimmer, the CEO of Lyft, put forth a visionary piece where most city dwellers do not own cars in cities by the year 2025. Uber’s executives paint a future where mobility is like any other utility, where at a “twist of the tap,” mobility can flow out of a nozzle. In urban areas, home garages could be converted to living space (or Airbnb rentals), and large multi-story garages could be converted to green spaces.
  2. The shared car model, a.k.a. “Zipcar” model. A group of cars are available in a convenient regional area, where many can share and own these cars. For example, some progressive apartments now have shared vehicles in their garage for renters. In this model, a group of neighbors could invest in the commonly owned costs of these cars, and share insurance, car ownership, and maintenance costs. We’ve seen a growth in P2P insurance models, which could further enable this market.
  3. The wholly owned model, akin to current ownership. Just as we currently own most vehicles, we could continue to own vehicles in the future, but they will self-drive. This makes the most sense in rural areas and, to some degree, in suburban areas. Some people with families that have specific car seat or mobility needs (the elderly, those with wheelchairs, etc.) may require their own self-driving vehicles. Others we have spoken to suggest that human-driven cars will only be owned by the very rich — or very poor — similar to how horses are owned today.
  4. Autonomous cars own themselves. Also called a distributed autonomous organization (DAO), self-driving cars could become sentient creatures in the radical future that can not only self-drive and self-charge, but also then take themselves to be repaired at a local garage, and pay for it on their ownership. In this future, the excess profits generated from these self-driving cars would enable them to purchase an additional vehicle, expanding themselves from one car to eventually a fleet. All of this, in theory, could occur without human intervention and without human ownership.

In the end, there won’t be one single model. We’ll likely see a mixture occurring, just as we see this occurring now. Below, the models are broken out into a grid.


Matrix: Scenarios of Future Car Ownership

Mobility Model Who’s Likely to Adopt Who Will Own Business Model
On Demand Urban areas will embrace Uber, Lyft, car manufacturers On-demand service
Shared Car Urban areas, suburban Enterprise, Avis, private owners offering cars on Getaround, Turo Subscription, pro-rata
Wholly Owned Car Wealthy, young families, special care Individual owners Ownership/lease
Autonomous Cars Own Themselves An advanced artificial intelligence that can self-manage a fleet Cars will own themselves Computer-owned “corporation,” an undefined model, or a nonprofit akin to Wikipedia

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Above: Tesla’s Autonomous Car

Tesla showed its hand by prohibiting customers from sharing.
Recently, Tesla made an unusual mandate, that its own customers cannot enable their privately purchased self-driving Teslas to be listed on Uber or Lyft. This is a strange mandate considering the cars were purchased outright. It, of course, forebodes a few future business models that we’ll see from Tesla; it’ll likely offer a service model where the owners, or Tesla themsleves enable their autonomous cars to be made available to others as a service.

When would human-driven cars become obsolete?
While Elon Musk suggests that manually driving a car may someday be illegal due to human error and safety reasons, such vehicles won’t go away anytime soon. There would be a significant economic bottom if so many owned assets were quickly depreciated by a government decree. But looking decades forward, when autonomous cars become dominant and common, we will see a social and perhaps government cry for human drivers to be curbed. Perhaps if it’s not illegal, the insurance costs of manually driving would become too high.

To summarize, autonomous vehicles will not only significantly impact how we will be transported, but also the very business models in which our economy operates and how cities will change.

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Above: BMW’s Autonomous Concept Car

Facebook joins the Collaborative Economy with Marketplace

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Facebook Joins the Collaborative Economy
Facebook has announced the launch of its Marketplace, a new feature in four countries that enables users to buy and sell their used goods using Facebook connections. While Facebook’s strongest advantage is a network of trusted users, it must develop more sophisticated features to compete against established players. But it has a good start, as the environmental benefits of Facebook Marketplace for helping individuals reuse goods rather than send them to the junk yard will be of particular help for many migrating students, new families, or those seeking to change up their personal items.

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Market Timing: Existing Startups Under Fire
At a macro level, the startups in the Collaborative Economy Honeycomb are undergoing a shakeup as VC funding is being reduced, startups are being acquired, and regulators are putting the pressure on. The end result is that some startups are having to fold up shop. Facebook’s market entry is smart timing, as it can be a trusted player.

Marketplace Competition
To the casual observer, it would be easy to compare Facebook Marketplace to established players like eBay, Yerdle, Nextdoor, Listia, or Taobao, but these players are far ahead of Marketplace. Marketplace could pose some threats to Craigslist local listings for users seeking to find people they may know, or listings from friends of friends. And the potential is huge; for scale, massive eBay has 164 million active users in Q2 2016, a far cry from Facebook’s 1.7 billion users in the same period.

Four Features Facebook Is Missing:
While Facebook offers a very strong trust graph of people you know in your area, Marketplace lacks a few key features, including:

  1. A payment system that enables digital transactions, similar to eBay using credit cards or PayPal.
  2. A guaranteed bidding system so the buyer doesn’t have to worry about getting the item.
  3. A shipping solution or meeting place (sometimes called a “sharespot”) to enable people to share goods, whether it be at local police stations or Amazon lockers.
  4. Lastly, there doesn’t appear to be a ratings or review feature so buyers and sellers can rate each other, especially if people don’t know them, to build further trust.

The Future for Marketplace
Facebook must improve its feature set, then move into ride and home sharing. An ideal next move would be for Facebook to tie in its Messenger payment system, enabling seamless transactions, and potentially move into more lucrative on-demand commerce systems like ride sharing, or perhaps even home sharing, thereby threatening Uber and Airbnb. By enabling the commerce aspect, not only does this make transactions easier for members, but Facebook will have yet another revenue stream. This isn’t an odd concept, as in China, Uber has sold off assets to Didi, which is owned by Tencent and Alibaba — companies that offer a wide range of Internet products. Yet before Facebook can move into new markets beyond used goods, it must first bolster those four missing features in order to prepare the platform.

Want more? Read my body of work on the Collaborative Economy, filled with data, slides, and more.