Podcast: Tubular exoskeleton-type thing

928 Apple

Horace Dediu and Jim Zellmer discuss how to think about cars in this 57 minute podcast. [32MB 57 minute mp3]

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Excerpt:

Horace: That is, indeed, probably the most exciting way because an outsider will come in, look at the problem as an information problem not a transportation problem. They’ll look at it and say…This would be my dream.

Someone would say, “You know, I see the job to be done here. The job is people don’t want [to own] cars. Ownership of cars is not just expensive but it’s actually adding a lot of waiting into your life. Waiting in traffic, waiting to park. Waiting at line in the DMV, whatever. You’ve got all these hassles associated with cars… So we’re going to solve your problem of transportation by providing you with less waiting.”

And then they say, “That’s an information problem because knowing where the cars are and so on and allocating the car.” The car at that moment is ‘off-the-shelf’ and you say, “OK, but we’ll just pick whatever cars are available. Oh, if it’s electric it’s even better because our economics are going to be better with electric cars. It won’t break as much and so on.”

The innovator in this case looks at it as an information problem, attacks a job to be done that’s on that, uses off the shelf technology which is just a city car with electric drive, and then goes back to the manufacturer and tells them, ‘You know what would make them better is if we had this, that, or the other thing.’”

And then the manufacturer would say, “Thanks, we’ll get back to you in five years.”

You don’t have that time. So you say, “No, I want to have it done in the next six months.”

Then you start to think, “You know what? Maybe I can make the car myself.”

That is really the spark of a potential story…And that’s the cool thing is it’s the same thing that happened with smartphones where Apple said, “In order for us to get a better phone we need to solve these problems and that may involve getting into new businesses.”

You get into apps. You get into services. You get into Siri. You get into…Suddenly you’re solving a whole set of different problems.

Jim: Owning and leasing capital equipment.

Horace: Yeah. But the fuel was the huge profit you got because you solved a job. The fuel to get you into the new industries is supplied in ample quantities, beyond what you can absorb. And so suddenly, this guy was making a business selling information, really, to consumers about where to get a car at a time when they need it and not to get a car when they don’t need it. That simple shift makes them, hopefully, wealthy beyond their wildest dreams. They say, “You know what? I have so much capital now I can buy a car company.” And they’re actually quite cheap to buy because, as you know, they don’t make much money. And so, they’re usually wasting assets.

You go in and they could go and grab Saab, for example. Boom, just pick up Saab for peanuts or pick up a brand out of the UK or something and the Indians did. They bought Jaguar. They bought Land Rover. BMW bought Mini, which was essentially a defunct brand in the UK, as well.

You can get that and you get the brand and you get some tooling, some facilities, some distribution network, whatever. Throw most of it away and rebuild the business along the lines that serve this need. And so, they would then create a niche for themselves in electric vehicles optimized around the job to be done of not being owned.

 

  • J_Zellmer

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    • Håkon Bogen

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      • http://justatheory.com/ justatheory

        Test thread.

  • OliverBruce

    This was an excellent podcast. Looking forward to more.

    Sounds like the job to be done is mobility – to move yourself from one place to another comfortably, safely and cheaply in a reasonable timeframe. Cars do that job for anything in a couple of hundred km radius, but they also come with a whole set of other hassles like maintenance etc. The opportunity space that Zipcar has exploited so well is really quite an early stage manifestation of how to enable more mobility without being tied to the traditional ownership model. I can see the opportunity to take Gordon Murray Designs iStream, make fun looking, low cost custom cars that can be hired like Zipcars around public transport hubs.

    Tesla: Can see Horace’s points – expensive, status quo manufacturing techniques, tackling the high end of the market. But I also can’t see how they could have developed decent electric vehicle technology selling tractors to the third world. And they’re doing things quite differently at the dealer level which allows for higher margins (~25%). But Horace’s checklist of what a disruptive force in the auto industry might look like is great, and Mobius Motors in Kenya is a potential candidate for a case study. They’re building a tubular framed 4×4 for less than the cost of a tuktuk – their advisors are all ex GM/Ford/McKinsey/VW and Safaricom so have a good sense of how to put these operations together.

    Re the production of the podcast – it’d be great if you considered investing in a better recording setup and didn’t type on a computer in the background while recording. It’s distracting and lets down what is otherwise an excellent podcast. Thanks.

  • Bruce_Mc

    I agree generally with your assessment of Google’s approach to solving problems: “Let’s throw a bunch of technology at this and see what sticks.”

    I think some of the technology behind driverless cars may “stick,” even though the pure driverless car for individuals may not. Cruise control that brakes a car when the car in front slows down is already being offered by some manufacturers. I could see long haul trucks becoming more and more autonomous as well.

  • Watcher

    A very interesting conversation!

    On the topic of small entrants to the market of cars, I can think of two examples, both from Brazil.
    There, Troller, a manufacturer of off-road jeeps got a relevant foothold on that market, being brought by Ford in 2007.
    An older example is Gurgel, a local brand started in the 70′s by an engineer who had worked in american car companies. They focused on local production and used unusual methods (i.e fiberglass bodies). They went bankrupt in the beginning of the 90′s, but their story is often remembered for showing why things ‘never go right around here’, resonating with your comment on how people are certain they can’t prevail against the big brands. Perhaps not disruptive in the methods, but something different was done on the product

  • jubei_jc

    Dorace,

    This was a very good Podcast. It still resonates with the style that I’ve come to love from The Critical Path.

    I’m not sure if I agree with you that the power plant for the vehicle is not a disrupter though. I was an engineer in the automotive industry for 8yrs. The power plant change is very significant. For Tesla to change to 100% battery power is a big deal for the industry.

    The electric motor Tesla is using is going from thousands of parts from the traditional gas motor to just 11-14 parts I believe. Also with less parts there will be less maintenance so the cost to own drops significantly. Less trips to the mechanic. Why is this a disruptor?

    1. Less parts for the power plant means many suppliers will no longer be able to provide business to automakers such as Tesla for engine parts. Not just the mechanical parts but also the oils and lubricants needed to keep them functioning.

    2. There will be less maintenance required for these types of vehicles for the end customer. Less trips to the mechanic means less stress on the customer to deal with upkeep and additional charges (at least for me anyway. I love my Prius).

    3. The idea of the way the car is built is changed. The car is built around the new platform allowing for better performance and space in a smaller package for the end customer.

    I think this change is a quite a disrupter but may more so for the industry than the end customer. In the industry these other entities are seen as customers.

    Just my thoughts…

    Thank you. I look forward to hearing more.

  • OliverBruce

    I should also note that Gordon Murray Design hasn’t yet announced any partnerships for its iStream design and manufacturing. I just came across this:

    “Gordon is 61 now, and his environmental car has got him every bit as fired up and motivated as he was when he first started in Formula 1. “Three mainstream manufacturers have approached us. I’m talking to the Americans at the moment, and I’m flying to Japan next week to talk to a couple there. Our company is all about design, prototyping, development, engineering support. We don’t do production, but I’m planning to retain the rights to the design.”

    from (http://www.f1fanatic.co.uk/2013/01/30/gordon-murray/) which was published in Jan 2013 – right at the bottom of the article.

    So perhaps we can expect some development on this front? Its an interesting strategy, and Murray seems to be approaching this with a disruptive mindset. But it has been nearly 3 years since they announced the T25 and nobody has jumped yet.

    • jim_zellmer

      Thanks for posting this.

      Dan Neil’s recent side by side (s x s) “Gator” review and commentary illustrates the challenge a potential auto disruptor faces – at least in the more regulated world.

      “s x s” vehicles are “mutating, resulting in a strain of super-aggressive sport side-by-sides, with top speeds as high as 75 miles per hour”.

      I added a couple of s x s vehicle photos to the post along with an image of the Daimler motorized carriage and a model T – for effect.

      http://asymcar.com/r/?p=34

      • OliverBruce

        Hi Jim,

        Fair point about these vehicles – I hadn’t considered them potential disruptors, but if they could be made road legal then there might be something there.

        Thanks for putting together the ‘river’. You should also be checking out Driving into the Future blog – has a good grasp on recent developments including the following on Toyota’s tubeframe efforts:

        http://drivingtothefuture.wordpress.com/2013/04/24/design-concept-of-the-day-toyota-mewe/

        Cheers,
        Oliver