Business as Usual: Driverless Vehicle Startup Motional

Transcription: 

Good afternoon, everyone. This is Audrey Russo, President and CEO of the Pittsburgh Technology Council thrilled to be here on a Monday. And we have a great guest as we do every day president and CEO of motional, I will introduce him in a moment. But I just want to set the stage. So everyone knows sort of the rules of the game and to give deep appreciation to Huntington bank, they have been a tremendous friend to our community for a long time. And particularly during the pandemic, they really stepped up and had a lot of aggressive support in all the opportunities that the SBA has had, as well as you know, through the PPP, in e idml, as well as supporting small and mid sized companies. So if you don't know them, get to know them. They're key member in our community. So we just to remind everyone that we launched the series at the beginning of the pandemic, I don't know how many years ago that was, but just to keep the community connected and formed, and to showcase some of the world changing innovation that has some footprint here in Pittsburgh in southwestern Pennsylvania. We've muted your mic. And that's what the intention so that we don't care anything in your background. And we also have a chat, the chat is for you to ask our guests questions. Jonathan Kersting, who is the Vice President and all things media and marketing at the tech council keep an eye on that to make sure that we're allowing for some engagement, this chat is not for any kind of sales or marketing of your own respective companies. So thank you all for being here. And I am pretty excited about bringing Karl Iagnemma had a perfectly I had a perfectly before we started the show that I'm going to call you, Karl. And I want to thank you so much for being here. Before we talk about motional. Karl, what we like to do and what I like to do is find out a little bit about you. What's been your journey to emotional anything, including your time at MIT, and your role in actually founding a company called nutonomy. So welcome. Thank you for taking the time. I know that you are joining us from Boston. So really appreciate that. And so let's talk a little bit about Karl.

All right. Well, thanks, Audrey. Nice to be on the webinar today. I can tell you a little bit of background. I am a Detroiter, by birth, I grew up in the Detroit area, went to school in the Detroit area once University of Michigan. So big 10 school and studied engineering. And for the first part of my career, I was really focused on technology development, I was a technologist by background, went to MIT, and formed a research lab at MIT that was really focused on robotics technology, and technology for Vehicle Safety Systems, driver assistance, and ultimately, what we now call driverless technology or self driving technology, what we then called autonomous vehicles. So this was now dating back, you know, 15 to 20 years ago. But it speaks to the fact that all of this technology in the driverless space is really fairly recently been transitioning from the research labs of the world. So my background is in that research space, around 2013. Myself, one of my colleagues at MIT, fella named Emilio Rizzoli, who is a professor of engineering. You know, we we decided that this technology that we've been working on for so long for much of our careers was kind of getting close enough to maturity, that if you really squinted at it, you could see where, you know, someday these could be commercial products, where we could have driverless cars, really on the road serving useful purposes that people would be willing to pay for, you know, take you to the grocery store, take you to work. And so we formed a startup company called autonomy. We started with just the two of us. But we formed an office in Cambridge, Mass, you know, near MIT's campus. We also formed office in Singapore, which might seem like a crazy thing to do, but in retrospect, probably was but you know, driverless vehicles at that time were so new on the horizon. We felt we had to go to a place that the government understood their potential impact. The the society was potentially welcoming the technology in Singapore checked a lot of boxes. So we founded our business in Singapore and attained bridge. We grew that business over the course of a few years, to about 130. Primarily engineers, hundred and 30 staff. And then we joined we were acquired by a company called active, so active for those of you who are familiar with aptiv. They're a technology, automotive tier one supplier. And what that means is they're a technology provider to the auto industry. And so for us as a startup, and for what we were doing, which is building technology, you know, for autonomous cars, it was really a great match. So we were very excited to learn after to join active, active at that time already had a footprint in Pittsburgh that dated back many years after it had been doing work in autonomous vehicles. They had long standing collaborations with Carnegie Mellon, there was a company a small startup called automatica, that was founded out of Carnegie Mellon, that was acquired by by aptiv. And so we joined this business that first of all, we had a lot of shared DNA with. But secondly, we had a lot of had a lot of history in Pittsburgh. So we inherited that a little bit. And then we've kind of taken off from there, which, you know, I'm happy to talk more about but but that's a little bit about my background of where I'm coming from.

No, that's great. It's funny, you make the point, I like to say that autonomous vehicles in the work tied to that industry is a 40. Year overnight success, right. In Carnegie Mellon. There's been research going on in autonomous trucking, I think it's 40 years. So I like yeah, like the new right, that you did about squinting that you could really see the future in terms of, of commercialization. So So talk to us a little bit. And thank you for sharing that story. Because after does have ties into Pittsburgh, so the story is nicely, nicely woven. Talk to us about motional. So what is motional? What's the focus? How does it fit into the the autonomous vehicle ecosystem?

Mm hmm. So first of all, start with what we're trying to do, you know, our mission emotional is to make driverless vehicles, a safe, reliable and accessible reality, and ultimately change how the world moves. That's the goal. motional is a joint venture. So we were formed via joint venture from aptiv and Hyundai Motor Group. So I kind of gave a little bit of the story leading up to App though. Less than a year ago, after that young guy decided they wanted to partner on this activity. So they embarked upon this joint venture. That's called motional. So we became a standalone business with two parent owners 5050 ownership between Hyundai Motor Group, which I think everybody knows, you know, South Korea's largest automaker, top five automaker in the world, on the one half, and then active on the other half, who I already introduced. As part of the joint venture formation gendai invested $2 billion and some IP, but active what what we brought to the what after brought the table was really my team, the team I had built within aptiv and the technology stack that we had been developing with an asset. So he and I brought some some capital and some IP and aptiv brought a bunch of IP and a team. And this was again, March 2020. And since then, we've really been on a growth trajectory, we've grown significantly, we were about 660 odd people at the time of a joint venture formation. Today, we're close to 1000, we'll be very close to 1000 by the end of the year. So we've been growing significantly this year. And that growth is going to continue and will continue in Pittsburgh. I'll add that. So our footprint today, we're in Boston, we're in Pittsburgh, we're in Las Vegas, we're in Singapore. And we're also in Santa Monica and Seoul. So primarily North America, but with a significant presence in Asia as well. So the emotional, you know, emotional as a business is quite new. And so for many people, you know, they maybe haven't heard her name before. I've heard of john Reese just recently. But the team and the DNA actually goes back many, many years, as we just talked about, you know, within aptiv. Within nutonomy, our team was responsible for a number of really, I would say breakthroughs and first in the industry. First cross country drive from New York to San Francisco that was just about 100%. Autonomous that was a apip technology, the world's first open to the public Robo taxi pilot in Singapore. That was the autonomy that was us we're very proud of. And today if you go to Vegas, which is tough these days, but hopefully in a few months, if you go to Vegas, and you open your Lyft app, you can hail one of our vehicles emotional car through the Lyft app. You know, there's a good chance you'll get one of our vehicles if we got availability, we've given over 100,000 rides to members of the public to date. And we get a star rating just like every other driver at the end of our trip. And so, so far so good. We've got 98% five star or five ratings which we're very proud of so so that's a little bit about our footprint, our background. You know the name itself motional took us a while to come to that name. You start a new company, one of the fundamental questions of all we're going to call this thing but motional For us, it's really about motion, which is so obvious, but also emotional. You know, one of the things I realized that we realize is that transportation, mobility, how you decide to get around has become an emotional decision. And I believe that's not going to go away. So for us, it's about connecting this choice of how you're going to move through the world. connecting that to your experience as an individual, and putting people first and everything we do, even though we're developing, you know, kind of basic technology. It's literally about motional. We tell you a little bit about Pittsburgh. So Pittsburgh, is really special to us. I mentioned some of the heritage, it actually dates back to 2013. That relationship between aptiv and Carnegie Mellon, and automatic around that time. And we've really been in Pittsburgh since that period. So we have been testing driverless vehicles on the road

for about seven years for almost a little bit over seven years. So proud of that fact. We had previously had a bit of a distributed footprint we were in we were in several sites we've consolidated now. We've got a single office, which is at no 19 in Hazelwood, green, which I think everybody in Pittsburgh has heard probably a lot about, right? Yeah. That's our big new Pittsburgh Technology Center. We've got about 300 employees there. And we've got capacity to expand fairly significantly. And so Pittsburgh, mill 19. For us, it's got engineering resources, it has a workshop, it's got vehicle development and build you really everything under one roof. And we're super excited about it. So a little bit of background about myself, I'm motional. And happy to have

me jump. You said that if we're in Las Vegas, that we can get lift we can get emotional what what do we get? Like what shows up?

Yeah. So what you'll see you'll you'll open your app, a normal list app, not any kind of special download, you'll get a prompt that says, Are you interested in potentially taking a driverless ride today? You can say yes, you can say no, some people, if they're not interested in the technology, they may opt out. But if you say yes, and one of our cars is available on the network, we'll come and pick you up. Now, the technology today, we've still got what we call vehicle operators in the in the car, they're there to monitor the system to make sure you know, all system circles. So they're sitting behind the wheel, but they're not touching the wheel. They're not touching the gas, the accelerator or the brake. So you'll get in somewhere on the strip, we operate in a but almost 20 square mile area 80 square miles. So if you're on our on the strip, or downtown Las Vegas, and you want to go to another casino, you want to go to a hotel, you'll have basically a trip where you know, our technology, our system is controlling all the decision making on the road, the steering, the throttle, the braking. And we've got our engineers there, again, to monitor the system to answer questions about the technology, etc.

So here's that's, that's phenomenal. And that's great. And it's it is, like I said, you know, it's been a long time coming and your, your capability is amazing. So tell me about how you've been able to grow in March right at the onset of COVID.

Yeah, yeah, you know, this is something that I think every, every CEO, every HR lead every everyone who's in the C suite of a business, large or small has had to deal with, with COVID. You know, for us, we were at the beginning of the growth phase, as I mentioned, and I was excited at the beginning of you know, March thinking, well, we're going to expand significantly COVID hit, my first thought was that this is really going to crimp our growth plans, I thought it was going to be a challenge for people to be willing and able to change jobs, because we recruit, you know, from all over the world from various different industries. But I would say I was pleasantly surprised that people were willing, I think we've seen willing to really quickly adapt to the new normal around job interviewing around getting to know their colleagues around getting to know, an organization. And so we've been extremely successful this year in growing our team. Obviously, there's also been, you know, some opportunity, I mean, other industries have not been in growth mode, the opposite if they've been hit hard by the pandemic, there have been a lot of really strong, talented people looking for, you know, their next job. So, for us, it's meant significant growth, and that's going to continue into 2021.

Is that growth been tied to new investors.

Yeah, you know, with a joint venture, that that $2,000,000,001.6 billion of that was cash. The other 400 million was engineering services and other activities. But it was 1.6 billion in cash. So we started the pandemic, with a very strong cash position. And to be totally honest with you look, we saw it as an opportunity, we saw that some of our competitors would potentially be maybe moderating their growth or maybe even retrenching a little bit. And for us, we said, well, there's going to be great people available. We've got cash, we want to expand, let's just go make it happen. But I do credit, you know, I think the talent acquisition teams of the world have been had to be nimble and adapt their practices and emotional has done that they've done a very good job of that.

And so how many people are in Pittsburgh right now?

Little under 300. I want to say we're at about 290. Jim can correct me if I'm wrong on that. And then

are we what's the trajectory?

trajectory is, you know, significant growth, I believe we've got space for at least 400 at the facility. And it is a you know, it's a massive space, I think the sky's the limit in terms of potential future expansion. And we've got, what do we have 70,000 square feet there. So we've got, you know, a meaningful chunk, our neighbors, their great neighbors, Carnegie Mellon, a couple different labs of Carnegie Mellon. So we love the recruiting landscape. I think when you talk to anyone, especially in autonomous vehicle space, Pittsburgh has become generally acknowledged not just by us, but by everyone as as the premier space in the world, not just the country, but the world for recruiting robotics and driverless vehicle talent.

Right? We see that yes, it's a 40 year overnight success, as I mentioned earlier, so tell us in Scott details, a question and then I think you have a question. So if we could grab those really quick.

So thanks for joining us, Carl. Really appreciate them. love learning all about emotional, this is really exciting stuff. So Scott wants to know, with so much already happening with autonomous vehicles in Pittsburgh, what is the future of the sector for Pittsburgh will provide long term substantial opportunities in manufacturing in our region. What are your thoughts?

Well, today, certainly r&d, you know, it really is connected nicely with Pittsburgh's deep established academic, you know, strength, right? We're drawing on those individuals. I mentioned this kind of transition from research to road. So it's the folks from the Carnegie Mellon's of the world, and people who have come to the Carnegie Mellon ecosystem, it's the robotic startups that have been formed over the past 20 years. So from an r&d perspective, this is these are durable investments, these are long term investments. You know, the auto industry is an industry that historically has been not always the most nimble, I would say, you know, they don't turn on a dime. They are carriers, you know, rather than, you know, nimble destroyers, but when they do turn, they've got a lot of momentum. I think everyone, the auto industry recognizes that the potential for autonomous vehicles is is virtually limitless. But it's a fairly, you know, it's a long term play. We've got cars on the road, we've got great technology development, but it'll be some time before we have autonomous vehicles in every city in the United States, or in, you know, most many cities around the world, it's going to take some time. Right. So the investments are long term investments. From a manufacturing perspective, it's a bit of a different question, you know, that starts to raise questions on partnership. And for us as a technology company, what vehicle manufacturer are we partnering with, to build these next generation cars of the future, if you will, and everyone is, you know, us, our competitors. We're all answering that question a little bit of a different way. Our partnership with Hyundai it's really it's a bet that we can leverage motional technology development experts, expertise, and Candyce vehicle manufacturing expertise, you put those together, and all of a sudden we've got that car of the future. Now, what assembly line is that going to roll off of? That's still a little bit of an open question, something we're working on today.

So, um, before we get to Jonathan, I'm gonna lob one question, but I think I heard that you said, you were in Detroit, you raised in Detroit, is that right?

And so yeah, that's right.

Right. So you have so that's the heart of what was the auto industry there. So I got very excited because, you know, there's like a Pittsburgh Detroit kind of competition that often runs, runs amongst us. So I like Scott's question for that. But do you have a presence in Detroit?

Yeah, we don't today, our parent companies do active. So absent was previously known as Delphi technologies, which was previously part of General Motors. And so they have a long history, Detroit and, you know, all the major automakers do, but for us, as motional as a new business You know, our focus is primarily software development. Most of our employees spend their days writing software, it's a little bit of a, you know, car 2.0 or 3.0. So it's interesting that you bring it up. But I've never felt that having a presence in Detroit was an absolute necessity. Now, of course, we have partners, their potential partners, potential customers, were there frequently. But this is, you know, it's not my father's car industry, he worked in the car industry, but it's not like you have to be in Detroit anymore. You know, it's the Pittsburgh so the world is the Singapore's of the world and these other places that now we're seeing a lot of activity in the driverless space.

I've been saying that forever, and I didn't even lay you up for that. So I totally love that don't need to be. So just quickly, I'm gonna go to the questions talk about your relationship with local governments. Can you talk about that? Because that's a strong piece of the work that you do.

Yeah. Oh, yeah. Yeah, you know, it's essential, because, and not just our industry, any new industry that has an impact on members of the public, you've got to work with the government? Look, I believe that, I know that there are alternative models, where you just put things in front of people, you, you wait for them to want it, and then you know, you go from there. But for us, we're developing technology that look, you're it's going to be on the road next year, you're going to be sharing the road with it, as a driver, as a cyclist as a pedestrian, we felt it was very important that we've got the support of the local government. And, you know, it's easy to get support for when things are going right, when you really need that support is when things aren't perfect. That's when you're gonna lean on that relationship. So every city that we operate in, we make it a focus on building a strong relationship with the government is true in Boston. Very true in Singapore, in Pittsburgh, you know, we've been working with Mira puto, we worked in 2018, under executive order for testing. So we have permission to test now throughout Pittsburgh, we operate today. In beaver County, and Allegheny County, we comply with the 10 dot they have some standards around data sharing another kind of rules of the road, if you will. So I would characterize it as a close working relationship. We feel like that's the right way to proceed.

All right. Well, Jonathan, you want to grab some of the questions?

Absolutely. Here. So let's meet scroll here from from Dave domains here. What's new here? have legal liability circumstances evolved enough to a settled state in any way to the point of being a non issue for the advancement of autonomous vehicles?

That's a great question. You know, the answer is they haven't. It's still a bit of an open question on who's gonna, where the liability is going to get a fall in incidence of of accidents in the future. And I think the reason for that is largely because we're still a little bit of an advance at that stage. You know, the driverless industry, not just us, but but the entire industry doesn't yet have big enough fleets on the road, where this has become an issue. But it will, at the end of the day, this is an automotive technology, the auto industry has a lot of experience, for better or worse, dealing with this issue. So what we do know is this isn't going to be a showstopper for us, we know that we're not going to be you know, put out of business by this issue. We also are convinced and I mean, we wouldn't be doing this if we weren't, but we're convinced that the technology is going to be safe for them a human driver. In fact, we won't put the cars on the road until we reach that point. So given that you've got this safe technology that's actually going to improve road safety, rather than make it worse. And the fact that this is this is not unknown terrain for the auto industry, you know, we're going to move forward, we're going to do it in a very safe way. And I'm confident that we're going to get all these issues sorted out, but a little bit hard to predict, you know, some of the cases that we're going to face because it is it is new terrain. It's a new technology. Right.

So what about your thoughts on making your technology available via Lyft? Here in Pittsburgh? kribi Vegas party.

Yeah. Well, it's interesting. there's a there's a bit of history there. You know, we wanted to partner with left we started a small pilot activity in Pittsburgh. And we had we had previously you know, put put some, some brick and mortar in place in in Vegas. Sorry, I think I said Pittsburgh with Vegas. We previously had an operation in Vegas. We were looking for a place to do a partnership. Love Pittsburgh, I will tell you what Vegas can offer year round is good weather. And it turns out that's actually unfortunately, still a big issue for these cars. They don't do as great in inclement weather. They like nice conditions. Let me put it that way. It's due to the nature of the sensors and the maturity of some of the components technology. So when we looked at it across all of our sites, we said what's there place to get started. A place like Vegas looks very attractive. So that's the plan for the immediate term. wouldn't rule out Pittsburgh, certainly. But we don't have a plan today to do like a lift launch in Pittsburgh.

Okay. What else? Jonathan, any other questions?

They keep coming in? I have my own question to them. Okay, so we've been seeing some headlines about Ubers, Advanced Technology Group talking to Aurora. What are your thoughts on some consolidation, especially in the Pittsburgh area?

You know, we've already started to see consolidation in this industry, I think it can be it's a natural evolution of the space. And I think you see this across sectors, you have a new area, a new idea, a new technology space, you see this kind of explosion of startups of new entities. And over time, there's consolidation for different reasons. Some entities don't make it. Some entities decide to join forces with a competitor. There is, you know, more traditional acquisition, whatever the case may be. And so, you know, I read the report last week, clearly, at the moment, it's it's, it's not nothing seems final. So on the one hand, not surprised, I think consolidation will continue. You know, Aurora is an interesting company, it's a small world, driverless, driverless technology space. So we know all those guys. In fact, one of the founders of Aurora was my former student at MIT. So long history with these companies and wish them the best. We don't do them as a primary competitor. They're focused on automating trucks rather than passenger cars, or taxis, which is what we're trying to do. So wish them well. But we'll see what happens should be an interesting deal if it happens.

Another question, Jonathan. Yeah, there's

so many obviously, how do you view competition with Tesla of all places?

Yeah, and, you know, I'm gonna sound a little bit like a broken record. Again, it's a little bit different. The Tesla, with their offering right now, it's remarkable, honestly. But it but it's a different system. It's, I view it as a great driver assistance system. Now I know, it's called auto pilot. I don't love that part. I think it leads to a little confusion, what it's intended to be as something that helps you drive better. And I think if people treat it as such, and don't fall asleep in the car, and things like that, I think that's great. But I think even you know, Tesla, if you press them, they would they would not claim it's intended to be a replacement, a full replacement for the driver. I think they're hoping they'll get there someday. But today, that's not I think, where they're, they're focused. Now, what we're aiming to do is build a system where we have very high degree of confidence that we can have no one in the car. So we've got no driver, sleeping attentive or not an empty car, which can pick someone up at their residence or workplace and take them where they want to go, if you can realize that our goal is to do that, you know, the economics are incredibly favorable, because you don't have a human driver. You don't have that part of the cost of the trip. So there's a there's, there's a there's different business models at play here. We're more focused on what we call mobility services. And Tesla's more focused on you know, selling cars to individuals and making that individual driving experience as good as they can.

So let me ask something, do you drive a car? What kind of car do you drive?

Well, my wife is from Sweden. So for many years, we had a choice between Saab and Volvo and then Saab went bankrupt. So we drive Volvo about a Pollstar. That's actually a beautiful looking car. Yeah, that's on my wish list.

I love songs, didn't realize that. So is there. What do you think that we may have missed out? I know, there's a couple of other questions. And we're coming to the end. We might have time for one more question, Jonathan. What about the IP question that Jim for an off house?

Yeah. Have you ever had a David and Goliath issue with Hyundai particularly around IP and funding and ownership?

That's interesting. So I don't know how many folks on the call have been part of, you know, m&a, or joint ventures? You know, it's interesting. I think, naturally, you think, you know, what are the dynamics between parent companies, but in our particular case, you're a big company like chunda, you see a new technology, I think, sometimes big companies, and many of them acknowledge this have trouble creating new ideas, new technology, being nimble enough to really move quickly after a new important into a new important technology space. I think young guy to their credit, they sort of acknowledged that. So they've been hugely supportive of what we're doing. They made a big investment into us, number one, number two, we're now you know, the 50% on a certain asset, Sunday's balance sheet, as we do well as we create value that accrues to them as well. So, you know, we have, we have great relationship with our parent companies. Everyone's interests are aligned and you know, So far, so good. It's been a great experience.

So, given the fact of your commitment to Pittsburgh, which we all appreciate, because these people really are building tomorrow, besides from the incredible talent that in the assets that we have here, what is surprised you about Pittsburgh? Just overall, yeah. What do you say to other people? You know that when you're Yeah, conversation about Pittsburgh?

Well, you know, I would say two things. First time I went to Pittsburgh, I was actually surprised at what a beautiful city it was. And I say that in earnest, I think people have a fairly gritty view of history. I mean, look, I don't, that's not a criticism. I grew up. I said, it's right. So I'm not criticizing anything. But you go to Pittsburgh, and I saw rivers and hills. And I will tell you, there's not many of those in the Detroit area. So you're kind of blown away by that. But also, again, Pittsburgh, there's this external view, you know, Pittsburgh has this kind of rough exterior. But then again, you've got such a strong and deep technology talent base, not only in my domain, but in, you know, across domains, certainly in the medical space and other sectors as well. So just the, the depth and kind of the wealth of talent there is really remarkable. It's been a really good place to do business. You know, from a cost perspective. It's attractive, I wouldn't say it's low, but it's not Silicon Valley. So huge number of positives. I was. I'm always depressed when we see more competitors coming into Pittsburgh, I'd like it to be a little bit of a seat, you know, a secret, but it's I mean, the secrets long out, unfortunately, secret's out. Well, first of all, thank

you so much. And hopefully you take care of yourself during these times as well as your rapidly growing, you're a seasoned entrepreneur, and any advice to give entrepreneurs as they're going through this journey overall?

Yeah, well, don't think about the downside, you know, don't look down. Just stay focused on the future, growing value growing your business. And if you've got a good idea, I'm in the US today with the venture capital landscape with the funding landscape. It's a great, it's a great time to start a business, I'm convinced to that.

Okay, Karl, we're at our time, we went just a little bit over, we had some great questions. Thank you for being a great ambassador, thank you for investing in Pittsburgh. Thank you for having an amazing vision. We will stay connected to you as hopefully you will with us. And thank you to your team that's here. Jim Margherita made sure that that this happened, and this conversations are really appreciated. And thanks for being such a good ambassador for Pittsburgh. I think you nailed it. So I want to thank everyone for joining us today. I know there are a couple of other questions, and that we didn't get to and I deeply apologize for that tomorrow. We have lieutenant governor john Fetterman. So who will be talking to us about lots of things including looking at the legalization of marijuana in the state of Pennsylvania and other things that he's been involved in. So thank you again to motional thank you for your leadership and support. And we will see you here tomorrow at the same time. Thanks, everyone.

Good stuff.

Transcribed by https://otter.ai