Encore: Could Amazon’s Zoox Beat Tesla and Waymo in the Robotaxi Race?

0:00Millions of Americans use credit cards to purchase goods every day. The Durbin Marshall credit card mandates put the secure transactions you rely on at risk, leaving you vulnerable to hackers and foreign cyber criminals that want your data. Hackers win. You lose. Guard your card before it's too late. Tell Congress your data security is not for sale and oppose the Durbin Marshall credit card mandates. Paid for by Electronic Payments Coalition. Hey listeners, Christopher Mims here from Bold Names. we've got something a little different for you this week. Tim and I have been talking a lot about robo-taxis lately, and we thought this was the perfect time to revisit one of our favorite interviews, Aisha Evans, CEO of Zoox.

0:49Just in time for Hot Robo-Taxi Summer. You might have heard our conversation earlier this year, and now that Tesla is officially testing its self-driving cars on streets in Austin, Texas, and Waymo is expanding, Evan's insights into the robo-taxi business are even more timely. And make sure to stick around after the interview because we've got a brand new segment where Tim and I go deep into why the stakes are so high as these companies try to win customers' trust, especially people who you might not think of as robo-taxi riders, like parents tired of driving their teens around, people like me.

1:30That's next.

1:36Recently, my co-host Tim Higgins took a ride around San Francisco in a vehicle made by Zooks, Amazon's robo-taxi startup. Yeah, we'll ride forward. Why not? Okay. It's your first time, so... Yeah, oh, should I sit over there? No. All right. Unlike some of its rivals, Zooks' vehicles don't look like traditional cars. They're sort of like toasters on wheels. Or maybe a theme park ride that hopped off the rails. They don't have brake pedals or a steering wheel. Just two rows of seats facing each other. It's almost like a lounge. It was actually the London Cab was the inspiration. You can go ahead and press toy for your ride.

2:17Yeah, there you go. And yeah, the whole thing is we don't want you to think about driving. We want you to think about being transported. Tim hitched a ride with Zoox's CEO, Aisha Evans. Before this, she was a senior executive at Intel. And after she was brought on board at Zoox in 2019, she sold the startup to Amazon for$1.2 billion. She's a skilled manager who in many ways has met this moment in autonomous driving, a time when what she calls patient and smart capital is required to get to the end of a self-driving race that has proved to be a marathon. What happens if it approaches a driving situation that it doesn't understand?

2:57It just did, by the way. Well, this one it understood. It saw some people opening their doors, so it went around it. In an industry where scale could prove to be everything and safety is paramount, Evan's style of calm, steady-as-she-goes leadership could hardly be a bigger contrast with that of a competitor, Tesla CEO Elon Musk. But Amazon has put a lot of money into Zoox, which will be starting a commercial robo-taxi service in Las Vegas this year. This is not an industry where companies can afford to be cavalier with safety, and Evans knows it. If you do a prompt on one of the best AI engines today, and you know it's 99 % right, maybe it's annoying, but that's okay.

3:38In our space, if it's wrong 1 % of the time, that is not okay. You just can't, that's not acceptable. The bar has to be way higher than that. From the Wall Street Journal, I'm Christopher Mims. And I'm Tim Higgins. This is Bold Names, where you'll hear from the leaders of the bold name companies featured in the pages of the Wall Street Journal. Today we ask, what was it like taking over a self-driving car startup at a major turning point in the industry? Ayesha Evans, welcome. We want to get into Zooks' plan for deploying robot taxis, but first, I think it's worth taking a little journey back in time to about how you and Zooks got to this point.

4:21It's almost exactly your sixth anniversary taking over Zooks as CEO. You'd come from Intel before. And your arrival was really a turning point for the company. But it was also, as we would see in the months that followed, a turning point for the driverless car industry that had been up until 2020 in overdrive. Very frothy, as we like to say here in Silicon Valley. But then the cash was disappearing. So I'm curious, when you took over, what was your first priority? My first priority, like I would call it priority zero, is you're coming in from a very established company. I told the team that I wanted them, I knew it would be okay when they would not remember that I wasn't here at the beginning.

5:05And so talking to a lot of people, understanding what's really going on, getting a feel for the industry. After that, I went to priority one, which was it takes a lot of capital and a lot of patience to do this. And so we needed to solve that. What was your strategy for pivoting Zooks' strategy with these employees? Many of them had begun with this scrappy startup with a very charismatic founder who had really bold vision for where he was going to take Zooks. So what was that like for you? It was lonely, but it was, look, I have a slightly different view. When you think about, essentially, these are computers on wheel from a technology standpoint.

5:51They have to be safe, not just 99 % of the time, but 99 points, pick your number of nines. We think it's four plus. That's a lot of work. You're bringing also a variety of experiences, background. One day you're talking to kind of an AI genius at the forefront of things. The next day you're talking to, you know, a car mechanics kind of person and then a battery person. So bringing everybody together and saying congratulations, because you have to have some audacity and boldness to go after something like this. And so thanking them, congratulating them and then saying, OK, but what got us here won't get us there.

6:32And so this is going to take time. We need to slow down, stop with all the talking to the press and making bold claims and go back into the building and sort of figure out, A, the capital and partnership situation, and B, build a roadmap that is incremental, that is deliberate, and use a lot of analogies and know that it's going to take a while. This is almost like the beginning of aviation in a way. And one of the big things you did almost immediately was look at that capital table, I imagine, and say, oh, we're in trouble, right? I mean, and that puts you on a road, a path to eventually being acquired by Amazon.

7:11That is absolutely correct. And look, it's not just you need money. You need what I call patient and smart capital, meaning people who understand deep tech, people who can see a bold vision and the steps towards there, people who are close to the compute industry and who are not going to oscillate too much and who can afford to take a bet like this. And when you do that math and calculus, there aren't that many companies. We're thrilled that we went with Amazon. And even though the press wasn't kind to me at the time, I'm very, very grateful and proud that we made that move. It freed us up to go after the work as opposed to making claims and demos.

7:53And, you know, because demos are very easy in this space. They are getting even easier. But getting this thing to work, to be safe, to operate, to wow the customers and build a business, very different movie. So speaking of wowing the customers, one of the things that's so distinctive about Zoox when you first encounter it is the fact that your vehicles look like they are from maybe the near future. It's not a Cybertruck, but it's a lounge inside with two benches facing each other, right? It could go forward or backward. It feels like a happy, benevolent future. Everything runs on wind power and there are no more car accidents.

8:36Obviously, that's deliberate, but what's the thinking behind that? First of all, if you step into that vehicle, when we fully commercially deployed and you think about driving, we failed. We want you to feel like you're being transported. Then there is at scale, the level of safety, the level of control, the level of redundancy that you need negotiating with somebody who might be a company that's a traditional OEM that's in a different mindset will take more capital, will take longer, more meetings, more back and forth and more detours, and really take away from solving what's really a very hard problem.

9:16OEM being lingo for carmaker out there in the layman's world, which is, I think you're kind of getting at something we're going to get into, the idea that you're actually making these cars yourself, unlike Waymo Google's effort, which is kind of taking a car and putting its equipment onto it and converting it over. This is ground up for Zoox, which was a pretty radical idea given how much capital is going to be required, right? You were not only developing the self-driving brain, but you were also developing a car. And that is very audacious and very grand. So I guess I'm curious, what is that timeline or how close to having paying customers in the vehicles are you?

9:59We're getting closer and closer, but, you know, paying cost the journey. It's funny. We just had a meeting yesterday and I was talking to some of the leaders and I'm like look it took us 11 years to put this robot taxi that we love even to this day when I sometimes I'm driving around and I see a couple whizz by I giggle I'm happy and so but that took 11 years let's not have a disrespect for the journey to commercialization and customers that's going to take some some time so we will dip our toes into it later this year. We'll learn a lot, but it'll be small scale because again, that's a new journey.

10:40And the next couple of years are really exciting for us. And so right now, you're currently at the what? What is it currently available? Because I'm in San Francisco and I've seen these vehicles on the roadway. What's going on? We're testing. We just started testing in San Francisco in November and also in Las Vegas from our depot, which is southwest of the Strip, all the way up the Strip. We finally have friends and family riding, which is really cool. And of course, you know, select VIPs, whether it's press, regulatory and execs and what have you. And so we'll go now into the phase where they'll be able to ride without a Zoox host and push every single button.

11:27And then we'll shortly add what we call Zoox Explorers, which will be people that we will sign up and will have the ability to ride whenever they want. That period where somebody will be in the vehicle and I don't even know who the hell they are. And they'll give us feedback. So all that is planned. So we're at the end of Tiny and entering the beginning of Small and then paying customers later this year. We've heard how Zoox is aiming to be a transportation company that makes you forget that cars even existed. But making that happen will require solving a lot of hard and occasionally gross real-world problems.

12:05What happens if somebody pukes in the car? Oh, this is, especially in Vegas, I suppose we could be prepared for that. What happens in Vegas stays in Vegas. Maybe it stays inside the back of a Zoox. How will Zoox handle the mundane realities of operating a fleet of vehicles that people are prepared to occupy, if not drive, like they stole them? Stay with us.

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13:08so as you're moving toward paying customers i'm really curious even further out how this business works just on a fundamental profit and loss level what is your kind of unit basis for this because obviously with uber the reason they have worked as a business is they don't have to own cars they don't have to have the risk of owning those vehicles. You know, all of that's taken on by their drivers, but you have to build vehicles, own them, maintain them. You know, even if you're not paying wages to a driver, it seems like that might be hard to pencil out. So how ultimately do the unit economics on this work?

13:52So I'm going to be really careful. First of all, I'm going to back up the boat a little bit. You've both said twice build. So let's talk about what we do with the vehicle. We architect and design it. And then we work with a global supply chain. And then what I would call 20 big Lego pieces arrive at our factories. We have a prototype factory that they arrive at. And then from there, we do assembly, test, integration, bring up, and then ship off to depots where they will operate from. So I want to be very clear, There's no gigafactory here. There's no any of that stuff. So in our case, volumes are low.

14:32Because it's our fleet, we know it super well, the robot, because we designed it, we architected it. We put a lot of features in it, thinking already about operations. That's, again, a first principle thing. The robot pays for itself very quickly. at the current prices that folks are used to with the ability to bring down the pricing over time as you're going to different phases. I was at Intel beforehand. I don't know a lot of hardware businesses that have a lot of software and algorithms that pay for themselves overnight. And if anybody pretends that they know how to do that, I will just tip my hat to them.

15:16There's going to be a buildup where you'll need profitability all the way to margin and all the way to the phases of free cash flow. That will take time. But the opportunity is immense. And we also think that the time will be expanded because there are a lot of folks who don't ride today that will ride in the future. I was telling Tim I'm a soccer mom. And now I'm lost with myself because my daughter is in college. and I'm like, why do I have so much time? And I know I have so much time because I am not driving up and down the peninsula in every nook and cranny, dropping up and picking up kids for soccer.

15:55As a minivan driver and owner, I definitely identify with that. And it's also been amazing to see the pickup of Uber's new product for teens, right? Which of course bolsters your thesis now, which is there's a huge potentially untapped market. I mean, it doesn't take much imagination. But I think that one of the things, and we've kind of been alluding to it, there's other costs. It's not just the technology. There are other challenges that you have going on there. I think conventional wisdom might be that you just flip a switch and the robot goes to work. But it's not that simple, I'm betting.

16:35No, it's not. It's more like aviation than it is like the robot vacuum going around your house. Look, I mean, we have to have a lot of respect for this. This is a very big, heavy robot that is roaming around and driving amongst other human drivers, by the way. And when you look at the math, whether it's collisions, whether it's injuries, whether it's fatalities, when you look at the ability to not make mistakes, obviously, or at least minimize your number of mistakes, but also react to other people's mistakes, it's an infinite long tail. And so we've been very open and very transparent that we have a teleguidance center, almost like an air traffic control tower type thing, where there are operators that the robots can call for help.

17:25If it sees a situation that it knows it doesn't know how to handle, imagine like a super, super, super, super unstructured construction zone or some blockage that it's not sure how to maneuver around. it has the ability to call and say, hey, over this period of time and over this distance, I see something that doesn't make sense to me. I either need a permission to break a rule or it can receive an alternate trajectory via breadcrumbs that it is still in charge of deciding it's safe enough to maneuver. And so obviously, my team's going to kill me for saying this, but But I've always said, look, if I'm going to need one or two people for each robot, we might as well not do this because then it's already being served today.

18:14Right. It doesn't work if you've got one person who's watching one car and then another person who's cleaning it. But as you scale up as a business where one person is watching X amount of cars and one person is taking care of X amount of vehicles, you start to get some scale and some savings. And that's where you see the business going forward. Absolutely. What happens if somebody pukes in the car? this is uh especially in vegas i suppose we could be prepared for that what happens in vegas stays in vegas maybe it stays inside the back of a zoox there you go you can use that tagline if you want for your advertising i will i will give you credit for it uh so basically what we do is we're monitoring the inside of the the vehicle and uh that vehicle would be pulled out of base and either out of the fleet and either go to a hub or go back to depot.

19:10Given what your goals are, it's hard to see a connection to Amazon other than as patient capital. But is there a connection there? I mean, they're fast becoming the world's biggest logistics company. I could see some potential overlap. But are there any ideas about that? Have there been in the past? They are more than patient capital. They've also done a lot of different businesses. There's a lot of experience there. And so they also give us really good advice. They challenge us. The first order of business is to deliver what we've said, because, again, it makes sense that if it's this hard to solve the problem and we all drive on the same roads, right?

19:51The trucks, everybody drives on the same road. So our first order is to deliver this business and build it, grow it. We've had conversations about other things we could do. Obviously, delivery is one, but that's a tough problem to solve. And it still goes through solving the first problem to begin with. Who do you see as your biggest competitors at Zoox at this point? Is it Waymo? Is it Tesla? Is it just Uber with drivers? So I'm a little different than most people. This is a big industry. I try and have some respect and humility. And so I have called them fellow travelers. Because I was not confused that I was going to be alone or we were going to be alone doing this.

20:38That to me would be delusional, at least the way I think. So its fellow travelers were also indirectly in the safety business. What either of us does affects the other, whether we like it or not. So the way I would answer your question is that we've always thought that there would be a wave of consolidation past the demos. and it would be three to five players in America, probably up to 10, 15 in China. And then Europe will see what happens, as is the case in many different industries. Three in the US, and you think maybe Waymo, Tesla, and yourself. Who's Coke? Who's Pepsi? What are you? Oh, I'm...

21:26I'm trying to... I'm an excellent chai latte.

21:32Well, I guess I'm curious on that field of competition. I get what you're saying, and it's still probably a few years away before the competition gets very intense, and we all know it will. But I wonder, how do you compete against the likes of a Waymo or a Tesla? Because in a lot of ways, if the robot is driving, it's almost a commodity experience. Is it a race to the bottom, or is it a race to create the most luxurious box on wheels? So we look at it as the customer experience and the full end-to-end experience, including customer support, by the way, is going to be key. We think that our experience is magical.

22:13I mean, this is your space. You don't think about driving. You're not like, oh, the wheel is moving. Is that okay? Or anything like that. It's like whatever you were doing before you entered, you can continue doing it. I've had some people crank up the music and start just rocking out there. I've had some people just meditate. So the personalization, the simplicity, all of those things are what we think we will offer. And we have a parent that knows a lot about operations, that will teach us a lot about operations too, which is key because little things like that matter. Pick up and drop off, wait times, when something goes wrong, how do you react?

22:53How quickly do you react? And so we think that will be up there in terms of that. It's almost like, yeah, it's a first-class seat, but you paid coach. You paid for coach. We just heard about how Zoox will tackle the nitty-gritty of rolling out a fleet of robo-taxis. But the company faces the additional challenge of rolling out a vehicle that looks like almost nothing else on the road. This almost wasn't the case. And the history of the company's funky ride is a tale worth hearing. All of my mentors, friends, sponsors would be like, the first thing you need to do is get rid of that vehicle. That is the first thing you need to do.

23:26Those people are crazy. That's next.

23:57You mentioned that you think in the US will probably be three big players here, ultimately, after the consolidation is done. Obviously, Waymo is going from strength to strength. Tesla always feels like a wildcard to me because, of course, they have an incredibly deep bench of talent. But, you know, the sort of revealed reality of their, you know, so-called full self-driving software, which is on the road in personal vehicles, is always that it can be a little erratic in ways that certainly folks find unnerving. But it sounds like you think that they're credible. Why is that? Like, can you kind of square that circle for me?

24:41It's just, I mean, it's not my, I don't like it when people criticize Zoox and tell us what we're doing or not doing, even though they have no internal information on what's really going on in here. So I'm not going to treat somebody or another company a way I wouldn't want to be treated. I don't know what they're up to. I know what they've said. And obviously, like, the same is true for us. The proof is in the pudding. I mean, when I arrived in whenever it was six years ago, the number of people, I mean, all of my mentors, friends, sponsors would be like, the first thing you need to do is get rid of that vehicle.

25:13That is the first thing you need to do. Those people are crazy, blah, blah, blah, blah, blah, blah. And I was like, wait, what about I go in there and seek to understand and get a little bit more information? Because, you know, I'm not one that tends to think people are stupid. So I have to take them at their word. And it's the same bar we have. We can say whatever we want, but if we don't show up with a driving thing, then we have to shut up. At this point, Tesla is saying a robot taxi they plan on deploying this summer in Texas. Another competitor, Uber's CEO, told our colleague Joanna Stern in Davos that he didn't see humans being replaced in scale behind the wheel for at least another 15 to 20 years.

25:53Is that the time when robots replace humans behind the wheel or is it sooner? I want to be careful because that can be fairly inflammatory. Remember, we are creating a lot of jobs at all skills levels, and that's not going to stop. So I think we're just having humans do different things than being behind the wheel. look it depends on how you define scales if we're talking about covering the entire united states and even uh venturing internationally yeah i think that's a reasonable time frame uh but along the way city by city state by state you will see progress progress again if you have the uh the chance to be in uh in uh in san francisco it's pretty amazing no if ben and buts and and timetri please say thank you after this podcast literally you whip out your phone You download Waymo and a few minutes, you're good to go.