Waymo’s Next Challenge: Humanity

[00:00:00] Hi, I'm Eric Newcomer. And I am Madeline Rennbarger. And this is the Newcomer Podcast. Each week, Eric and I discuss the VC deals and the drama that went down. Let's do it. Here we go. Let's dive in. Welcome back to the podcast. Happy New Year, Eric. It's our first show of 2025. And Silicon Beach is on fire. We're both safe in New York and comfy, but it's pretty dystopian.

[00:00:32] We have some images to start off. Oh, my gosh. Certainly our hearts are with everybody in LA. You know, we make everything a tech story. So we're like, oh, it's an important tech city, but obviously just a lot of friends in LA and it's tragic. So excited for these fires to resolve.

[00:00:50] Absolutely. A heart goes out to our friends, you know, both in media and in the tech community that are being affected by these fires.

[00:00:56] Even if you're not in tech, we care about what's happening to you.

[00:00:59] It's terrible. Yes, we do care. It is. It's really tragic.

[00:01:04] Especially our heart goes out to, you know, anyway, it's terrible. But, you know, it's also like, oh, my God, what images?

[00:01:11] Yeah, it'll become a disinformation story. I do. They're like shouting about arson now, which I'm skeptical.

[00:01:18] Anyway, I don't want to going around everywhere. Yeah. I yeah. Don't want to speculate.

[00:01:22] I think there's arson. Yeah. I don't know. We'll see. I will find out. But regardless, it's it's really tough.

[00:01:28] And so our hearts go out to everyone in the LA area affected by this. Moving on to some different news.

[00:01:34] Waymo has hit parity with Lyft. I feel like what's so crazy about being in San Francisco is you're like, you see these cars and you're like, this is happening.

[00:01:41] And the rest of the world is like, can self-driving happen?

[00:01:44] Yeah. When you're in San Francisco and at least for a while when you've been because you got the early invite code, so you've known it for a while, but it's around.

[00:01:52] It's happening. And at this point, it is just the norm at this like it's it's surpassed one of the largest rideshare companies.

[00:01:58] And classic human emotional processing of new technology. We have already moved past.

[00:02:03] Oh, my God, they're self-driving cars to I don't know. They're going to be a lot of problems.

[00:02:08] And you've been talking to some of the Uber crew, the people who are used to human negative.

[00:02:15] But I'm just laughing.

[00:02:17] Well, that's the reporter angle, right? Yeah, that's we always have to see what could go wrong.

[00:02:23] So what could go wrong?

[00:02:25] I've been talking to some of the Uber people who have had a little bit of concerns from their own experience scaling Uber in different cities and communities that, you know, know this firsthand that there's things that come in when you grow like this.

[00:02:37] You have, you know, the mass adoption of riderships. You hit that pivotal moment.

[00:02:41] But but one thing that you need to look out for always is the human element.

[00:02:45] I mean, there's been an increase of reports of Waymo's getting trashed.

[00:02:50] Obviously, there was Waymo's being set on fire in different parts of San Francisco before.

[00:02:54] But just in general, cleanliness is an issue if there's not a driver in the car to maintain it.

[00:02:59] You know, how do you monitor for that?

[00:03:01] You know, pro social behavior. So that's just one factor.

[00:03:04] Waymo is becoming the ultimate teenage hookup spot and drug.

[00:03:08] I was completely private chauffeur. That's like, oh, my gosh, people dreamed about it.

[00:03:12] It's like, oh, you can have an office, you know, going when you're on a long drive, you have your own private car.

[00:03:17] But of course, there are lots of other things people might want sort of on demand private space for.

[00:03:22] I mean, I think one thing that's interesting about the Uber people's observations is just, you know, Uber obviously has important technology.

[00:03:30] But in some ways, the company succeeded with operational excellence.

[00:03:34] That meant dealing with regulators.

[00:03:36] But it also meant figuring out where the cars could park and what what zones people could go into and how they should handle sports.

[00:03:44] You know, like the baseball game ending and everything, everything in between.

[00:03:48] And so I think the message here is, OK, you figured out San Francisco in sort of neat little zones when you're only letting the elites on who are very studious about and very, you know, sort of on team Waymo.

[00:04:04] Yeah, exactly. You let the fanboys on.

[00:04:06] And so now the next step is when you when you open it up even wider, there's lots of new factors that you have to control for or not control for and figure out a way to deal with.

[00:04:15] In conversations with some people adjacent to the Uber world, one thing I found interesting was how the Waymo fleets that are, you know, launching in Austin and Atlanta later this year are really partnering with Uber.

[00:04:27] Uber is maintaining who's pretty much controlling the infrastructure for that.

[00:04:30] And so I wonder if we'll see, you know, more of these partnerships out of necessity crop up, at least in the near future, as self-driving moves to different cities.

[00:04:37] That's clearly the story Uber wants.

[00:04:39] I mean, you know, they want Waymo to be like, oh, my God, this is going to be such a headache.

[00:04:44] Let's let's hand this over.

[00:04:45] I think, you know, Waymo is in the power position.

[00:04:48] They've got the technology so they can say, all right, in this city, we'll do it in this city.

[00:04:52] You do it. And let's see if you're really so much better.

[00:04:55] So I think that will be an interesting experiment to run.

[00:04:59] I mean, my question for you is, how much do you think this is all going to slow down the deployment?

[00:05:03] Because I think the real question is, how much of the work that Waymo did in San Francisco is specific to understanding the streets of San Francisco versus they now have a playbook to roll out in other cities?

[00:05:16] I mean, do you have a point of view on that?

[00:05:17] That's a good point.

[00:05:18] San Francisco has a pretty unique setup, right?

[00:05:21] It's it's dense.

[00:05:22] It's narrow.

[00:05:23] There's not as many factors of constant jaywalking and the degree that you experience in a mega city like New York, you know.

[00:05:30] And I think that they'll need to maybe take a play by play city by city approach as they go forward.

[00:05:37] Obviously, Western cities involve a lot more highway driving.

[00:05:40] Self-driving around cities is one of the hardest hurdles to get across.

[00:05:43] And if you're in other urban environments, especially in suburban ones with these self-driving trucking companies that are popping up for highway driving,

[00:05:50] that'll be a host of different problems, but presumably more controllable factors than sort of all of the abnormal edge cases that you have to account for in city driving.

[00:06:00] As someone who used to be like, oh, self-driving cars are way overhyped.

[00:06:03] I think these are small speed bumps relative to developing the technology.

[00:06:09] I mean, first of all, you're bullish.

[00:06:11] OK, you've done a full you've jumped.

[00:06:13] Yeah, I'm totally.

[00:06:14] Well, I've been bullish on self-driving in this point.

[00:06:16] I mean, I was bearish, you know, like, I don't know, five years ago, you know.

[00:06:21] But when Uber was doing it, I was extremely bearish because I saw how many interventions they had.

[00:06:26] Once I was in Waymo without a driver, I became extremely bullish.

[00:06:29] But but my point is just that, like, they can restrict who gets on the network, you know, to to worry about the quality.

[00:06:36] You can penalize people.

[00:06:37] I mean, they're going to they have cameras looking in the cars.

[00:06:39] They're going to know exactly what happened.

[00:06:41] They can use AI.

[00:06:42] To me, the most the pro Uber Lyft case that I believe the most is the sort of liquidity of the network or this issue of when you actually have to pay for what Waymo's cost.

[00:06:56] And that's what we don't really know.

[00:06:57] Will it make sense to have Waymo's at the density that you need so that you're ready for rush hour traffic versus right now Waymo can sort of be we're there when we're available.

[00:07:11] And if not, you'll take an Uber.

[00:07:13] You know what I mean?

[00:07:13] There there's sort of not a service that can exist just like to to meet the flexible demand.

[00:07:20] You know, Uber and Lyft's innovation was they incentivize drivers to work when there is a lot of work to be done and not when there wasn't.

[00:07:27] And Waymo doesn't have the same mechanism besides just, you know, parking the car.

[00:07:32] Yeah. Right now Waymo is also top down to part of the Uber and Lyft mechanism is that it's the driver's car.

[00:07:37] Right.

[00:07:37] And so that's another level of overhead that some people that I've spoken to have said can be really difficult with scaling going forward, that you might need to find a way to handle that.

[00:07:46] That's not fully controlled by the company also manufacturing the self-driving software.

[00:07:51] Yes. A recurring theme is always if you give something away for less than it costs you to produce, that will be a very popular product.

[00:08:00] And then once you have to get the margins right, who knows how things will sort out.

[00:08:05] And so how much is Waymo heavily subsidizing this to make it work?

[00:08:10] And can they find a model where they can deliver it competitively?

[00:08:15] If they can't, they're going to, you know, it's going to struggle.

[00:08:18] Well, traditional, I mean, traditional transportation companies also typically have, you know, razor thin margins as is like it's a tough, it's a tough model.

[00:08:28] Waymo is such a superior product to driving like that to me is the case.

[00:08:34] They also have the leverage.

[00:08:36] They can decide, do we work with automakers or do we do it ourselves?

[00:08:39] Do we work with Uber or do we do it ourselves?

[00:08:41] Like I would much rather be in the Waymo position.

[00:08:45] And I just think fundamentally the other piece of it is that they, if it's a network, they get to coordinate all their cars together and sort of learn things from each other versus of all their, you know, the car companies are doing their own technology.

[00:08:57] Anyway, I think Waymo remains in a super strong position.

[00:09:01] People counted Google out forever.

[00:09:03] And this thing in a decade is going to be like transformative.

[00:09:08] And I think I, it's a question of when the first city says we only want self-driving cars.

[00:09:14] No more of these crazy human drivers.

[00:09:17] Do you agree?

[00:09:18] Disagree?

[00:09:18] I mean, that's very, you're from Texas, aren't you?

[00:09:21] You know, you don't have a little bit of real American, like we're never going to let you get rid of cars.

[00:09:26] It's like guns, you know?

[00:09:27] No, I mean, I feel like it's, it's the, you know, I have to speak to my Texan roots.

[00:09:32] There's some individual myth of, you know, being the man behind the wheel, if you will, that I think is going to be hard to give up.

[00:09:39] And my, in my counterpoint to you, nothing rational, entirely vibes.

[00:09:43] But that's what Texas is for.

[00:09:45] You know, the guns and cars can be in Texas and the dense metropolitan areas will have no, no human drivers and hopefully no guns.

[00:09:54] But what do you do when there's a city in Texas where the Waymo's are?

[00:09:58] We'll find out.

[00:09:59] That's the American experiment.

[00:10:01] But anyway, very exciting.

[00:10:03] It's exciting news.

[00:10:04] I think as someone who's really excited about self-driving, like to see them hit this critical mass in San Francisco and they're expanding into more cities.

[00:10:13] So we'll have this experiment play out again and again.

[00:10:16] Moving on to the deal of the week, the live shopping platform Whatnot just announced an upround $265 million Series E fundraise co-led by Graycroft, DST Global and Avra Capital, which brought its valuation up to around $5 billion, which is up from its last funding round in 2022.

[00:10:37] Eric, you have been mixed signals on the live shopping market, but here it is.

[00:10:42] Well, you know, I've written them off, I think.

[00:10:43] I mean, Pop Shop, you know, is a disaster.

[00:10:47] TikTok is ubiquitous.

[00:10:50] I did pull up the Google Trends and whatnot, you know, held strong and then recently had a strong uptick, though.

[00:10:58] Strong upticks around funding rounds are always extremely suspicious, but it still feels resilient.

[00:11:04] It's not a company that's sort of like fallen away from at least my quick Google Trend search.

[00:11:09] I mean, you were making what I thought was the most interesting point about what happens if TikTok gets banned.

[00:11:16] Right.

[00:11:17] Well, TikTok.

[00:11:17] So as an avid TikTok user, full disclosure, both of us are obsessives, I think.

[00:11:23] Yeah.

[00:11:25] Regretful obsessives, if you will.

[00:11:27] The shopping feature on TikTok, the TikTok shop offers some live shopping features.

[00:11:32] And live shopping is something that obviously has taken, has some audience in the United States, if whatnot, is raising this great round.

[00:11:38] But it's not, it's much more popular in Asia and other countries.

[00:11:42] TikTok shop does offer some live shopping.

[00:11:45] So whatnot does compete with them in some way.

[00:11:47] Right.

[00:11:48] TikTok was subsidizing their shopping like a ton, I think, like over Christmas.

[00:11:53] Oh, absolutely.

[00:11:54] The deals on there were unethically low, I would say.

[00:11:58] Well, they just want you to do one and then, you know, maybe.

[00:12:00] I mean, that it makes you wonder, right?

[00:12:03] Like why, why does whatnot need this much money?

[00:12:07] And like maybe one of the answers is they need to be able to discount at the level of TikTok to get people to try it.

[00:12:13] I assume there's some social media spend, but it is, it is crazy in a moment where we're sort of in a downturn outside of AI where.

[00:12:23] And a particular consumer downtown.

[00:12:26] Yeah.

[00:12:26] Oh, yeah.

[00:12:26] And people are saying, oh, you can run your company with, you know, just you and, you know, Chachi BT that, you know, a marketplace would raise this much money is amazing to me.

[00:12:37] Well, whatnot does compete with TikTok, particularly on the TikTok shop feature.

[00:12:41] If TikTok does end up getting banned at the Supreme Court, then whatnot would be in a position to take up some of that market share.

[00:12:48] So a degree of this funding round feels almost advantageous that it's coming at this moment.

[00:12:52] You think the management's like, hey, you know, there's a 20% chance TikTok gets banned.

[00:12:57] You get a great investment if that happens.

[00:13:00] It's trending.

[00:13:01] It seems a little more uncertain than maybe it did a couple of months ago that the ban is actually going to go through.

[00:13:05] But obviously, you know, one of the largest Trump donors this cycle was also one of the biggest shareholders in TikTok.

[00:13:13] And I think everybody thinks that's going to have a big influence on it.

[00:13:17] It would be funny if, you know, Mark Andreessen, who's Andreessen Horowitz, is an investor in this round and an investor earlier and whatnot, tried to pull strings to the opposite.

[00:13:28] But I doubt it happens.

[00:13:30] And I bet TikTok stays and whatnot has to fight a fair fight to win over video shoppers.

[00:13:39] Eric, you bet TikTok lives another day.

[00:13:41] Is that your 2025 prediction?

[00:13:43] Yeah.

[00:13:43] I mean, just like, man, I, I, my position, which I stand by, is that the U.S. should enforce reciprocity with China.

[00:13:53] And it's not about being Chinese, particularly manipulating the U.S., but it's just like if they have companies here, we should have social media companies there.

[00:14:01] If they can manipulate us, we'll manipulate you.

[00:14:03] And it's the lack of reciprocity that is my issue.

[00:14:06] So at the current moment, I support a TikTok ban.

[00:14:09] That said, it would be a political disaster.

[00:14:11] I feel like politicians understand this and they're not even quite in touch with the demographic that would go insane if TikTok were banned.

[00:14:20] Yeah.

[00:14:21] I mean, we're excited for the new year.

[00:14:22] I think it's going to be a busy year for us.

[00:14:25] We're planning our event schedule.

[00:14:28] This is like the first, you know, I feel like this is the first year where just like as a business, I'm like, oh, my God, every passing day is like a day less to get everything done.

[00:14:37] We want to this year, which is sort of a different feeling than I guess.

[00:14:42] That's a good problem to have, Eric.

[00:14:43] That's great.

[00:14:44] It's a good problem.

[00:14:45] But it is also like, oh, I was complaining on Twitter.

[00:14:48] I'm going to become like one of these grind people or grind mindset people.

[00:14:53] I'm like, I can't believe like the first full week of the year is like January 6th because that means nobody was answering my emails on like January 2nd and 3rd.

[00:15:04] So, all right.

[00:15:06] Good luck now, everybody in L.A.

[00:15:08] And yeah, we'll see you next week.

[00:15:09] Thanks so much.