Shai Agassis new transport vision

Shai Agassi
Shai Agassi

The Better Place founder foresees autonomous, electric, personal pods taking us aroundthe worlds big cities.

Almost ten years have passed since the Better Place venture was launched, and three years have gone by since it went up in smoke. It could be argued that it was a foreseeable business fiasco, which burned nearly a billion dollars, and is now lost and gone forever, but taking a broader, more long-term look at things, it becomes clear that the billion dollars have not gone to waste. Far from it.

The ventures greatest success was in creating global awareness, both among private consumers and among government decision makers, of the existence of viable alternatives to vehicles fueled by petroleum-based products. Better Place proved that a combination of the industrial capabilities of auto manufacturers, advanced information systems, and government incentives, can create a new trend even within a tough, conservative industry.

In addition, Shai Agassis company presented real solutions, with reasonable costs, for some of the main problems that for years deterred people when it came to electric cars. But whats nearly certain, is that Better Places greatest technological contribution was the establishment of foundations upon which the vision of the autonomous car is now being built. The moment it was proven that it was possible to develop and produce on a large scale a platform for electric cars that is managed remotely and can transport passengers at the same level of safety as that of a personal car, at reasonable prices, and with practical ranges, this became a logical continuation of the development of robotics.

The public sector is the customer

On the business side too, Better Place's failure has indirectly contributed to the field's development. It demonstrated that the business model of a venture with a long-term vision on such a large scale cannot be built on revenue from private car owners. As has been proven in Israel (and to some degree in Denmark as well), the personal vehicle market is characterized by extremely conservative consumers, who make practical, short-term decisions, and whose considerations have barely changed over the past few decades.

While soaring fuel prices can provide a temporary tailwind pushing consumers towards electric cars, the moment this wind drops, as is happening now, so does the enthusiasm.

The second lesson is that venture capital is apparently not the right partner for funding such a venture. This is an industry in which the guiding principle is reaping the fastest possible return on investment, and which has limited patience for significant unanticipated changes to business plans. The failure of Better Place has thus shown that the best partner/customer for ventures aiming to change a fundamental paradigm, such as transport, in the long term, is the public sector. In other words, government funding.

Transport as an essential service

The beginning of the lesson-learning process can be observed in the talk that Better Place founder Shai Agassis recently delivered at the international technology conference CeBIT, which took place in late March in Hanover. This was Agassis first public speech at an international event of this size since the collapse of Better Place, and his choice of a global electronics convention, which brings together the worlds high-tech and software giants, was presumably not coincidental.

The vision that Agassi presented in his talk on smart, electric public transport as an alternative to personal vehicles is raising a great deal of interest from companies like Google, Apple, and the like, alongside great interest from government and municipal authorities in Europe and the US.

As previously reported in Globes, Agassi founded new private company by the name of NEWRGY, but has not yet released any official information about the business plans of the company, or its future areas of operation. Asked by the audience after his talk whether it was indicative of his personal plans in the field, he responded that his new venture was still operating in stealth mode, and declined to say when it would be publicized. Nevertheless, many hints can be picked up upon from what he had to say.

The basic idea he presented was a transition from a model of privately owned vehicles to transport as a utility, meaning personal transport provided as an essential service, like water and electricity, by government or municipal authorities, or by private companies.

Agassi claims that a great many mass consumer products have and will transition from being real products, that are sold via physical marketing channels, to services that are consumed electronically, automatically, and with no need for the expensive services of salespeople or the physical purchase of objects.

As an example, he cites Netflix, which in just a few short years went from being a DVD distribution service, which provided on-demand viewing (based on information gathered on customer preferences), to becoming an independent creator of television content, which is replacing the traditional network model. This kind of transformation, according to Agassi, creates the platforms upon which massive wealth will be built in the coming years.

The tsunami is headed for the auto industry

Agassi says that the next industry that will face that same wave of change is the auto industry: We think that we still buy cars. Heres the reality: If you live in a mega-city, and most of the world is moving to mega-cities, you dont have anywhere to put the car. Parking is too expensive, insurance is too expensive. When you actually got the car parked, the last thing you want to do is move it, because you wont find another parking [spot]. Agassi says this is a global phenomenon: rates of driving license issuance in cities such as New York, London, and Tokyo are dropping, while the average age of people receiving their first license is rising.

What is the alternative? Agassi presents the revolution now being created by transport business models such as Uber, which today provides immediate, available transport at prices known in advance, at the touch of a button. The value of Uber is $40 billion, says Agassi, which is more than most car companies.

Agassi says that autonomous cars are the next wave in the tsunami of change, and they will be a natural continuation of models like Uber. He says, The equipment needed to transform an existing shell of a car into an autonomous car today costs $60,000-75,000. But by the end of the decade, comparable technologies will appear that will cost less than $1,000 and will be able to drive ten times better than human drivers. Agassis vision is electrically powered, autonomously driven, personal pods, that will drive around cities seven days a week, 24 hours a day, and will be available at the touch of a button.

People who dont live in the city will park their cars outside of it, and will pay what they would pay for parking in the city for this transport service instead, using a card. Agassi says that it will be five years until this technology is ready, but notes that industry estimates range between 10 and 15 years.

As an intermediate stage, before these systems become the norm, Agassi believes that autonomous transport systems will appear, but with drivers, whose job will partly be to supervise the operation of the vehicle, but mostly to make the service more user-friendly, and more acceptable to customers who may have difficulty adjusting to driverless vehicles. Agassi concludes by saying, I would suggest to suspend disbelief and instead of arguing against it figure out how to build a big boat that gets carried by these tsunami waves, because theyre coming. The earthquake has already happened, long ago. If you have the boat that carries you on these waves, youre going to get very, very far. If youre just watching from the shore, saying, Its not coming, its not coming, the future - its staring right at you.

At the end of the day, one can adopt a cynical viewpoint and say that this is an expensive, futuristic, high-tech dream, that is detached from reality, and has an unknown timetable and a very hazy revenue model, which appeals mostly to rich, bored techies, and to government officials looking for good PR. But the truth is that this answers a very real, urgent need, that exacts a high economic toll each and every single day, and which will only increase with the years. The traffic that jams up the downtown areas of the big cities in the West will not go away by itself, and underground public transport is limited by capacity and cost. Governments and local authorities are the parties with the greatest motivation to finance such ventures, and the venture capital industry will join them. Will Shai Agassi succeed this time in leading the trend, or will he just be a late joiner and minor player? This is a question that should probably be addressed to Larry Page and Tim Cook.

Shai Agassi
Shai Agassi
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