Uber-Owned Startup Otto Wants to Ship Your Stuff With a Truck That Drives Itself
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Self-driving cars and ridesharing services are starting to get serious about each other. Uber will launch a fleet of human-supervised self-driving Volvo SUVs in Pittsburgh later this month, and Ford plans to have autonomous cars ready for hailing by 2021.
But Uber, who has raced to be first to market, isn’t just seizing opportunity for self-driving passenger vehicles. Today, the company announced that it has acquired Otto, a self-driving big-rig truck company. Otto creates kits that can be installed in freight vehicles to make them drive autonomously, with minimal human intervention.
Ex-Googlers Anthony Levandowski and Lior Ron founded Otto in January of this year. Ron was previously product head for Google Maps as well as Motorola. Levandowski led the development of Google’s first self-driving car and has pioneered self-driving technology throughout his career.
Last month, Entrepreneur sat down with Ron to learn about how his background led him to found Otto and get a glimpse of what an autonomous trucking future might look like.
Why did you decide to found Otto and focus on self-driving trucks?
Anthony and me have known each other for the past almost decade. We came together and realized, there’s no other technology that excites us more and has more promise to impact society and benefit society in the next couple of years. It really has the potential to reshape how cities are built, reshape how transportation is made, to reshape many of the issues that we have in society today, from safety to environment to productivity.
We started talking about the future of self-driving and what can we do to accelerate the future and reap some of those societal benefits sooner than later. And we realized that while there was so much activity going on on the passenger side and all of those great minds and projects, including Google, there wasn’t a lot of attention being given to something as important as that, which is commercial transportation, and how we move goods, not just people.
And if you think about that, really, moving goods is the backbone of economy. Everything around us, except us, was on a truck at some point, at some time. A truck touched it. Seventy percent of all of the cargo in the U.S. is being moved by trucks. We all live in an on-demand era, and there are more and more demands on the shipping and logistical network of the U.S., but just not enough supply of truck drivers, of capacity, in freight.
By showing we can deploy autonomy and technology in this market, we hope that will unlock a lot of the societal challenges and opportunities, the regulations, public adoption and comfort with the technology.
The challenge of bringing the technology to market is not just a technological challenge. It’s also a business, product challenge, of how can we constrain the problem for something that can be solved in the foreseeable future. The nice thing about the logistics and commercial transportation market is, if we can constrain the market to really be around highways, and on highways exit to exit, that’s 95 percent of the commercial transportation in the U.S.
How did your background lead you to Google and, ultimately, Otto?
I came to Google after business school at Stanford. And before that, I had the pleasure of serving seven years in the Israeli military. As part of that, at a very young age, I was given a lot of responsibilities and a lot of opportunities around building an applied technology to solve intelligence problems. It had to do with knowledge, and machine learning and GIS systems.
So that’s where I got my love for geography and geo-information systems and applying data at scale to solve a problem.
Google Maps was a natural transition for me to really take all of that understanding of how those technologies happen in a more closed setting in the military and apply them in a much wider scale with consumers. I joined Google Maps in 2007, the very early days. It was really a very special time, because it was a small team, and we had basically an unlimited opportunity in front of us to really map the world and build the most precise, most advanced, most comprehensive map of the universe.
Anthony joined Google after his startup was acquired. He helped kickstart and accelerate the Streetview development in technology. We did a lot of work on how to entice users to contribute and enhance the map.
That was all Map 1.0, I would call it. We built Google Maps, we scaled it from a couple of million users to over a billion users in the course of those five years. Then Map 2.0 is really taking that to the next level and really moves to a more real-time nature of the map. As you move to real-time, you really have to have more of a user contribution, because things are dynamic. I would call Waze, which I was helpful in integrating to Google, probably the best example of that Map 2.0 wave. And really, self-driving vehicles are Map 3.0, which is a highly accurate, super dynamic, real-time, super high-detailed representation of the world around us, which requires new sensors and new way of thinking about how to build the map.
Anthony was always more on sort of the robotic, self-driving side. He also, essentially, was involved in starting the self-driving car project at Google and one of the founding team members. We just had a great partnership along the years. And it’s time to take that vision of deploying autonomy to society in other spaces and start doing that.
We both left Google in January to start Otto. We started with two of us in a house in Palo Alto with a truck, and fast forward five or six months after, we have over 70 people in a nice, big warehouse in San Francisco.
We have four trucks driving 24/7 on the highways. They’re mostly driving in California, but in other states, such as Nevada, the ability to test completely driverless with complete autonomy is a bit easier. We’re in the process of starting to test and drive in more states.
And you two self-funded Otto from the start.
There’s a lot of advice on how to bootstrap businesses. We are just fortunate to be successful in our careers so we can afford to bootstrap, but bootstrapping gives you wings, and gives you freedom and gives you flexibility of how you want to build the business, and how fast you want to move and what culture you want to build early on. We were able and fortunate to use that self-funding to move very fast and hire a team very fast without stopping to raise outside capital.
We were able to grow the team from two of us in a small garage in Palo Alto to over 70 people in San Francisco. A big group followed us from Google. A group of Apple engineers that were excited and left Apple to join us. A couple of key engineers from Tesla.
The flexibility allowed us to be faster and move faster and create a lot of options for us of how we wanted to carry the business forward, talk with partners and build the company.
I highly recommend it if you can afford it and you have the confidence in the business to build.
Right now you’re really focused on highway trucks, but do you foresee applying your self-driving kits to other types of vehicles involved in the shipping and distribution industry?
The kit choice is part of that accelerating the future, and how can we bring the technology to market as fast as possible. The way to do that is by taking existing trucks and not waiting for a very long cycle of replacing the entire fleet.
Of the 2 million long-haul trucks in the U.S. today, it takes almost five years for a big fleet to replace the trucks, and then the truck stays on the road for another five, six years with smaller fleets. Those engines can run a million miles, which means 10, 11 years of livelihood on the roads. So, we really wanted to bring that change as soon as we can. And to do that, the best way is to build an aftermarket kit. So that’s what we’re focused on.
The other benefit of the kit is, in terms of time, in terms of cost, you don’t have to buy a completely new vehicle. You can just take your existing investment and convert it into a much more productive, much safer truck by deploying the kit. And it allows us to test and deploy much faster.
The same approach could be applied to other types of vehicles as well, whether it’s cars, or agriculture, like tractors, or a host of other vehicles. We’re just very focused on commercial transportation and trucking. It’s a big enough problem and space for us to try and change and solve.
In the passenger market, it’s really about minimizing the cost and trying to do a lot of things that would fit our appetite as consumers and our willingness to spend on that new technology. There are a lot of commonalities, but there are also many differences between those markets.
How much do the kits cost?
We don’t have a specific price point in mind. It’s too early. We’ve mentioned, I think, in passing, some example number, but really, at scale, that technology shouldn’t cost anything close to the cost of the truck.
So a truck would cost today, a new Volvo truck, off the lot, with all of the amenities and latest-and-greatest, like, $160,000. We really aim for the price point to be affordable because we want to drive that future and see those societal benefits unlocked as soon as possible.
We’re starting with an aftermarket kit, but there’s no reason not to integrate that into vehicles leaving the production line, so new trucks come equipped with the technology from day one.
Have you thought about a separate lane, or other kinds of infrastructural changes -- or limitations on this -- if it really proliferates? Would this technology enable more trucks to be on the road?
The future is exciting! I don’t have a crystal ball on the future, but I know it’s going to be different.
The drivers are going be in the cabin for the foreseeable future. We’re not trying to replace them. They’re basically getting a co-pilot, and they’re elevated from having to be in the loop 24/7 to really just be like a pilot, where 99 percent of the "flight" is being done by the computer, and the driver, or the "pilot" is there to just lift off and land. The driver is still there, but he can sleep a little bit while the computer is basically driving on the vast, thousands of miles of empty highway.
So that’s really what we’re aiming for, and when we get to that, then a lot of new opportunities arise. You can route those trucks very efficiently. You can be thoughtful about combining loads more effectively to get the number of trucks smaller, not bigger, because there’s more predictability of where those trucks are.
You can start driving at night and use the nighttime, which is mostly empty now, because truck drivers try to maintain sleeping patterns, and they prefer to drive during the day. And potentially, rather than those folks having to be away from home 300 days a year, they can really see their family much more because they can complete the same route more than double as fast because the robot is doing more of the driving for them, which means they can get to the destination and back much faster and actually have the ability to build a local family.
You can think about different ways to deploy distribution centers. Right now, distribution centers are being built very close to the destination. But you can think about building bigger distribution centers in farther away places, because you can get to places faster.
Stepping back, innovations in transportation have always been, for me, about finding time and space. It’s like a Star Trek-like warp-hole "engage" button. Because every time you redefine basic transportation, you redefine space and time. When the car was invented, it was really the predicament to start expanding cities. When there became common households, that was really the start of suburban communities. When flights and the plane were invented, it redefined geography. Same here, applied to commercial transportation. Once that network is in place, our whole definition of what it means to ship goods, how to do that is going to be completely transformed.
What types of partnerships are in store?
Shippers are interested in shipping more goods on the road and making their fleets safer and more sustainable. We can drive trucks in a much more thoughtful way. We don’t have to constantly accelerate or decelerate. We can move in the same route at the same constant speed, controlled by the computer, which means less pollution and a much more sustainable footprint. Trucking companies are excited for the same reason, OEMs [original equipment manufactures] are excited about the potential to embed the technology into the vehicles.
There have been a lot of discussions of how to apply the technology in the real world, that’s what I’m psyched about as a business and product leader, is how can we take technology and really use it to transform society. We see that transformation happening now by talking with shippers on how to integrate that into the logistical network, by talking with couriers about how this will impact and change their business, so that has been very refreshing.
What do you have to do to convince truck operators to adopt this technology? In theory, it may sound like a great idea, but what are some of the concerns that they have?
I would say, at large, everyone in the industry that we spoke with is very excited by the promise. They see, day in and day out, the issues and challenges that we’re trying to solve. Everything from safety on the roads, which manifests for them in costs. There are thousands of unnecessary fatalities. Maybe 1 percent of the vehicles in the U.S. are trucks, and they’re driving 5 percent of the miles and they’re responsible for 10 percent of the fatalities. So they experience more and more and more demand, which, in turn, translates to more and more and more pressure on those truck drivers to drive longer and longer and longer. And they’re craving for a safer solution that will allow them to fulfill that demand while still being safe.
They see the productivity issues of basically having a fleet of trucks laying around only driving nine, 10 hours a day, because that’s the limit of the truck driver. Because after that, every additional 30 minutes doubles the chance of accident. That’s just our ability to stay attentive as humans. So they see the potential to utilize their assets, their trucks, much better.
We got super positive response from everyone, from the big shippers, to the big trucking fleets, to the medium ones and even the small, what’s called owner-operator, which is basically a mom-and-pop shop, owning like one, two, five trucks. They’re excited to equip their trucks with the self-driving kits so they can, again, be more productive and drive almost more than double what they’re driving today, and be twice as productive and have twice as much revenue per truck. So we’ve gotten hundreds of emails and letters and support from, even just single truck drivers, eager to get the safety technology on their trucks.
That being said, the challenge is, first and foremost, seeing is believing. I think we as people, many times, are fearful of the unknown, and it sounds great, as you said, in theory, but in practice, people really want to touch it, sense it, feel it, understand what it is. And I think the more we can collaborate with partners and test in more and more states, and really have as many people understand the technology, experience it, see one of our self-driving trucks on the highway, slowly but surely, people will start feeling more and more comfortable with the technology.
In your video, the truck has the Otto logo on it and imagery. Is that something that you foresee, it being a brand and the trucks being branded?
We are very thoughtful about the brand. We wanted the brand to stand for technology, for innovation, for the brave new world for automobiles -- "auto, Otto." We see that as an integral part of the story, not just, "Here’s the technology, good luck." It’s, "Here is a new way to think about commercial transportation." So the brand is front and center.
There are many ways to then define and express in the market. Could be Otto trucks, could be partner trucks powered by Otto. The brand is gonna be there, we’re excited about the name, we’re excited about the meaning, we’re excited about the reception and the visibility.
We want the other inhabitants of the highway to know there’s an automated truck driving. We want them to understand what it means, so part of the name and brand is also important just for the product on its own, to communicate what it stands for and how it’s gonna behave.
Anything else you’d like to add?
From an entrepreneur perspective, I would say two things:
I was just fortunate to get my basic education in how to use technology to disrupt problems in the military, then be able to apply that at scale on Google Maps and really think about how to get technology into the world as sort of a network problem: Maps, self-driving. At Motorola, I learned the joys and wonders of building physical objects and how can that transform our world and lives, and to not be afraid of constraining myself to just software, but also having the appetite to build physical stuff. All of those paths led me to take on this challenge, and that has been a joy.
I encourage entrepreneurs to really aim for the moon. The amount of effort you put into going and doing something very ambitious, vs. opening a grocery shop is the same. You have to be a laser-focused on the problem you’re solving, you have to build your customer base, you have to develop your differentiator, you have to raise capital. It still applies. So I encourage people that they might as well try and solve some of the societal problems that we face.
The Valley and technology has its ways. Lots of entrepreneurs tend to do stuff that they know, which them leads them to choose the 100th company to do the same thing in a slightly different flavor, a slightly different take. I encourage people to go out of their comfort zone, and really to step back and think, from a societal perspective, "How can I lend my skills against a problem that really needs to be solved and will have a major impact?" vs. "How can I lend my skills to something that I might be slightly more familiar with but doesn’t really move the needle in the grand scheme of things?”
Learn a new domain. Whether it’s maps or mobile handsets and the mobile industry or the truck industry, disruption always happens from the outside. You don’t have to have 20 years of trucking experience to be able to help and provide value in the trucking industry. Go out of your comfort zone and seek opportunities to really bring innovation to new things.
This interview has been edited.