Category Archives: society/culture reform

Does it make sense for OEMs to be investing in AVs and urban mobility products?

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TLDR: AVs and robot taxi services are not a near-term (3-7 year) threat to existing OEM business lines, but they are a longer-term (7+ year) threat to OEMs; and this is why they are investing so heavily in AV technology.

Investments being made by large car manufacturer (OEMs) in self-driving autonomous vehicles (AVs) and urban mobility solutions are receiving a lot of attention these days, and for good reason. AVs promise significant societal benefits and economic opportunity, but I want to contemplate and deconstruct why OEMs are making these investments.  What is the business rationalle.

The going sentiment or explanation seems to be A) that AVs and these urban mobility solutions threaten the OEMs existing business and/or B) that the OEMs’ ability to design, manufacture, and distribute vehicles makes them a natural necessity in the future value chain of AVs. While I agree with the latter explanation, I think there is room to elaborate  on the former.

 

Vehicle sales will not decline significantly over near-term (3-7 years) because of robot taxi services.

First, the majority of cars and trucks are sold to consumers and businesses located outside dense urban city centers. Second, as I’ve explained in a previous post, robot taxi fleets will be economically constrained–over the near-term–to being deployed within dense urban city centers. As a result, over the near-term, if anywhere, robot taxi services will reduce car ownership rates within dense urban centers, but car ownership rates in urban centers are already low, therefore little impact will be made on the number of vehicles sold by OEMs. Simply put, car ownership is already low in the areas/populations wherein AV-based robot taxi services will be launched over the next 3-7 years. It won’t be until robot taxi services slowly make their way out to lower density suburban areas that car ownership there starts to be impacted.

I would suggest that vehicle sales by volume are declining not because of ride-hailing services, but rather vehicle build quality is improving. Cars are being built better and are lasting longer, and hence need to be replaced less frequently. Again, for most people living in the suburban US, ride-hailing is not a substitute for car ownership. And for most people living in urban environment, car-sharing (eg. GetAround) and short-term rental (eg. ZipCar) services are more likely to be a substitute* for car ownership than ride-hailing service is. Sure, hailing a ride is better than renting a car for two hours in most situations (that’s why ZipCar’s business is declining significantly), so ride-hailing services might be substitute for some urban market segments but I would argue that most car owners in urban areas own their car because they have consistent weekly inter-city transportation needs. Most people decide to buy/lease a vehicle because they have consistent transportation needs that cannot be solved with a better alternative. Getting to/from work or shuttling the kids to/from five days a week, for example.

The same holds true for suburban car owners. If you live outside dense urban areas and decide to buy/lease a vehicle, it is because you have consistent transportation needs that cannot be solved with a better alternative. Getting to/from work or shuttling the kids to/from five days a week, for example. For most people, car ownership is a better alternative for these consistent trips than Uber and Lyft.

As a result, I would argue that car ownership has not been impacted significantly by ride-hailing services–in neither urban nor suburban population.

Ride-hailing platforms have become a complementary transportation solution; not a substitute. They have become a substitute only for traditional taxi services. For urban dwellers, it complements mass-transit utilization. For suburban dwellers, it complements car ownership, as a solution for infrequent trip needs such as getting to/from the airport or nights on the town to avoid drinking and driving.

Although I don’t think robot taxi fares will come down to the level of mass-transit fares, the already low car ownership rates in urban populations means that I see robot taxi trips being used by consumers as a substitute for an occasional mass-transit trip; not permanent car ownership.

It’s a long-term play for OEMs.

Robot taxi services are not a near-term threat to OEMs, but I do think they are a long-term threat (7+ years). For the reasons stated above and in this post, robot taxi ride fares over the near-term will remain prohibitively high for suburban populations, where car ownership is highest. Eventually, in the longer-term (7+ years), the technology and economic constraints will change such that serving more sparsely populated areas can be done profitably, and robot taxi platforms will start serving these areas.

This is why I think hundred-year-old OEMs are investing in urban mobility and AV tech. OEMs don’t and shouldn’t care about being relevant over the next decade; they’re aiming to be relevant over the next 100 years.

 

*According to Jeffrey Rifkin, “Some 800,000 individuals in the U.S. are now using car-sharing services. Each car-share vehicle eliminates 15 personally owned cars.”   

Paradoux of Choice

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In our quest to maximize freedom, we maximize choice, but is this maximization of choice leading to maximization of happiness?

In his TedTalk, Psychologist Barry Swartz helps me understand why I hate large restaurant menus.  He articulates nicely, ideas that strongly suggest maximizing choice does not maximize our happiness; rather it is in fact reducing our happiness!   I don’t think there is anything more important to ponder than things that directly affect our collective (he mentions the possibility of Pareto Inefficient economies) and individual  happiness, and I highly recommend watching the entire 19 minute TedTalk (below); but some of the major takeaways are below.

The cost of choices includes:

  • paralysis, the resulting procrastination, and the resulting consequences of not taking action create huge costs for individuals
  • the opportunity costs of not choosing another available choice, subtracts from the satisfaction of making the choice that I made
  • with so many choices, we expect one of those choices to be a perfect fit; and high expectations that prevent us from being presently surprised and “The key to happiness is low expectations!”

Some takeaways:

  • “Everything was better back when things were worse”
  • “…pretty confident we have long since passed the point [number of choices] where choices are adding to our welfare”

“That feeling can create its own reality.”

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Two very curious psychological phenomena have been whirling around in my mind when I started to see how much of human behavior might be explained by them.     The first is the concept of “loss aversion”, which explains we often act in ways that minimize our expected losses rather than maximize our expected gains.   The second phenomena are self-fulfilling prophecies.  And interestingly, these may be related.

Loss aversion

Why is that one who loses $100 will lose more satisfaction than another person will gain satisfaction from a $100 windfall?   I might have some ideas that explain why we are this way, but simply being aware of this curious psychological phenomena is probably most important.  Look around and ask whether you think this phenomena can explain the human behavior, and I think you still start to see how well it explains a ton of behavior.   Loss aversion might explain why we do not ask for promotions if we fear that such being denied such a request might result in a damaged reputation within the firm.  Loss aversion might explain why we do not ask people on dates if our minds know subconsciously that we could end up feeling less confident about ourselves if the person says no; and this is even amidst the fact that our ego would probably grow by a far greater magnitude if  the person said yes.

Self-fulfilling prophecies

How often do we fear something happening, and then–out of this fear–act in such a way that then leads to that thing actually happening?!   Take for example, a person who fears that his/her lover is cheating on them.  This person then starts to act in a very insecure way.  The person starts to ask all kinds of weird questions, in weird ways, maybe starts acting weird too.  This then leads to the person’s lover becoming disenchanted by the person and then actually cheating or breaking off the relationship, which is what the person feared to begin with.  I find this incredibly ironic and, at first, very saddening.

Feelings and emotions make us humans interestingly complex, thinking creatures.  In a recent conversation/interview with Charlie Rose, Warren Buffet said:

That feeling can create its own reality.

The topic for Buffet and Rose’s conversation happened to be the U.S. consumer sentiment, and consumer’s faith and belief in the U.S. financial system.   Here the self-fulfilling prophecy to which Buffet was referring, would be the consumer’s fear that the banks were not trustworthy and that they would fail, which would cause many consumers to pull their money from the bank, which would then lead to the bank actually failing.   This is another example of how our feeling scared of something leads to behavior that ironically causes that thing to actually happen.    This realization had me pretty scared and saddened until I read an article that featured positive psychology ideas from Ryan Jacoby.   I then realized that self-fulfilling prophecies can work in the opposite manner as well. For example, if I believe that what I want to happen, will happen, I will behave and act according to this belief, thus leading to the desired thing actually happening.  Take the bank run story, for example.  If we believe that the banks will not fail, then we will leave our money in the bank, and we won’t cause a bank run, which would cause the banks to fail.  If we believe our lover is not cheating, we will act trusting, normal, and loving, and our lover will have no reason to seek companionship from someone else.

Can “loss aversion” explain economic recessions?

Citing the U.S.’s rapid recovery from 1930’s depression, Buffet says the American economic system works very well, but we will have have recessions (we have had ~15 of them since the Great Depression).  This got me thinking…Are our economic recessions also the result of human behavior and the psychological phenomenon whereby wealth is created and then because people fear the loss of this newly acquired wealth, they withdraw or reduce investments, which then slows down the economy because it inherently means taking money/capital out of the economic system?

 

Changing education

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This is a quick video of a handful open-minded thought leaders commenting on what things we need to question as we think of how best to teach children and one another is this new digital and information age.
Among this list of things that we need to question, one of the things I was happy to hear mentioned were, grades.  Should we even give them?  If so, how?     I of course think this is a very worthy conversation to take up, especially given the different learning styles and the different disciplines and skills that are needed for each.    http://www.youtube.com/watch?v=0e1-ZtFX35E&feature=youtu.be

Stephen Fry in America [short-movie series]

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Amazing what a new perspective on a culture can tell us about ourselves.   I think this Englishman gives us that and–at times–an appreciation for the geography we have in United States.   Perhaps the most telling takeaway I found from, say,  Episode 2, is the relatively great abundance of resources that most of us Americans enjoy.    I think watching this series will help us understand why/how  the rest of the world perceive us to be.   After watching Episode 1 and 2 of 6, I probably would recommend watching the series, but I certainly would recommend episode 2, where he travels to the deep south.   You can watch these episodes on Netflix.

The Fun Theory

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Sure it was an awarding-winning and brilliant word of mouth marketing communication idea and brand marketing strategy; but I love The Fun Theory project for what it proves about us as humans.    It shows us that no matter how badly we would like to think of ourselves as too serious or tough for fun, deep down inside, we all want to laugh, smile, and have fun!

Below is a video clip of one of my favorite installations from the project.  Cheers, Volkswagen for such a cool idea!

Below is a quote from Volkswagen, taken from the Fun Theory website:

This site is dedicated to the thought that something as simple as fun is the easiest way to change people’s behaviour for the better. Be it for yourself, for the environment, or for something entirely different, the only thing that matters is that it’s change for the better.

To see videos of more installations or to learn more about the project, go to http://www.thefuntheory.com

Sugata Mitra’s new education model, SOLEs, could be how our children learn in the future

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An absolutely enlightening and astonishing piece on Sugata Mitra’s research and, now, pursuit to further a new education model he calls Self Organizing Learning Environments (SOLEs).

Below is the video of Sugata’s Ted Talk, which shows his work and the amazing ability of children (young minds).    Highlights include: the story (starts at minute 7:00), the “grandmother method” (starts at minute 10:00), and the story of the 10 year olds correcting Sugata on the spelling of Pythagoras and telling him who he was in a few minutes.

some wisdom about our society and us as social beings

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Use the below link to watch video of a author David Brooks speak about some interesting human behaviors and psychological traits.  You only need to watch the first 30 minutes of the 60 minute long video, because the rest is just him answering not-so-interesting questions from the audience.  For me, some of the highlights from his talk include:

Are you struggling on how to choose between two choices?  …let your unconcious mind play a bigger role in the decision, and leave it to a coin flip.  Get a coin, assign each side of the coin to one choice, flip it, and let the flipping of the coin tell you how you should choose.  Do this by listening to your reaction to the outcome of the coin flip, not the actual result of the coin flip itself.”

Research shows that new born babies who do not receive hands on care (the physical touching from nurses and parents) are more likely to die than those who do.  This reflects our innate need to feel emotional connections to other people.  We are social beings.

http://booktv.org/Watch/12314/The+Social+Animal+The+Hidden+Sources+of+Love+Character+and+Achievement.aspx

A few things we can learn from the Japanese people…

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I was traveling around Japan in March 2011, and was in the Tokyo when the first of the earthquake tremors hit, and was there for the two days following…experiencing the aftershocks (many of which were big enough to be considered earthquakes), and observing–not surprisingly however–why I think the Japanese people are so amazing.    Below are some of the things we saw.

CALM
After the initial earthquake on Friday afternoon, all transportation was shut down.  All trains and buses were not running, and taxicab lines were two hours long, so we found a restaurant and bar to pass the time away.   We found a number of calm Japanese, not panicking, and just watching the news channel with a pint of beer in hand.  I even spoke with one man who was worried about his family, which he could not reach since phone lines and the trains from Tokyo to his rural suburb were not working.

ABILITY
We were in the Tokyo Stock Exchange building when the earthquake hit, and it was probably the best place we could have been.  The incredible architecture of buildings allowed them to sway but not fall, while outside on the streets, some glass windows and tilings on outside walls cracked and fell to the ground, putting pedestrians at risk.

CONSCIENCE
Disciplined queues for water and groceries. Not a rough word or a crude gesture.  People bought only what they needed for the present, so everybody could get something.  When the power went off in a store, people put things back on the shelves and left quietly.   There was no looting in shops.  No honking or overtaking on the roads.  The Japanese were very polite even to us travelers after such a devastating catastrophe.

TENDERNESS
Restaurants cut prices. An unguarded ATM is left alone.

TRAINING
All the Japanese professionals working in downtown Tokyo knew exactly what to do when the earthquake hit.  They calmly filed out of buildings with their employee-issued white construction helmets.  Even our Tokyo Stock Exchange tour guide calmly instructed us to get under the desks.

MEDIA
They showed magnificent restraint in the bulletins. No silly reporters. Only calm reportage.

Even though I saw first-hand–during the Great Flood of 1993 (I was a volunteer sand-bagger with my dad)–how Americans can come together to help one another, I still think we can learn a few things from the Japanese.