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Why Uber will win the scooter wars

Sidecar co-founder Sunil Paul unpacks his thoughts on the future of transportation on Recode Decode.

Uber CEO Dara Khosrowshahi onstage at Code Conference with Kara Swisher
Uber CEO Dara Khosrowshahi
Asa Mathat

On this episode of Recode Decode, hosted by Kara Swisher, Kara sits downs with Sunil Paul, the co-founder of Sidecar who recently penned a popular post for this site, “The scooter wars will be a bloodbath, and Uber will win.” In this podcast, he elaborates on why that is and shares his thoughts about the broader transportation industry, including self-driving cars, bike-sharing and vertical lift and take-off vehicles like Larry Page’s Kitty Hawk “flying car.” Now primarily an investor, Paul also talks about why Sidecar couldn’t compete with Uber and Lyft — even though it created ride-hailing features that are now popular parts of their products.

You can listen to Recode Decode on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts. Below, we’ve shared a lightly edited transcript of Kara’s full conversation with Paul.


Kara Swisher: Sunil, welcome to Recode Decode.

Sunil Paul: Great to be here.

Let’s do a little background. You and I have known each other for ...

A long time.

A dog’s age, as they say, like since D.C., in the early 90s. Can you explain how you were lucky enough to meet me then?

Well, I think I first met you when I was AOL’s internet product manager.

Right.

And then, I started a company.

I think you were the demo boy. That’s what I think you were, weren’t you? You showed me some demos.

I think I was a demo boy.

I recall demo boy-ing for Steve Case.

Somehow, that didn’t make it on my LinkedIn profile.

Okay. All right. You were working at AOL. What products did you work on there?

Basically, all the early internet products: The web browser, FTP and HughesNet and all that.

How did you get there? What were you doing in D.C.?

I came to D.C. to work on a space station. My early career I was an engineer. I helped do the early design for a space station. Then I got really interested in policy because Congress kept mucking around with the space station. I went, spent several years as a policy analyst on the Hill for [the] Office of Technology Assessment. While I was there, I started mucking around with this new thing, that was the early ’90s, I started mucking around with this new thing called the internet and that ...

Mucking later. All this mucking later.

All this mucking later. Yeah, exactly.

You moved to AOL. Why did you pick AOL? There were a couple companies there then. Remember UUNET, all the rest of them?

Yeah. Well, to be honest, because I got the job.

Right, but It was a hub of that.

It was.

I mean it was UUNET, MM ... the one, that other crazy guy believed in aliens.

I can’t remember that one. Oh, yeah, yeah, yeah.

But he was like UUNET, and then they got bought by a telco, one of the big telcos.

Right, ANS [Advanced Network and Services] was based out there, too.

ANS, yeah.

Was purchased by AOL.

It was a bunch of them out there. A ton of them at the time, and people don’t realize it was because it was near MAE-East, correct? Is that correct?

That’s right.

And then Gore was there, too.

That’s right. I’ve forgotten all those details. But yeah, I think it was a hub, especially Sprint and all these other companies had focused on that area and AOL, honestly, I’m not exactly sure why AOL started there but ...

Because it was near MAE-East, and yeah, that’s why, that’s really pretty much it.

Oh really?

Yeah.

Well, you would know, you literally wrote the book-

Yes, I did know, yes I did, indeed. So you were there and then you started a company with Mark Pincus from Zynga.

Yeah, that’s right.

It was called, I wrote about it ...

It’s called Freeloader.

Freeloader! I wrote about in the Washington Post, I did, it was one of the few ... you and Magnet Interactive were the only interesting companies in D.C. at the time.

Yeah, and we sublet office from them, it was that small, it’s like, “Oh, there’s another tech company in town, let’s go there.”

That was a good CD-ROM company, they made a beautiful CD-ROM, they made some beautiful ... no one bought them in the end, CD-ROMs. So, you guys started Freeloader. Could you explain Freeloader to the people who don’t recall internet history?

Well, Freeloader was, I like to say, it was the hottest thing on the internet for about nine months. And it was part of this category called push where the idea was ...

PointCast was the hot one.

Instead of ... PointCast was the big one, that was the big one, and PointCast and the concept of push was on the cover of Wired Magazine. We ended up building that company very, very quickly and selling it within, I think, five or six months of founding it. And thank God, because the whole category fell apart maybe six months later. It was an interesting lesson.

So what was the lesson? Because many young entrepreneurs are listening here.

I think one of the lessons is, everything seems like it’s going to the Moon and it doesn’t always go to the Moon, sometimes there’s things you just can’t predict. In that case, it turned out it was sysadmins that got tired of all this traffic coming in, mostly from PointCast, and started turning it off. And they turned us off as well and that led to basically the destruction of the entire category.

Right, and the concept behind push was that things would be pushed towards you, which the internet really is push now in a weird way.

A lot of it is, yeah. RSS feeders were the first version of it.

You’d want some news on blank, whatever you ... sports, or whatever you liked, and it would push it at you.

I mean, the iPhone does that for you without you even having to think about it today.

Right, exactly, but at the time, it was innovative, you had to go get things before, you had to go grab them and it was hard to grab.

This was when a 56K modem was fast.

Right, exactly, and so it was a big deal that this stuff, there were a couple big concepts like that. Six Degrees, remember that one?

Yeah!

Where it was sort of early Facebook.

The first social network, based in New York was started, I think, the same year. Yeah, Six Degrees.

Six Degrees.

I forgot that guys name.

I think it was Boston.

I thought it was New York.

It was a basement I was in, in Boston.

Oh, okay.

Yeah.

Yeah, that guy.

He sold the patent.

He also tried creating a kind of political network. I’m afraid that didn’t work either.

The internet is littered with all these companies. But nonetheless, you were early and then you guys both moved out here, right? The company that bought it was a mess, you guys got into big trouble with them, I’m remembering the highlights of it.

Yeah, we were purchased by a public company called Individual, that later got bought by someone else. But, yeah, part of the acquisition deal was, “We want to move the company out to San Francisco,” that was when Mark and I first met, at the end of the conversation, we were like, “We really should go do this in San Francisco.” But the urgency of, “There’s all this stuff happening, we need to get this product out there, here’s the developers, they’re already in town.” All those reasons, we started the company in Washington, D.C., but had the ambition to move it out to San Francisco eventually. So, after the acquisition, we moved, I don’t know, 30-40 people out here, it was the mid-1990s and South of Market was still only a few tech companies here or there. It was kind of unusual to be in, in San Francisco.

It was.

It’s so strange compared to today where ...

Right, there’s tons of them. So, you started it and then what happened?

Well, we started it and we sold it and then we moved it to San Francisco and the acquiring company shut it down ... months after, within a year, after we had moved it to San Francisco.

Which was a typical experience for a lot of entrepreneurs.

Yeah, that’s right.

So here you are.

It’s not a surprise.

There you were.

I mean the advice and, luckily, we structured a deal where, if they shut it down, we’d get fully paid out. Which, that’s not that ... a good lawyer will make sure you get that term in there. Yeah, so both of us were out of a job, we went and started thinking about new things. Out of that, I created Brightmail, which is the first commercial anti-spam company. Mark created what became SupportSoft, which is this software to basically enable support services.

Right, and then Tribe, you did Tribe?

And then Tribe after that. And then Zynga.

Right, but Brightmail, explain that because it was an important company, I want people to understand.

Yeah, Brightmail, I mean basically, if you go back to the late 1990s, there was literally a conversation about, “We might not be able to use email in just a few years” because spam was so bad.

It was.

And spam went from being a minor little annoyance to more like 50-80 percent of email traffic. And we needed a solution. There were a lot of people talking about having significant government intervention in order to, basically, imposing a kinda, content rules. I didn’t want that, I thought if the government gets into the business of regulating content, that’s a bad thing.

Oh, that’s a new topic, we’ll talk about that in a little bit. It’s going there now.

But that’s why I started Brightmail.

Did you hear Facebook, today, said there were Russians on the platform, were you shocked?

What?

I know, keep going, I’ll tell you later.

I’m shocked! Shocked, sir!

Boris and Natasha have been hanging out there for two years, now guess what? We have Boris and Natasha, anyway, I’m sorry, I’m really irritated with them right now. So, getting back, so email was a problem, it was a really big chance, so you started this company.

Yeah, so spam’s a big problem, I started it, I frankly, started it with an expectation that this would be a small initial opportunity because ISPs were having a problem, but corporations weren’t. With the idea that eventually, we’d be able to go build into something bigger once we had a foothold inside the email ecosystem, and that worked.

Right, and if you recall, nobody had ... it was just Yahoo Mail, right? What was available back then? There was corporate ones ...

Back then, there was AOL, of course. Hotmail had launched somewhere in that time period.

Right, but there weren’t that many email, there was no Gmail for sure at the time.

There was no Gmail. It was very early. Earthlink, AT&T ...

That’s right, Earthlink.

Were some of the biggest email accounts out there. Which was ... yeah, a little weird to contemplate.

Yeah, so you were cleaning up for those, because you could see it happening and that email would become so important.

Yes, I was convinced back then and I’m still convinced that email, it’s like this fundamental backbone of communication and, all right, now it’s maybe common wisdom that we’re always falling back on email, but I think there have been many times when people thought, “Well, maybe it won’t be the foundational medium because, whatever, we’re going to end up using instant messaging, we’re going to end up using Snapchat, whatever, some other new medium.” And I think it’s kind of like the Kevin Kelly idea about technology never dies, I think in this communication world, once you’ve established a big network, without network effect, it’s really hard to screw it up.

Right, absolutely, email works.

And so I think that’s ...

It’s like the egg, it works. Like maybe someday, we’ll come up with a square egg or something like that.

And little problems happen, but you fix it.

Yeah, exactly, and so you did that and then you sold that, again, to ...?

To Symantec.

Symantec, that’s right, so it was a big sale.

Yeah, that was a big sale, I mean, that was six years, built it to profitability, filed an S-1, ready to go public and got a great offer so we took it.

And then you went on to do Sidecar, is that right?

Yeah, Sidecar after many years. In the meantime, I took some time off, I invested, I did a bunch of Cleantech stuff, I taught at the first year of Singularity University and helped incubate Getaround, the peer-to-peer car-sharing company.

What got you into cars, this Getaround? Was it Getaround itself or what? Because going to email to cars is not really the straightest line I can find.

I don’t know, it’s kind of entrepreneur DNA/daydreaming.

People weren’t thinking of it when you did this. I remember when you came to me, I remember where we were, in some dumb ballroom, was it maybe South By Southwest? And I was like, “Huh?” And you were the first person who talked to me about car-sharing, I think.

About car-sharing?

Yeah.

Yeah, well, it’s ... honestly, well, first of all, as a kid, I was always fascinated by cars, I came to the U.S. when I was four years old and my mom tells me, that was like the thing that I commented on about what’s so strange about this country, is there’s a lot of cars. But actually, in the time period between Freeloader and Brightmail, I had the initial inspiration. 1997, I was outside of Mission Cliffs.

Climbing.

Climbing, and waiting for my wife, at the time, to pick me up and was waiting, looking at my flip phone. And it occurred to me that there’s got to be somebody else that’s going the same direction I am. And the big problem was, there just wasn’t a way to coordinate information so that I could take a ride with that person instead of my wife having to come and pick me up. So that was the inspiration, I actually tried to create a company in 1999 around that idea. And ultimately, decided not to because I didn’t think ...

What was that one called? Uber?

Yeah, we called it V-Car for Virtual Car.

I would like that.

Yeah.

And you didn’t make it?

No, we didn’t decide to make it. This is the era of 99-cent gasoline, so the consumer demand wasn’t really there. It was pre 9/11, pre-climate change being a big concern.

Timing!

And yeah, well, it definitely was the wrong time to do it back then. Also the iPhone had not come out.

2,000 years later.

Yeah.

You needed a visual representation, you couldn’t do this on flip phones.

And you really needed like that combination of mapping, GPS, an open platform where you didn’t have to go beg Sprint or another carrier to put you on their deck, as it was called.

So, I had this initial idea, inspiration, worked on it, filed a patent and then kind of put it on a shelf for a long time. In the meantime, I met the founders of City CarShare just because I was interested in transportation. I helped them get launched, they were the first nonprofit car-sharing organization in the U.S. I was on their board for several years.

So where you go get a car and then it stays in parking spaces, right?

Right, car-sharing, as compared to ride-sharing, where you’re sharing access to the car but you have to drive yourself. And along the way, kept thinking about innovations around mobility and one of the ideas was, well, instead of having to own the fleet, why not just allow someone else to loan you their car and you get paid for it? So that led to, in the summer, I think it was 2009, Singularity University, Sam and Jessica were students of mine and helped incubate what became Getaround.

And one of the things that was a key obstacle there was insurance, I mean if you think about most ... I guess most people don’t know this, but your insurance policy will typically say that you can’t use your car for a commercial purpose, for hire. And the insurance company can kill your insurance. So I was trying to figure out a solution to this, I went to a member of the assembly in California and told them about this problem, he’s like, “Well, what would you do?” And I was like, “Well, get a law that says that the insurance company can’t cancel your insurance.”

So, ultimately, that’s what we did, we put forward legislation, this passed, Schwarzenegger signed it into law and it was the first peer-to-peer car-sharing law.

So you are the reason for Uber. But go ahead.

Well, that was peer-to-peer car-sharing and that helped launch that whole thing.

That is the same concept.

A couple of important concepts, one concept was just this idea that you could take your car and make money with it.

Make money with it, right.

Another important concept was that the definition of profit was not per mile, it wasn’t, “If I drive a mile and I get paid a dollar, I made a profit.” It was more like, “Oh, well I own this car and I have to depreciate over the course of a year. If I make some money, as long as I’m not making a huge amount of money, that’s not a for-profit.” So, I mean these are tiny things, but they influenced, ultimately, the creation of ride-sharing because ride-sharing … So, we created Sidecar in 2012, and created …

Right, Uber, like ’10? ’10? Or ’11?

Well, Uber black car service, I think, was created in ’10, so we launched our ride-sharing service in the beginning of ’12, I think it was February of ‘12. And it was very quickly copied by Lyft and then by Uber. And the big insight was simply anybody can give a ride and that that should be legal. And we figured out a way to get past the black-and-white laws that had been passed to keep that kind of thing from happening to prevent ...

Yeah, for it to protect the taxi industry, right?

Protect the taxi industry, exactly.

Right, and you had been in that group of them. Now, Sidecar didn’t last.

Sidecar did not last, we ended up ...

Give us the quick why not?

Well, I think the biggest why not is quickly being copied by a competitor that had a huge ...

No ethics?

Visibility advantage of the pink mustache. And second, being copied by Uber, which was willing to be super, super aggressive in the way they competed, not just throwing a ton of money at it but using what, at minimum, were unethical methods and it remains to be seen whether or not they’re illegal.

Right.

So, all that happened, we weren’t able to raise as much money, we tried to innovate our way out of not having as much money, and ultimately, we tried, I could tell you back and forth about what we did, but a lot of things we did are now deployed by Uber and Lyft. I mean, the interface and the experience that you have today of putting in a destination, getting a price upfront, all of that is — sharing your location with others — all those are things that we did first.

I remember.

All these innovations.

But you got run over.

But it wasn’t quite enough.

And there were three.

Yeah, we got run over. We ended up selling assets to General Motors in the end.

Right, but there were three, that was, I think, the problem. There were three.

Yeah.

Ultimately, why do you think you didn’t ...

There’s a weird, I don’t really understand also the investor dynamic around why ...

They can’t take three, why two?

Two and not three. I never really understood it, to be honest.

Right, but they made those picks.

I beat my head against the wall for saying ...

Yeah, especially because you were a longtime entrepreneur but you were there, it was the three of you at the time and there were some European ones and Hailo and things like that.

Hailo, focused primarily on taxi, they were in New York, there’s still ... New York’s a big enough market, there are still other competitors.

Yeah, but there were a lot around and then there just were two, pretty much.

That’s right, that’s right.

So how did you feel after that?

Well, I mean, during it, not just after, it’s tough. Especially as someone who’d been successful several times before, it’s almost humiliating to like, “Damn it, why can’t we get this thing to work?”

Oh my God, the moment of honesty right there, honesty and humility.

Yeah. At the same time, it was ... I have to say one of the things that was really fun, despite all the pain, was team.

Right.

You hear it from a lot of CEOs and leaders, but it really is true. It was ... I have to say in a way that was different than previous efforts and maybe because it was so hard ... the team really had to show their mettle. That was interesting. It was tough, but it was good.

Yeah, being not-Uber is not so much fun, and actually having been there and thought of the idea would have been really irritating.

We’re here with Sunil Paul. He’s the founding partner of Spring Ventures and he’s just recounted his long entrepreneurial history, including his foray into the ride-sharing business, which did not work out. And then you started ... What did you start doing after? You did Spring Ventures?

Spring Ventures is ... I’ve been investing out of that as a platform for my own investments for a long time now. What have I been doing since then? To be honest, I’ve mostly been enjoying myself and being able to comment on things.

So you commented on scooters, so this is sort of adjacent to what you had been doing. You had been looking at this market, or had you ever thought of getting into it?

I’ve never looked specifically at the scooter category. I looked a long time ago at bike-sharing and that was back ... I was still a CEO of Sidecar at the time, but I think ...

Explain what you wrote in this article. Explain ... and I urge you all to go read it.

What I basically said is, this is gonna be a financial bloodbath because of sort of the fundamentals of a two-sided market.

Mm-hmm. And explain that for people.

Ah, a two-sided market, in some ways it’s characteristic of any market, but in particular, the mobility world has two-sided markets. You have to have supply. You have to have a driver or you have to have a scooter or you have to have a car available at the time when someone needs it, and you need to have the demand. You need to have people opening up your app, looking for a way to get from A to B.

I think the fundamental difference with what’s going on today is Uber, in particular, but Uber and Lyft together, but have a tremendous amount of demand-side ... In other words, there’s a lot of people opening up their app and they’re looking for a way to get from A to B. That is ... It’s way easier to add supply than it is to add demand.

Right.

Now, one of the points that defenders of the scooter valuations and scooter companies will say is, “Well ...”

Explain their valuations first.

Well, I mean, both these ... a company called Bird and a company called Lime have both raised money. They’ve both raised hundreds of millions of dollars at ... Bird I think is valued — I forget the exact number, over a billion, I think it’s two or three billion dollars. And Lime, I don’t think they disclosed their valuation but they raised, I wanna say $300-and-something million.

It’s a lot!

A lot. And especially Bird, I mean these companies ... some of them have been around for a while, but Bird, in particular, is a company that is, I believe, less than a year old. So, a lot of enthusiasm, euphoria around this category, and I think it’s unwarranted. Not just unwarranted ... it’s one of the biggest valuation bubbles I’ve ever seen, and it’s because of this dynamic that I see that there is no fundamental barrier, and you’ve got competitors that will be able to enter the category very easily.

It’s not like you’re competing against some big, old-school company that doesn’t know how to innovate. You’re talking about two companies that have been able to innovate a lot in the past. And the two barriers people talk about, one is, “Oh well, customer acquisition is so cheap and so fast. The economics of the business are great, and as a result, you’re gonna be able to raise a lot of money and land grab,” etc., etc. Well, attractive economics are not a barrier to entry. Attractive economics are exactly opposite.

Right, ’cause everyone will come in. I don’t care what scooter it is.

Exactly.

”Oh, it’s a Bird. I will not wait until I get a Lime,” or something like that.

People are going to be motivated by what’s nearby and what’s convenient for them to actually purchase. If it’s in the app and it’s close by, it’s gonna be a no-brainer.

I think the other interesting thing is that because customer acquisition is so cheap, it actually is very attractive for the ride-sharing companies. Customer acquisition for ride-sharing companies is fairly expensive, right? I mean, it’s basically these promotions of, get a ride ...

15 percent off. Uber just offered me so many coupons today when I was driving. I also found out the profile of my driver, which I was wildly uninterested in, but there it was. But go ahead. I’m not a very friendly person. But go ahead.

So, they’re paying 10, 30 bucks to acquire a customer, so if they could acquire a customer for free or close to free, that’s hugely attractive.

Right.

So, to me that says — and, by the way, this not based on any kind of insider information. This is just based on logic. They’re going to offer scooter rides either for free or very, very cheap, like as some sort of package.

So, cut the price.

Or take 10 rides and get it for free, or whatever, because customer acquisition is so cheap. That’s a strategic value for ride-sharing companies to acquire customers.

Sure.

Then what about the logistics side? People say, “Well, look, logistics is so complicated, so different than the ride-sharing world.”

Really?

”That’s gonna be a big barrier.” Yeah, if you read some of the articles by investors and advocates of scooters, that’s one of the cases they make.

Right.

And, I just don’t buy that either.

I don’t either. They can figure it out.

The fundamental difference is you need to have scooters charged and redeployed. So they use these things called chargers. They’re people that will go pick up the scooters, charge them overnight, and then redeploy them where they’re needed.

Where people are.

And yeah, they get paid per scooter to do this. So, how hard is it to get someone who’s got a beater of a car or can walk to go pick these things up? It’s much easier to get those people than it is to get someone who’s got a late-model car, who’s got a clean driving record, no felonies, etc.

A ride-sharing person is much harder to get, and these companies are recruiting hundreds a day, so to get a small fraction of them to go also be chargers is not gonna be that hard. And then finally, there’s a tremendous synergy between the two. Imagine you’re an Uber driver, you’re done with your evening, you go, you pick up some scooters ...

And charge them.

Put them in the back of your car, charge them overnight. The next morning, you wanna go give rides. Well, where do the scooters need to be? They need to be where people are wanting rides. Where do you need to be? You need to be where people need to get a ride.

Right. Yeah, no, it all does fit together.

So, for all those reasons ... and, by the way, there’s one thing I didn’t get into in the piece just ’cause I didn’t wanna make it a tome.

You’re gonna do a part two, just so you know.

It’s regulation. So, regulation changes the game tremendously. In the ride-sharing wars, we created this gray area that allowed us to go out and deploy rapidly and cities had a hard time kind of dealing with it. There’s no gray area for scooters. You’re using the public sidewalk, and fundamentally, there’s people much more pissed off at you because, with the ride-sharing world, who’s pissed off? Taxi drivers. Okay, that’s a problem, but politically, not such a big problem. Scooters, who’s pissed off at you? Every pedestrian that walks downtown! They are calling their representatives saying, “What’s going on with this thing?” So, politically, a very different thing. And finally, from a regulatory thing ...

So you have to have the ability to manage that? Meaning you have to be a bigger company?

Well, I guess what I mean by that is there’s greater political support to clamp down on from a regulatory standpoint.

Which means you’re stronger from a big-company point of view. If you’re a big company you can deal with it.

Either a big company or a little company. There’s press today that ... Rumors that Scoot, a small company based in San Francisco that’s done electric mopeds that hasn’t raised much money, might get a permit in San Francisco, like that ... and it’s largely because they’ve been friendly and cooperative with regulators in the past.

Right.

So, that changes the dynamic tremendously. It’s no longer just ... like, getting a permit in San Francisco is gonna be incredibly valuable, and that’s not gonna be ... you’re not gonna get it based on the fact that you raised hundreds of millions of dollars.

Right, right, and so there’ll be a lot of people.

It’s gonna be all kinds of other criteria.

So what about the social impact, too, because — talk about people hating on scooters.

What do you mean, the social impact? You mean ...

You know, they’re everywhere and they’re piled up and they’re a mess.

Yeah, it is a mess.

It kind of happened it bike-sharing, with the loose bike-sharing, not the ones that are attached.

Exactly. I think, first of all ...

They seem gone off the streets, recently. The loose bikes.

The Jump bikes? No. I mean, in San Francisco they’re still there.

Not that many. Not as many.

Jump actually has a pilot program with San Francisco.

Yeah.

As you probably know, the Chinese bike-sharing companies are all trying to expand internationally, including the U.S.

Yeah.

I think part of what’s going on with bike-sharing and scooter-sharing is the regulators have seen this movie before just by reading the press of what’s happened in China, and so they’re ...

Leaving a big pile of bikes everywhere.

Yeah. It’s ... I gotta say, it’s the most amazing set of photographs.

This is a photograph of all these bikes piled up and you just sit there and you think, “Oh my God what a ...” everything about that picture’s wrong. Like the waste ...

It’s just literally a mountain of bikes.

A mountain of bikes, yeah.

It’s insane. So I think regulators are gonna respond differently. The sort of social experience is what enables it.

Right.

Like, yeah. By the way, I think cities will end up having some little bit of middle ground. I mean, the right thing to do is to create areas for the scooters to be.

They just got fixed with the bike lanes. They have to go back and fix this? You think they want to?

Yeah. I mean, it won’t be that hard.

Yeah, they’ll probably go in the bike lanes and then the bikers and them will have wars, which will be delightful. That’ll be-

You can take over a parking space and that’s space for dozens and dozens of scooters, and dockless bikes.

Yeah.

And that’s one car space that they have to give up.

I mean where they ride, where they actually get to ride, too.

Oh. Yeah, interestingly, in California, it’s actually a state law to enable electric skateboards that allowed ... that makes it legal for electric scooters to be in the bike lane.

I see.

And on the sidewalk, actually. There’s a whole ‘nother dynamic around cities having the right to regulate what’s going on on a sidewalk, but for things that are regulated by the state, they’re allowed.

So they’re allowed on city sidewalks?

No, ’cause the city sidewalk’s regulated by the city.

Right.

But if it’s like a state highway or a state-regulated space ...

Which there isn’t much of. Which it’s not much of, right?

Actually, it’s a good question. I think maybe the street, in some cases, is regulated by the state.

So ... and let me do the second part of your thing, it’s gonna be a bloodbath “and Uber will win.” Why do you think that?

Simply because they have more demand, by far, than Lyft. I mean, Lyft seems to have made some progress in ...

What are they ... what does Lyft have? Lyft has the ...

They ... it’s kinda hard to ...

They’re supposedly gonna buy one.

They both try to goose their own numbers, but Lyft’s claim is that they’re doing really well here in San Francisco.

Mm-hmm.

And in a few other cities.

What did they buy? They bought?

They bought a bike-sharing company called Motivate.

Motivate. Right. And Uber has ...

They’re the ones that do Citi Bike in New York and the Ford Bike here in San Francisco.

Yes. That’s right. Yeah. So they’re going with bikes. And what about Uber?

Uber bought Jump, the one that has that permit. So it’s a dockless system.

So who’s gonna buy the scooter companies? Are each of them gonna take one?

Well, Lime got ... not clear what the financial deal was, but Uber has equity in Lime.

Mm-hmm.

To me, that says they’re the most likely to get bought by Uber. The valuations for the big scooter companies are, I think, way too high.

Bird.

For Bird.

It’s just Bird.

Yeah. For Bird, is way too high for Lyft, but there’s a lot of other scooter companies and you’re not really looking for the existing reach of the network. Really what you benefit is the people.

Yeah, plus that founder keeps giving stupid interviews where he sounds like an idiot. Have you noticed that? I was like, “Wow. This guy’s really ...”

I just saw a headline saying he’s going after cars, not Uber.

What? Cars?

I don’t know.

I don’t know. I gotta tell you, my kids wanna ride these things.

Like competing with cars.

So, how does this stuff — where is it going, because there’s all kinds of issues. I know, for example ... they are kind of useful, the scooters, compared to ... I don’t wanna get on a bike, but I do wanna get on a scooter although I don’t because I’m 100 years old. But my kids do. It seems more convenient, but then there’s the electrified boards, there’s all kinds of things. There’s those weird roll-y things I see every now and then, which again, most people over a certain age aren’t gonna get on, necessarily. It’s not a solution for most people and years ago there was ... I’m blanking.

Segway.

Segway. Right. Exactly. Which was huge for a while, the idea ... it wasn’t huge ...

The idea of it was huge.

The idea was huge and he got a ton of attention. Jeff Bezos used to ride around on one. That sort of ... you just see them in malls now, or on police. I’ve noticed in the airports, police will have them or they’ll have bikes or something like that. Talk about this idea of “other transportation.” I mean, like use Segway as the example ... Segway is actually somewhat useful, except it’s big.

It’s somewhat useful. It’s pretty expensive and obviously did not find its ... aside from mall cops ...

And tours from San Francisco.

Didn’t really find ... and tours, yeah.

They do tours, yeah. Also, you look stupid on it.

Part of what’s interesting is ...

You look real stupid on a Segway. Don’t you think?

Yeah, I think that’s why ...

You don’t look quite as stupid on a scooter.

I think that’s why they make comedy movies about it.

I know that, but you look real stupid. But go ahead. I’m not sure what it is about them but you do.

We’ve got this huge revolution happening in transportation. It’s awesome and amazing.

Right.

You know, all of the things you were talking about, because of electric motors and electrification of skateboards and feet and ... not feet, but shoes.

Eventually. We’re gonna have Hover Shoes.

We’re gonna have Hover Shoes. You’ve seen that, right? Actually it’s from Segway, as well.

Yeah.

So, I think we’re gonna end up with a system where the last mile, in good weather, is going to ... you have lots of options. You’ll be able to take a bike, a power-assisted bike, it’ll allow you to work even in hills and scooters and maybe other things as well. I think some of those may end up becoming autonomous, at least for the purpose of redeployment.

Okay.

You know, there are people working on ...

Meaning what?

Well, in other words ...

Scooters turn themselves in?

Yeah, so you could imagine ...

Ghost scooters? Okay, go ahead. Tell me about this.

Ghost scooters. Yeah, yeah.

I hadn’t even thought of this.

I mean, you could imagine if it’s operating at very slow speed, and it’s not super sophisticated, fully autonomous, is able to avoid all kinds of situations at high speed, it’s moving at very slow speed … If it has a problem, it basically stops and maybe phones home and asks for a human for final resolution, what it’s supposed to do.

Right.

So you could imagine that kind of future so that you don’t have the chargers, but honestly that’s a small thing. I think the big picture is, we’re gonna end up in a world where it’s much, much easier to move around in cities because of these short solutions, or the last-mile, last-yard kind of solutions, also because of autonomous vehicles, which are coming.

Mm-hmm. They’re coming.

I know now there’s kind of ... the common wisdom is, “Oh it’s much further than we think.” I’m still in the category of, they’re coming.

I’m with you on that.

They’re coming.

They’re coming.

They’re coming. Yeah. I think very soon, like next year.

They have to come. You know, if I was mayor of San Francisco, I would bar cars. That would ... I would just set the tone. I’d just say, “We’re not having cars in five years. That’s it. So figure it out!” Like, let’s figure it out. And I would just say, “That’s gonna be the law.” And then they’d figure it out, right?

I think that’s great.

You just say it, like that’s how it’s gonna be.

I think there’s a ...

Then I’d get killed by the car people.

There’s something I call the triple revolution that we have to get right in cities, and further away too. But the triple revolution is basically autonomous vehicles, electrification of vehicles and ride sharing or fleet-operated vehicles. We’ve gotta get that right, specifically if we don’t get electrification of the vehicles, the fact that all of this transportation is gonna become so cheap is gonna mean we’re gonna have way more miles traveled and if it’s not electric we’re gonna have a huge increase in emissions.

Right.

So I’m a big advocate of cities requiring ...

Which is where everybody’s living.

Yeah. The cities, in particular, because that’s where all of this stuff is going to be deployed in the early days. That they require, if they’re going to provide a permit for an autonomous fleet, that it has to be an electric fleet. I hope that there’s some conversations going on. I hope that some cities will come forward with that.

It seems like most of the stories are about fighting. About them, about the use of them, about them being on the streets in San Francisco. When the scooters entered, people were putting excrement on them. Now, it’s sort of calmed down, but that seems to be always how this stuff is created. Everyone sees it as the plague, essentially.

Yeah. There’s a level of hysteria in San Francisco, in particular, about anything new. Despite it being a town that you’d think would embrace new things, it’s actually kind of conservative about new things.

Yeah. No. You see last week with the cafeterias? It was in the Chronicle.

I didn’t see that particular one.

They’re trying to bar cafeterias in tech companies. Believe me, I hate the baby-fication of these techies, but let them have their frigging cafeterias. I’m sorry, that’s too much.

Yeah, that seems like ...

It almost makes me a Republican, on some days. Not usual.

That seems like stupid overreach.

Yeah, in any case, but ... are there regulatory problems with all these new alternative transportation systems? I feel like the politicians aren’t smart enough to understand where it’s going, which would be a fully autonomous city that doesn’t have cars in it. Just doesn’t have ...

It has no cars, and has much less need for the existing system of transit.

Right, so talk about that, too. Dara, at Code, was talking about the idea that you use your Uber up to pay for transit, and then it saves transit ... It’s good business for Uber, but ...

There’s certain kinds of transit that’s always going to be valuable. There’s some cost. We already built the BART lines, we already built ... It doesn’t make any sense to rip all that stuff out.

No, we had built the blacksmiths, and we don’t seem to have them anymore, but too bad.

I think new extensions, things like high-speed railway — we can talk about long-distance stuff in just a second — but it’s not going to make as much sense because it’s incredibly expensive to build out the infrastructure for the stuff. As compared to just building roads, or just building these lighter-weight infrastructure, where you can have a flexible fleet, up top.

As it changes.

The autonomous cars, I think, are going to increasingly be autonomous shuttles and maybe, also, individual-size vehicles, because that’s kind of what you need. Most trips are one person. You can either, on a very high-throughput place, like a very busy street, a Broadway, or Main Street, whatever, you can have a larger-capacity vehicle. It could be autonomous. This is already happening in some limited areas in different cities in Singapore and some airports. But I see that happening in the main thoroughfares and in the smaller areas, you can have an individual-sized vehicle, maybe two instead of three people. It can actually connect up with the bigger ones, just through platooning, meaning just following very very close to the vehicle in front of it, so that you can have that high density. In the big thoroughfares, you want high density. A subway car is awesome! You get so many people packed in there, especially in Japan where you can really cram them in.

I also think the other dynamic that’s going to happen is cities, towns that are kind of far away from the urban core, are also going to see an increase in population because of autonomous cars and telecommuting. Telecommuting continues to get better. It’s already pretty good, a lot of people remote-work. But the combination of that and autonomous cars means that you could live an hour, two hours, maybe even three or four hours away from the place that you come in to interact face-to-face with people, and out there it’s going to be cheaper. If you go live in Reno or Grass Valley or Sacramento, you can still come into San Francisco to have your meetings for, whatever, a day or two.

Yeah. When you sit around and look at commuting, it’s insane.

It is insane.

It’s just insane. Even today, I was going to something. I was going to drive my car and I was like, “I don’t want to drive my car!” It was weird. For some reason more and more — and I’m somebody who’s had a car my whole life, I’m not a millennial, like I have to take an Uber everywhere — but it’s a really interesting shift. It’s the same way you felt like, “I’m not going to have a phone in my house. I’m going to have a mobile phone.”

There’s an interesting law, really just a rule of thumb, called Marchetti’s Law, that found that throughout human history, starting with hunter-gatherers, people have not wanted to commute more than about half an hour to their place of work. Work could be where I’m going to go hunt for things, or gather out in the wilderness. It’s true for villages, and then once we got to modern transportation, the distance people were willing to go in a streetcar, or in their own car. I think autonomous vehicles will break Marchetti’s Law, because you’re no longer just about the commute. When you’re walking out to the place that you’re going to go hunt, or you’re going to go gather, or you’re going to walk to the small town, or drive to your place where you make money. You’re just driving, you’re just walking, whereas in an autonomous car, you’re going to be able to watch a movie, you’re going to be able to eat. It’ll be more like being on a long-distance train with car service, or with food service and all the rest. The whole dynamic around commuting is going to dramatically change over the next decade.

What prevents this from happening? What do you see as the biggest challenges, besides the technology, the battery technology, and everything else?

What prevents it from happening? I think there are, shockingly, few barriers for it to happen, especially, the city version.

Probably regulatory.

The regulatory is what everyone brings up, but I think we’re going to work it out. There’s existing regimes ...

Entrenched interests.

We might get it wrong here or there, but generally speaking...

Right. What about entrenched interest, insurance companies, garages?

No.

They’ll just go away?

No, no.

Like a lot of things.

Interesting opportunities around things like garages and rethinking real estate: If you look at past transportation revolutions, much, maybe most of the money has actually been made through some kind of real estate transaction. In other words, when you get a new kind of transportation, real estate that today is very cheap, somebody comes for a valuable, and that story has been repeated over and over again. Railroads and their right of ways, and streetcar suburbs, and the suburbs of the automobile air ...

You’re saying Grass Valley is where we should invest?

Grass Valley.

Yeah, I don’t want to live in Grass Valley.

I don’t either.

Yeah, although, walking through Market Street today I thought, “I am moving to Palo Alto!” For the first time, I was like, “And, scene.” I’m going to be writing about that a lot.

Increasingly, Palo Alto is a lot like San Francisco just in terms of it’s monoculture.

I know, it’s just ...

You gotta get out of this South of Market area.

You’re right. You’re right.

That’s the other thing.

No, I was talking about it because the streets are just ...

Too crowded.

Not that. They’re just dirty and crazy and drug infested and stuff like that. Everywhere, which is interesting. I sound like a crazy woman.

That’s a whole other thing.

That’s a whole other podcast. Alright, so give me a couple ...

It could be something that we’ll solve.

The last thing I want to ask you is about, those cars that do vertical lift and take-offs. What do you think about that?

It’s amazing and I was a skeptic until I ...

What changed your tune?

Here’s the case for VTOL, is basically, it’s orders of magnitude fewer moving parts than a helicopter. That makes them more maintainable, easier to manufacture and lower costs.

Right. Why were you a skeptic? Because you thought it sounded crazy?

Well, I’m always a skeptic until I know more, honestly. I just thought it seems ...

Feels very Elon Musk, doesn’t it? He’ll have 20 of them deployed.

Right.

Right? Don’t you see it?

Right. I don’t know. I think he’s going to want tunnels or something. Anyway, it’s easier to fly autonomously through the air than it is on the ground. I think those two factors, and frankly, capital helps.

Right. You’re in Berkeley ...

Actually having the research to be able to go do it.

... You just fly into a building in San Francisco and take the elevator down. It’s five minutes, versus an hour.

Yeah, and I think where you’re going to see even more applicability is ...

Rural areas.

Yeah. I have a place up in Sedona, and to be able to get back and forth instead of an hour, turns it into 15 minutes, or ...

Will they be single VTOLs, or will there be a couple people in them, like a little helicopter?

I think the jury is still out on that. Because of the technology base they’re using, lighter weight, it favors a smaller number of passengers.

A small amount of passengers.

I don’t think we’re going to see a big cargo plane capacity.

Right. What about floating cars? And the stuff that Larry Page is working on, the Kitty Hawk hover?

Yeah, it’s actually very related. It’s, basically, in the same category. They’re choosing to do it over water, as I understand it, because it’s easier to deal with the safety concerns.

Between water areas?

Yeah.

Instead of a boat, essentially, they’re going to hover over a body of water?

Right. And you don’t have to worry as much about where you’re going to land.

Oh, I see.

In other words, if you have a problem, you just come down.

You just land in the water.

Whereas, if you’re going over the city ...

I’ve heard that story before.

... Or you’re going over ...

Oops.

... Anywhere else on the land, you have to be very, very careful about where you land.

Right. What do you think about that? That’s another one. It’s called Kitty Hawk, right?

Yeah. I saw a demo of it. Was it at TED? I can’t remember where. Cool. I don’t know what to make of these things until they actually start in reality.

All right. Last question. Transporter? I’m not kidding. Why would I kid?

Starting with photons?

Yeah.

Yeah. I wish. Wouldn’t it be awesome?

What happened to the jet pack? Sunil, what happened to the jet pack? That was going to be a thing.

Yeah.

It was not a thing.

There’s crazy YouTube videos of people doing stuff.

I know, but it’s not a thing.

It’s not a thing.

No one’s working on a jet pack. It was a thing, that’s what inspired a lot of this.

I think it’s a fundamental mistake we make a lot, which is if you go back to the era of advances in car transportation and rocket transportation and all the rest, there are projections of 200-mile-per-hour freeways, and literally rocket ships that were capable of going to the stars in this kind of time frame. That didn’t pan out, and I think we make the same mistake in this category, because we get used to the pace of innovation.

Moore’s Law is, I think, the most interesting example where it’s clearly running out of steam, and maybe quantum computing can do it, but there’s no guarantee it will. There’s nothing sacred, and I think there’s this quasi-religious view that it’s going to just keep going and we’re going to end up with jet packs of computing. The odds are, we’re not going to end up with a jet pack of computing.

But scooters are here to stay?

Scooters are ... They’re coming back here in San Francisco, and they’re still in lots of other cities.

Right, and they’re here to stay. Even at the valuations, because of the financial bloodbath.

Oh, no. I think it’s going to be a bloodbath.

One will emerge, but ...

It’s going to be a bloodbath, and I think their most likely outcome is to be acquired by someone.

And then be part of an offering. They’ll also have scooters, they’ll also have …

I think there might be some OEMs or some others that ... Here’s the thing, if they go out and acquire a bunch of demand, then ... One thing we didn’t talk about is, what happens with autonomy? I think, generally speaking, the autonomous world is also going to be a kind of bloodbath, or mess, financially. It’s different because ...

Everybody’s investing in these until there’s more ...

There’s just so much capital going into it in a lot of different companies. They all think they’re going to build their own demand. They’re wrong. Building demand is, actually, pretty hard. If one of these scooter companies can go out and build a lot of demand, I could see some of these other companies that suddenly realize, “Oh, wait a minute. The biggest question when we deploy our autonomous XYZ product is making sure people actually get in it.

Use it. Right.

And it’s not enough to just put it on the street.

Right, 100 percent. You’re absolutely right. A few years ago I thought Uber would get acquired by Google because if you’re building the autonomous car, you need the reservation system.

I think the two companies that have yet to make their move, Apple, and Google, because of maps, and if Uber is smart, they will figure out a way to continue to get more and more demand, including — and potentially building — a mapping product, or building another navigation. They’re already doing it, and talking about doing it with public transit.

Yeah, because they made enemies with all those companies in the last regime.

Right.

Wow, pissing off two companies.

They’re working on mapping, but ...

Do you think they should be in autonomous cars, then? Or you just wrote that they were getting back into it again?

Honestly, I think you need to have the expertise in autonomous cars.

Me too.

But I don’t think they need to build. I think it’s a huge waste of capital.

Yup, I agree.

There’s just a ton of capital going into building out the capacity and the technology, but if you have the demand, then you can sit there and dictate what the experience will be for a consumer.

Right, exactly.

All the way down to the seat cushion!

Right, exactly. Yeah, because then you have OEM. Let me ask you, the last question. I didn’t ask you about Elon Musk.

What about him?

Where’s he going to be in all this?

I wrote a blog at the end of last year, speculating that maybe last year was peak Elon. I have tremendous respect for what he’s been able to do.

He did land a rocket on a platform in the ocean.

Yeah! He’s taken on categories that no commonsense entrepreneur would go after. A lot of respect for that. And … he’s just a human being. I just don’t see how you can continue to chase so many new ideas and be successful, certainly not at all of them. It detracts from your core ...

Then tweet all night.

Yeah, yeah. I don’t know.

What about Tesla? He’s certainly pushed everyone forward. In many ways.

Oh. Yeah, yeah, yeah. For sure.

I’m like, “This guy’s good.” Pushed everybody forward.

Tesla’s ... It’s total sea change in the whole industry, as a result of what he did.

Oh, yeah. GM wouldn’t be where it is now.

Totally. I’m a fan of Tesla. I think there’s a valuation question of whether or not they can succeed, but if they were able to ramp up production and ... I’ll tell you one thing about Tesla that’s interesting, very different than other electric car companies, is, simply by building out a significant charging network, and you could imagine the future, building out other infrastructure around autonomous. In other words, having the ability to have very robust navigation in your car, and know that in this particular corridor, your car’s going to be safe. That’s very valuable, and it does start building a network effect that I think other OEMs will have a tough time matching.

Yeah. It’ll be interesting to see what happens.

Yeah, yeah.

Yeah.

It will be amazing. I am, certainly, rooting for Tesla. I hope that they succeed.

He reminds me of Howard Hughes, more than anybody else. Everyone compares him to others, like Kanye West or Trump, and I’m like, “No, he’s like Howard Hughes.” Howard Hughes did a lot of things in the aviation industry, people don’t understand.

Yes.

People focus on the last part of his crazy life, but not the first part.

Yeah, that’s true, and also the similarity of just LA and the ... Yeah. There’s a lot of similarities.

Yeah. It’s just interesting. I don’t mean to say that he’s going to end up like Howard Hughes, but Howard Hughes was creative and out there like that. Anyway, we’ll see where that ends up. Sunil, this is great talking to you. I expect you to write a second part to your scooter story, okay?

Oh, okay.

All right. That’s an assignment, and thank you for doing it for us.

All right. That’s what I get. I show up and I get a writing assignment.

Yes, exactly.

Yes, ma’am.

You should. You’ll get a book contract. It’ll be great. Anyway, thank you for coming on the show.

Thank you. It was great.

This article originally appeared on Recode.net.

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