Silicon Valley Stumbles in World Beyond Software
wsj.com
wsj.com
The first guy to head the project was one Nicholas Roy, an MIT Robotics professor whose professional claim to the position seems to be mentoring a pair of students who succeeded in building a drone that flew around a parking garage - predetermined layout, no weather. Completely out of his depth, he failed.
After he failed, Google hired Dave Vos, another guy who spent some time in an MIT graduate office - this time one in an aerospace specialty - who spent the last couple of decades in tech management positions. At least he had the experience to come in and say, hey, maybe we need some wind tunnels, maybe we need some professional tooling that's taken for granted in most aerospace companies, because trying to build an aircraft without that tooling is like trying to run a web-facing application off developer workstations instead of setting up a proper production architecture. And he, too, failed.
The real problem that Google (and probably Amazon too) faces is that they need to synergize two very different engineering teams to make delivery drones work. You need aerospace folks to build reliable aircraft, you need AI folks to give those aircraft targets to aim at, and you need them to sit on the same floor in the same building. The aerospace folks aren't going to move to the Valley because there's no aerospace hub in SV, and SV isn't a good place to start one because the necessary land - you know, the wide open spaces you need for runways and hangars - is a pipedream in SV. And the AI folks, you know, the ones the Big Four are paying close to a million dollars in salary and begging not to leave for a competitor - are never going to leave SV to work on delivery drones.
The best course of action that Alphabet has is to acquire a proven aerospace company, give it some great AI folks, and come back in a year to check on their progress. But most of these Project X types like their ivory towers. It's how Google convinced them to join Project X in the first place, selling them on the promise that they'd be in the same ivory tower they were in back in MIT, just with guaranteed funding and a request to think about commercial viability. So, not gonna happen.
It's a good long-term bet if it's a defense contractor that's been getting contracts for decades. Could hedge a bit against what the market might hit them with. Plus, they're trying to get tighter with government anyway. They'd likely acquire people good at doing that, too. Then start brining their tech or services in defense industry in general more than now.
That's on purpose. They bribe politicians overseeing or in the military. Those deliver them contracts worth many times what they paid in bribes. It's called the "revolving door" of the Pentagon by those that follow it. It becomes obvious when you notice all these failures are tolerated with none of the proven fraud resulting in prison sentences. The same ineffective companies keep getting big contracts with the effective, smaller ones fighting for scraps. As it's designed to be.
Nice example posted here a while back:
...AMES? I don't know how active it is as an aerospace hub, but it DOES have all that.
Seattle?
And we have the example of Peapod and WebVan which didn't just foretell but proved unless it was for specialized markets, it's a proposal for hemorrhaging money. Even if you get automation and you perfect the travelling salesman's problem you're still mostly dealing with low value products. Now, if it was delivery of expensive (Rx) drugs, or maybe even heavy but valuable items like gold or jewelry, legal documents, etc. okay. people will pay for that and you can make a profit but toiletries and pantry goods?
You argue that as if it's a constant -- and that it's not is the point. The exact innovation they are stumbling on is a way to lower that cost to near zero.
Drone technology will eventually happen. The question is how far out it is. And make no mistake, when it does happen, it will truly be a revolution (without the hyperbole).
Why not start with high value items --items where cost of delivery is a small fraction of the value of the good. Like FedEx did? Why go after groceries and perishables? It's an odd choice.
This is akin to Musk choosing Titan over Mars to explore the feasibility of interplanetary colonization by people.
[1]http://smallbusiness.chron.com/industry-standard-gross-margi...
Let's say I can deliver it (for whatever "it" is) $1 cheaper with a drone than with a truck. Let's say I'm delivering a $300 tablet. Nobody cares about the $1. (I mean, yes, some business - either the seller or the delivery business - cares about the $1. But it's not enough to move the needle on customer behavior. If it would, a reasonably smart seller would drop their price $1.)
But if I'm delivering a head of lettuce, that $1 difference is going to make significantly more customers have lettuce delivered. And the seller can't drop their price $1 to achieve the same effect, because they have 1% margin. More: If the seller lowers the price 98 cents and keeps 2 cents, the seller just doubled their margin on that head of lettuce.
I think your point is also valid - working from the top of the value chain down is a fine strategy, and FedEx is a great example of it. But working from the bottom up ("disrupting from below") is also a very useful strategy, and Intel is a good example of it. They started making chips to power calculators. They didn't start by trying to replace IBM mainframes.
+ Power/Range - drones can't fly very far + Load - they can't carry a lot + Landing - in urban areas - there are few places to land + Securing content - You can't just leave a box on the front lawn in many cases + Safety - flying a lot of drones result in failures, we can't have drones falling out of the sky. They also pose other hazards.
So many issues with drones.
I suggest that 'self driving delivery vehicles' will happen long before drones, and when they do, the added cost of 'drone' simply won't be worth it for most purchases.
I think you're right that 'self-driving delivery vehicles' might happen first, but I honestly think that drones will follow, and the cost of delivery from solar-power-recharged inexpensive drones is going to go to near zero. The question was, why is there investment in this when it delivery has failed in the past, and the answer, whether it's drones or self-driving vehicles is that once inexpensive delivery options are possible, in general, it will change everything.
Solar electricity is much more expensive than electricity from other sources, more importantly, 'fuel' a very minor issue in the 'total cost of delivery'.
The 'cost' will be in so many other things, first off - having inventory within a 'drone flight' away from people.
I actually don't believe that drones will ever fly stuff to our door.
It will always be more expensive to delivery stuff 'by flying drone' - and 'very quickly'. See: prices for airmail vs. snail mail.
So what do consumers really need that they can't drive to the store for? Toothpaste? Books? Toilet paper? No. That won't be cost effective.
If someone 'really needs something now' - the 'cost effective' way to do it is to walk or drive down the street to the store.
Delf-driving trucks, with 'robot arms' to nicely 'drop stuff off' for the rest.
There's plenty of innovation, but drones are not one of them. They will fail hard. The physics alone is a huge obstacle, but the planning, logistics, and optimization possibilities that they create or take away guarantee it will only ever be used in insignificantly tiny niches, if at all.
Shouldn't your conclusion be the opposite? If the cost of delivery is a large proportion of the good, then lowering the cost of delivery will have a larger impact on the economics of selling that good.
Peapod and Webvan didn't lower the cost of delivery because the human salary was still a large component of that cost. It might even have increased the cost for convenience.
However, think about the problem some. glassdoor says UPS drivers make ~65K a year. Gotta add ~15K to that to consider benefits and payroll tax (and I believe I am underestimating here). Let's say the vehicle costs 150K and can be driven 10 years. That's 15K per year. Let's assume 150 gallons of gas a week (lots of driving going on). That's ~25K a year. Then let's assume maintenance of the vehicle is 10K per year. We've gotten up to 50K per year on additional expenses. Look, my estimates may be off, but likely not enough off to say that the driver isn't the most expensive part.
The cost of delivery: We can charge for it as an optional feature (our normal model is pickup), and people currently pay far higher fees for manual human delivery across longer distances, which creates its own uniquely irritating issues in apartment complexes (multi-layered security, parking, buzz-ins, waiting for lifts, etc.).
low value products: People are willing to pay a very high premium for convenience. Half of US consumers' food budgets are spent on convenience.
power/range: For hot meals to nearby apartments, we are typically talking <1kg + <1km visible range.
fuel cost: We have on-site mains power.
AI: We can negotiate exclusive access to privately held airspace with strata management.
landing space: This is the greatest issue. Lower rise apartments in less extreme climates with open (shared or private) balconies are probably the best case. In many cases, it will simply be untenable.
This isn't by any means our focus but it's certainly an area we're keeping tabs on.
I don't think the good pizza joint (sit down) I go to is going to be able to deliver pizza at $14/pie with coupon while maintaining their quality of ingredients and process.
Further even if these projects never return a dime directly they have a halo effect which helps the overall company.
Sorry, what? The Other Bets segment loses $2.5 billion per year.
Sure, they might have made an extra 0.6 billion that quarter, but it's not exactly a hidden bet. Further, these are R&D losses, so it's hard to say what the long term impact is, but it's unlikely to be exactly -2.5 billion / year.
* Government? Would be targeted as waste. (Maybe sneak it into NASA?)
* Startup? Would anyone fund it? No short term payout.
* Non-profit?
* Billionaire's pet project?
Some of the best PhD students, working on some of the most interesting projects in my experience all had DOE or EPA grant projects. I think this sort of research deserves a lot more money since, in my (biased) opinion, it pushes humanity forward through public access of research in the form of publications, theses, and the strict requirements that data be preserved for future reference.
Besides, they're public companies. Investors might not know exactly which moonshot projects they're investing in, but the overall numbers are published four times a year. There's no major surprises.
The same is gradually happening with things like batteries, motors, etc. Everything is becoming more standardized and more like software.
The current limitations have to do with both physics and engineering, and also software reliability, but those barriers are all receding. Solar Cell roof shingles are an idea likely had by many kindergarteners, but the genius has to do with making a longer-term bet and creating the financing to make it into a viable business in a world that rewards short-term results.
The important thing is that a Billionaire today can make a bigger impact than a superpower government could a decade ago. The glorification of the bygone era of massive infrastructure investment voiced by Thiel at the GOP convention can be alternately viewed as a wish that we had more Musks taking big gambles and a general cynicism about the tech elite who develop cults of personality after a single, largely luck-driven, often low-tech home run.
The Interstate highway system was a buildout that could happen because of the solving of coordination problems that had prevented escape from a local maximum. As governments lose relevance, it is up to the Musks of the world to usher in both the technological vision and the social coordination solutions.
- Copy the link.
- Open an incognito browser window.
- Paste the URL into the address bar / omnibox.
- Hit return.
Many websites seems to keep track of you with a combination of cookies and IP. But many also allow you through if you come from Google, so replace this step with "Paste URL into Google search, then click first result" and it should work.
Or at least, WSJ continues to test various policies: http://digiday.com/publishers/wall-street-journal-paywall-go...
How annoying. Well, we can always use an that lets you set the REFERER header on a per-site basis,[1] or even one preset specifically for bypassing paywalls.[2]
[1] https://chrome.google.com/webstore/detail/referer-control/hn...
[2] https://chrome.google.com/webstore/detail/paywall-bypass/fnm...
Open the article and see the headline. Copy and paste the headline into Google. Click the link.
WSJ and other sites show the full article to referrals from Google.