Welcome to our “Innovators Worth Watching” series, spotlighting interesting and potentially disruptive players across a spectrum of industries.
Autonomous vehicles (AVs) or self-driving vehicles hold the potential to offer immense benefits. They could reduce the number of accidents, make transportation more affordable and accessible, and give our driving time back to us. While visions of a fully self-driving nirvana have captured the public’s imagination, some leading figures in the AV industry have cautioned that such a world is decades away. The technological barriers to a fully self-driving vehicle that can navigate any road, at any speed, in any weather are substantial to say the least.
Yet, Voyage, a Silicon Valley-based AV startup, believes it is up to the challenge. Its mission is to “super-charge communities with autonomous vehicles”. In line with that mission, Voyage cut its teeth on The Villages, a retirement community in San Jose in 2017. Subsequently, Voyage is testing its AVs in The Villages, Florida, where it intends to eventually make them available to all 125,000 residents within the bounds of the community.
In contrast with demanding freeways and dense urban roads, where people drive their cars at higher speeds and often must deal with a large number of pedestrians, retirement communities offer a much easier proving ground for AVs. But does simply targeting a less-demanding application make a company disruptive? No. Let’s take a closer look to evaluate the disruptive potential of Voyage relative to ride-hailing services and taxis.
1. Does it target people whose only alternative is to buy nothing at all (nonconsumers) or who are overserved by existing offerings in the market?
Yes. Many of the residents of The Villages are what we call “nonconsumers” of transportation, with little to no transportation options. Some can’t drive themselves because of old age or physical disability, and they may not have family nearby to drive them around. Furthermore, ride-hailing services such as Uber and Lyft are relatively expensive (on a per mile basis) for very short trips.
A resident at The Villages explained, “Volunteer drivers, care-givers, Uber/Lyft, and others are not adequate. Many who could be living a better life [were] not being served.”
2. Is the offering not as good as existing offerings as judged by historical measures of performance?
Yes. At present, unlike Lyft or a traditional taxi service, Voyage doesn’t take residents beyond the retirement community.
3. Is the innovation simpler to use, more convenient, or more affordable than existing offerings?
Unclear. We don’t have much information about Voyage’s actual pricing apart from the fact that it’s aiming to charge $1-per-mile. What we do know is that it provides a better service to people whose other alternatives range from putting themselves and others in danger by driving to having no access to transportation at all.
4. Does the offering have a technology that enables it to improve and move upmarket?
Yes. The technological enablers that underpin AVs include lidar sensor, which uses laser beams to create an accurate 3-D map of the self-driving car’s surroundings, artificial intelligence (AI), and computing hardware. Already, we’ve seen these technologies improve over time.
Some lidar manufacturers have reduced the cost of existing models and introduced improved models. For instance, Velodyne LiDAR, a leading player in this market, reduced the cost of its lidar, the VLP-16, by up to 50%. Also, it introduced a higher performance lidar with better range and resolution: VLS-128. There are also several startups that are developing new iterations of lidar sensors.
The increased availability of data, improvements in key algorithms, and computer hardware over the last two decades have led to improvements in artificial intelligence.
With the amount of capital and engineering hours thrown into developing AVs, it seems likely that we can expect further improvements over time.
5. Is the technology paired with an innovative business model that allows it to be sustainable?
Too early to tell. Voyage appears to be contemplating a business model similar to ride-hailing services like Lyft, in which consumers pay per ride. At scale, such a model can be profitable, but whether Voyage can be profitable solely serving these retirement communities remains to be seen. Another question is whether Voyage can use its development efforts and learnings from these retirement communities to enter new markets at a relatively lower cost or with significantly better performance. This, too, remains to be seen.
For Voyage to truly make a mark and profitably march upmarket to more demanding applications, it should strive to be cost competitive with the other alternatives to driving oneself such as Lyft (human-driven) and shuttle services. Also, it should strive to build capabilities that deep-pocketed AV companies like Waymo and Cruise Automation will find hard to emulate.
6. Are existing providers motivated to ignore the new innovation and not feel threatened by it at the outset?
Yes. Ride-hailing services such as Lyft (human-driven) and traditional taxi services don’t seem motivated to alter their existing pricing structures to be cost competitive for very short trips in order to appeal to the residents of these retirement communities. Furthermore, well-resourced AV players like Waymo and Cruise Automation seem more interested in serving larger, well-established markets.
In the final analysis, Voyage seems to be playing its cards right by targeting a relatively forgiving customer base with its less-demanding deployment of the AV tech. If it manages to unlock a profitable business model, gradually build capabilities that are hard to emulate, and continues to make the right strategic choices, it may well be a disruptor worth watching.
Do you agree with our analysis? What are the interesting AV companies that you are tracking?
