Investing in The Future
The conversation begins with Reilly and Grayson discussing what is going to happen when consolidation begins in the autonomous vehicle industry.
This is a period of consolidation because you have essentially a lot of the robo-taxi ideas turned into commercial applications, probably around logistics and parcels.– Reilly Brennan
Then there are the startups such as Bear Flag Robotics (acquired by John Deere – August 2021) and Gatik that have been focused on specific applications since day one. Shifting the conversation to industrial use cases, Grayson asks Reilly what his thoughts are on the industrial market as it relates to autonomy.
One of those specific industrial markets is mining. With global mining companies hitting record profits and Rio Tinto recently announcing a $7.7 billion half-year dividend, Grayson asks Reilly if a global mining company could potentially acquire an autonomy startup.
No doubt. Electrification and AV to those specific players is as much on their mind as the way you would think about DHL, UPS, Amazon, etc adding autonomy and electrification to theirs. It’s just a component of how they make money or will make more money in the future.– Reilly Brennan
There is a growing segment of the startup market has is beginning to focus on the opportunities in the industrial market. One aspect of the startup industrial market that is booming is the autonomous trucking industry.
The autonomous trucking industry is generating revenue and shoring up the supply chain through automation, as consumers battle ever-increasing inflation. Reilly rightly points out that this industry is heavily dependent on partnerships to scale and return capital to shareholders and investors.
One of the key partnerships in the future will be railroads. Grayson makes a prediction that in the next 18 to 24 months, a railroad will buy an autonomous trucking company.
Another segment of the industrial market is maritime. Looking at investment opportunities in the space, Reilly is currently studying hydrography and shipping routes. There is an emerging opportunity to map waterways which will increase shipping efficiencies.
The depths within ports can change so much that it impacts how much payload you can take.– Reilly Brennan
As maritime shipping routes get optimized, it’s time to allow autonomous trucks to enter and operate at ports.
The partnership dynamics of autonomous trucking is arguably one of the most important parts of the business. In fact, we have seen some of the logistics companies take investments from entities that own or have access to those ports for that specific reason.
It’s a fundamental question that there is not any one company, even Waymo that can lay claim to a leadership position for those specific pickup points. That is a big opportunity and in fact, it’s probably more important than saying you are running 10,000 trips a day on this route in Texas.
If someone came to us and said if I secured the access to these specific vital ports in the United States, I think that is actually saying something a great deal.– Reilly Brennan
Staying on the topic of Waymo, Grayson asks Reilly if Waymo will eventually split into two separate companies: Waymo Via focused on autonomous trucking and Waymo One focused on autonomous vehicles.
It has always been a question in my mind whether we were at the point in this area of autonomy where you could have a multi-silhouette autonomy company.– Reilly Brennan
Is Waymo the only company that could pull off a multi-silhouette approach to autonomy, because of Alphabet’s continued long-term financing commitment? It looks that way as Aurora has seemingly shifted a majority of its focus to autonomous trucking.
For companies that don’t have a Google as a supporter and an investor, I think you probably have to pick one thing you are world-class in.– Reilly Brennan
Without an Alphabet-like financing partner, does Aurora get to a crossroads where they decide to sell off their autonomous vehicle division and focus solely on trucking? It’s a possibility as the autonomous vehicle market is beginning to consolidate around Argo AI, Cruise, and Waymo.
Then there is May Mobility which is focused on structured routes. Pick-up and drop-offs from airports are a huge opportunity that the autonomous vehicle industry is currently not exploiting. The true opportunity for airports and AVs is in resort towns with limited traffic and high-amounts of passenger traffic during predefined periods of time throughout the year.
Looking at the overall investment landscape, Reilly shares a story and his insights into how the team at Trucks VC uncovers potential investment opportunities.
When we look at companies, we tend to not really look for ideas, we kind of just wait for great founders to reveal something to us and then we get onboard.– Reilly Brennan
Wrapping up the conversation, Reilly and Grayson discuss the circular economy and the future of electric vehicles.
Recorded on Tuesday, March 1, 2022.