Billy Riggs (00:36)
All right. All right. All right. Welcome back to rewiring the American Edge. And today we're talking about the great platform race, competition versus control. And we've seen, you know, we've seen platform roles or we've seen platform wars before we've seen operational, you know, we've seen operational races and

marketplaces and social networks come and rise. And every time I think a question emerges, which is who controls these, these layers of dependence where everybody can create reliance on them. And I think what's one thing that's happening in the mobility space is we're seeing one company create a lot of dependencies and

create a lot of de-risking for them as a company. And it's a really interesting time in the field of transportation, because it's not just competition, it's co-op-tition. so, Vipul I started rolling welcome, welcome to rewiring the American ish. doing, man?

Vipul Vyas (01:38)
Good. How are you?

Billy Riggs (01:39)
Yeah, yeah, I'm good. good. It's been a I feel like it's been a busy day, but we've got good weather here in San Francisco. None of that rain and fog. So I'm happy little cooler than than it should be. But How about there in Palo Alto? How's it how's it going down there?

Vipul Vyas (01:58)
Warm it rained but it's all good. Okay

Billy Riggs (02:01)
Yeah, good, good. Well, so I teed up a conversation for us today, really kind of more in the business realm. And but really focused on my space today and and jumping off something that we had been talking about, the mobility technology space. And we spent some time talking about a

bricking incident in San Francisco where we were, questioning our dependency on robotics and, thinking about, reliance on, on technology and how far we should go in terms of reliance on, robotics. And maybe we should, particularly in emergency situations, maybe we should think about relying on them more. And I think that maybe that's something over

⁓ as we see agentic AI, coming to be and coming to be more fertile, that's something that we can maybe scratch the surface on more in future episodes.

But yeah, was hoping we could talk about Uber as a platform and what's happening with co-op petition. So ⁓ what do think, man?

Vipul Vyas (02:59)
Yeah,

I am all yours because this is a subject I'm less versed on so I'd be interested in hearing your perspective and learning actually.

Billy Riggs (03:06)
Haha.

Okay. Well, yeah, I mean, I think it's a really important shift because it's really moving, you know, since 2012 when we saw the advent of Uber and Lyft and we saw really a competitive marketplace for rideshare. You know, what we're seeing now, and we saw two companies really compete for customers.

What we see now is ⁓ strategic, less pure competition and more strategic co-op petition. And, I think we see particularly right now, Uber, for example, not trying to win particularly at automation, but, trying to really de-risk their automation entirely. And so if you people recall, they gave up their autonomous driving business a few years ago.

and they spread their net really widely and they've just been partnering extremely broadly with AV companies, OEMs, delivery firms, logistics providers. And I think we can be honest that automation is uncertain. It's really, and I'd love to hear your thoughts on this because from my perspective, even the biggest players have risks.

because it's capital intensive, the technology is complex, the timelines have always been difficult to predict and people are still betting billions on a handful of paths that are still skeptical. so what companies like Uber and companies that play in this space where they're saying we can work with everybody.

They'll say we can integrate with everyone and effectively say we will we will play with whoever wins. And so that means we can de-risk. We don't carry the R &D risk. We don't carry the hardware risk. And we also don't carry the regulatory risks. And so

they still have the best part of the equation. They still carry the customer. And so it's capital light, but it's customer heavy. you I don't know. I you've you've been in a lot of companies before, you know, this idea of having capital, but a lot of optionality. And then, also retaining this customer forward strategy.

particularly in market uncertainty in a heavily uncertain time. What do you think about this narrative there, Bipple?

Vipul Vyas (05:28)
I don't know. I I haven't really been in the B to C space, um, immersively, but, um, you know, they, they own the last mile in terms of the relationship with the customer as, you know, Amazon does, and Amazon acts like a broker to, um, the whole universe of, different suppliers, you know? And so if you're not on Amazon, you can potentially find yourself in trouble. I think Target learned that when they tried to partner with Amazon.

But at the same time, know, Amazon's a one-stop shop for many things. I don't know if Uber is really a one-stop shop. Like if I get the Waymo app on my phone, and it's cheaper or there's some differentiation there, then, you know, right now I've got Lyft and Uber and I, know, Uber gets the majority of my attention because it feels just a little bit easier, the UI is a little bit.

Slickered, I don't know if that's true anymore. That's just my impression. It may not even be a fair one. So I think that the interface is so fickle, like, know, if they were position themselves as Instacart or Amazon or even DoorDash, where they're just the front end to a lot of different transportation options, that would be interesting. They do have the benefit that

younger generations, Gen Z, Gen Alpha, are disinclined to own a car. They're not in any rush to drive, and they prefer just not even bothering. So, excuse me, so if they, position themselves as the point to go to get access to any transportation, that may be interesting, but I'm not sure if that's what they, that's what they inspire to.

Billy Riggs (07:01)
Yeah, I just

was more thinking about this from a textbook business school case standpoint. so maybe let's just go and step back and look at this from a case study standpoint. So our first case study would look at this from like in three segments. And so maybe that's let's take three, three, like two case studies. The first case study would be the traditional car company or maybe even the traditional

or Waymo or even Tesla model where there's a very integrated and tightly knit approach where you control the entire automated vehicle or vehicle stack. the vehicle, the self-driving software, the operations and the data are all more or less aligned. You may use vendors, but they're all

They're very integrated and Waymo does have vendors that are tightly integrated within their system, but particularly, know, a vendor like Cruise and even to a certain degree, the company Zucs that's an Amazon affiliate. It's a very integrated company. Now, if we look at this from a a CapEx standpoint, if we look at it from a systems redundancy standpoint,

You're carrying a lot of capital expenditure. And when you think about diversification in your supply chain, when you think about vulnerability to system shock, is there resiliency? You may have longer timelines. You may be less, you may have.

higher regulatory exposure to regulatory ambiguity or ⁓ uncertainty with regard to economic conditions. I think you make a really big bet on both your tech as well as the conditions and the geopolitical conditions that you operate on. And so it's not a diversification strategy.

Vipul Vyas (08:50)
You know, I think you.

Billy Riggs (09:02)
But then if you pivot over to kind of a more diversified play, and I think this is where if you look at of the way that Uber has played things, what they've done is they've said, well, we'll dangle our toes into the automated vehicle market. We will also be in the rental car market. We'll build a pricing layer.

will do customer demand, actually, will play in all these different market spaces and will actually, will leverage ourselves out. And I think, you know, does it actually create a little bit more of a a la carte menu that allows them to be more agile?

And I think it's just maybe what I would say is that is that more a 22nd century future forward view of how companies should be arranging themselves for the next century. of course I was reading this article this morning of the two person MedV startup that two people in their back rooms.

know, vibe coded a healthcare startup that's not worth $1.9 billion. So, you know, is this the future?

Vipul Vyas (10:12)
Not if it's that capital intensive. mean, software is very different than obviously something that involves lot of logistics. I don't think the winner's gonna be decided on simple things. And there's probably room for multiple players. But like I said, think that if they can assert a notion that

they're offering transportation as a service or tasks or car as a service. I think if they can broaden that definition and be like, look, you just don't need to own a car because whether you're trying to get a Waymo in your per for a human driver, whether you, whatever it is you want to do, we can accommodate that and get you from point A to point B.

in an economical way, or even a multimodal way, where there's multiple different modes of transportation involved, that I think you're essentially saying in a disruptive way that the way of thinking about car ownership or transportation ownership is shifting. And I think my view is that

I'm not saying that's necessarily what they have to do or that's the thing. It's not, I think it's going to come down to, I mean, look, today, they're not, I mean, this is aligned with their model. They don't own the cars. They don't own the labor. Most people are, think, 1099s in most places that they could get away with it. They have, all they do is their marketplace.

So Uber as a company knows how to do that. They know how to be a marketplace for transportation. And if they align their future to their past and their DNA and say, this is what we're competent at and we need to just double down on it and think about it more broadly, then there's something interesting there. I don't think it's just automatic that avoiding vertical integration

is a source of success. It's more because you know how to create a marketplace, because you can do that really, really well, you have a shot of being irrelevant because that's still important. I think the vertical integration, like what does making the car, providing the service,

What does that get you if you're, for example, Waymo? It's unclear.

Billy Riggs (12:17)
And that's a really good point.

think who owns the, you know, a lot of people, a lot of people always ask me who's who wants to own the asset. And at the end of the day, nobody wants to own the asset. And so the challenge with a lot of these, a lot of these companies is that the person that gets stuck owning the asset bears the most cost.

This is Waymo and Uber and a lot of these people don't want to be necessarily owning the asset because the person that owns the asset really wants to take the highest share of the revenue because they're bearing the most burden of the cost. it's really complex math for the person that owns the asset.

Vipul Vyas (12:51)
Well, I

not even sure the passenger, the citizen wants to the asset anymore.

Billy Riggs (13:02)
I don't think they do either. I I think the new economy, the citizen just wants to use the asset they want.

And whether or not it's even we're calling it an asset, know, a car is is it's not even a depreciating asset. a it's it's barely an asset.

Vipul Vyas (13:17)
It could be, I think, in a different model. I mean, I think it would mean different cars. I think if you look at, you know, like the airline industry, most, I don't think most airlines own their own planes, right? Their lease, I mean, think it's GE and a bunch of other companies lease those planes and each person does what they do best. GE is basically saying, I got a lot of capital sitting around that I want to deploy.

Billy Riggs (13:30)
Yeah. Yeah.

Vipul Vyas (13:40)
And I'm going to buy 747s and lease them to, I don't know, Etihad does, but whoever, some airline, right? And they're going to, everyone's going to get a return. Everyone's going do what they do best. Airlines are going do logistics, you know? Capital management is probably not the thing that airlines do best. They're more of an op-ex play. In fact, well, I mean, to be honest, most airlines now through their credit cards are really fintech companies in a way.

They make more money off the credit card than they do off the flight operations, which speaks to something else, but other problems. But I think, you know, that would be the nature of vehicles would be probably pretty different because once a plane is a revenue generating asset versus today, basically the car has value for a person because it has option value. It gives you the option to able to pick up and go and just the freedom of being able to do that. Right.

And it's not a revenue generating asset. A 737 is. And so as a result, that 737 has to be able to really, I don't know how many, I'm gonna exaggerate here, but pretty much operates every hour it can of the day. Every possible hour it's employed. So that thing is built to be easily maintained and abused in a way.

Billy Riggs (14:40)
Yeah.

Vipul Vyas (14:49)
Most cars sit around 97%, I'm probably making that up, but some huge percentage of their life, they're just idle sitting. They're trapped assets. They're poorly utilized assets, actually, to be frank. And one of the core things Uber did initially was like, let's untrap both the people and their assets and put them to use in the shared economy. And so I think this is just an extension of that model from my perspective, which is an ignorant one. That's what leaps to mind.

Billy Riggs (15:16)
And

also, I mean, I think a lot of people use in transport use the term induced demand. But one of the things to keep in mind with Uber and Lyft, and now to a certain degree Waymo, is that there's a lot of people with, and particularly young people and older adults, people with disabilities that have had what I call latent demand. And we found this with a lot of our surveys and our surveys and research of

Cruise and Waymo riders that a lot of people had unmet transportation needs. And these particularly, and I used to say that there was a pie for transportation and all that Waymo and Cruise and Zoeks and Uber and Lyft have done is they basically just increased the pie for transportation. that blatant demand for transportation was always there. It's just that there weren't tools to access it.

And all we're doing is creating tools to gobble up that additional need for transportation. And yeah. And so it's like, and to a certain degree, a lot of people say, well, you're just creating more market. But I actually think it's the counterpoint. The market is there. You're just providing resources to access the market.

Vipul Vyas (16:18)
There's probably quite a bit of it, to be honest.

Well, the other thing is who cares? So what if you are? It's not like people are...

Billy Riggs (16:36)
Well, I think,

yeah, it's a chicken or egg question, but I think ⁓ there is a, for environmental reasons perhaps you want to.

Vipul Vyas (16:46)
Yeah, I was about to say that

the impact is the, you what, you don't want people having sort of frivolous transportation needs, debate what's frivolous and what's not. The environmental costs are on the mile.

Billy Riggs (16:56)
Well, I mean, think ⁓

there's a cost for, there's a penalty for driving in terms of fossil fuels, but that penalty goes down as the fleet greens. But then there's a penalty on congestion. And what is that penalty? Is the penalty wasted time? Yeah, I don't know. do people, so I,

Vipul Vyas (17:16)
⁓ I don't know.

But

I don't actually argue the more network effect you have. I mean, don't we waste a lot of money on cars that don't ever get used that much? I I was in there a carbon footprint for just production of cars that aren't terribly well utilized. That would seem like all the tires that just never get worn down, they simply rot because of being idle. And then on the network effect, if you have inter...

connected vehicles then you can manage congestion way better than you do today because you can actually truly have centralized traffic management.

Billy Riggs (17:53)
I mean, arguably, is a sign, you can make the case that congestion is the sign of a healthy economy. That's a good argument is that when there's high congestion, there's a booming economy, right? Like that's a very, that's a very crass argument, but like people, absolutely, yeah.

Vipul Vyas (18:02)
to fully utilize that set.

Though it's a fair one, it's a fully utilized asset.

Billy Riggs (18:15)
And so, people forget that like complaining about congestion is just a, it's a first world problem.

Vipul Vyas (18:21)
Yeah, it's usually a warning subject.

Billy Riggs (18:23)
⁓

but this, what we're talking about here with this idea of kind of a, a specialized fleet where you bring in a, a specific vehicle provider that works with the works with the Lyft that works with an Uber, we call them a TNC and that transportation network company a ride share company. I think that's a.

that really is an opportunity to provide a purpose-built vehicle that provides, maybe it's a premium fleet, maybe it's a delivery vehicle, maybe it's a logistics vehicle. And that's, to be honest, I think we're gonna see more and more of that. that's already, it's slightly already where the market is headed with, we see that Uber partnering with Lucid. We see some partnerships between companies like, you know,

Bolt and Nvidia and Nissan and Wave. so there's all these OEM car company, automaker company and self-driving software company partnerships happening that I think will create these niche-based opportunities that allow for

self-driving layers to scale, but also this cooperative marketplace to really, I think, to hybridize and to provide interdependency at the same time.

I think that this idea, it's a portfolio strategy. the idea is that when there's multiple players at the same time, they can create competition between them. And

while some companies can be burning capital trying to win the race, the others can be building the finish line. But at the same time,

Billy Riggs (20:06)
Well, people had to go, but you know, that's I think that's the the rub about some of this, too, is that there's a we're talking about all this. We're talking about all this crazy cooptition. The part that complicates everything is that none of this works without the infrastructure piece and.

I've talked to Vipul and I keep on talking with everybody about how now this works without infrastructure and where all of this fails is, where automation breaks down invariably is with systems, complexity with curbs, charging systems, pick up and drop off transit integration and data governance. And that's influenced by cities and urban planning. And

so while companies are both competing and cooperating, that's the other actor in the system, which is government and cities. they don't just regulate, they shape the environment that these vehicles and...

and these companies work in. And I think the company that understands that first is the company that's really going to win, whether or not it's a company like Uber or a company like Waymo or a company like Lyft, company like Zoox or some company we've not heard of yet. many times what we've seen is that's the gap. It's who's going to communicate, who's going to...

collaborate with our cities. And maybe that's where the next phase of where the market gets decided. It's actually

cooperating and collaborating at the seams of systems complexity and that's with our governments. Because where we see these platforms emerging, that's where it's many times in our most complex places and where we have the most wicked problems in our cities.

And so, maybe that can be our takeaway. The future of mobility, It's not just about single occupancy vehicles. It's about systems of companies that are competing and cooperating. And that's definitely going to be a shift. We use the term co-op petition.

And the companies that are understanding that and navigating that without over committing capital with out locking into one path while de-risking are likely going to be the ones that are the most successful. But they also have to remember that cooperating with cities.

are going to be the way to unlock the best pathway in dealing with system complexity, particularly in the field of automation. They don't control the system. The people do. They may build great technology,

but they just won't control the system.

So thanks for joining us. from Vipul and I, see you next time on Rewiring the American Edge.