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Opera and the firm short-selling its stock (alleging Africa fintech abuses) weigh in

By Jake Bright

Internet services company Opera has come under a short-sell assault based on allegations of predatory lending practices by its fintech products in Africa.

Hindenburg Research issued a report claiming (among other things) that Opera’s finance products in Nigeria and Kenya have run afoul of prudent consumer practices and Google Play Store rules for lending apps.

Hindenburg — which is based in NYC and managed by financial analyst Nate Anderson — went on to suggest Opera’s U.S. listed stock was grossly overvalued.

That’s a primer on the key info, though there are several additional shades of the who, why, and where of this story to break down, before getting to what Opera and Hindenburg had to say.

A good start is Opera’s ownership and scope. Founded in Norway, the company is an internet services provider, largely centered around its Opera browser.

Opera was acquired in 2016 for $600 million by a consortium of Chinese investors, led by current Opera CEO Yahui Zhou.

Two years later, Opera went public in an IPO on NASDAQ, where its shares currently trade.

Web Broswers Africa 2019 Opera

Though Opera’s web platform isn’t widely used in the U.S. — where it has less than 1% of the browser market — it has been number-one in Africa, and more recently a distant second to Chrome, according to StatCounter.

On the back of its browser popularity, Opera went on an African venture-spree in 2019, introducing a suite of products and startup verticals in Nigeria and Kenya, with intent to scale more broadly across the continent.

In Nigeria these include motorcycle ride-hail service ORide and delivery app OFood.

Central to these services are Opera’s fintech apps: OPay in Nigeria and OKash and Opesa in Kenya — which offer payment and lending options.

Fintech focused VC and startups have been at the center of a decade long tech-boom in several core economies in Africa, namely Kenya and Nigeria.

In 2019 Opera led a wave of Chinese VC in African fintech, including $170 million in two rounds to its OPay payments service in Nigeria.

Opera’s fintech products in Africa (as well as Opera’s Cashbean in India) are at the core of Hindenburg Research’s brief and short-sell position. 

The crux of the Hindenburg report is that due to the declining market-share of its browser business, Opera has pivoted to products generating revenue from predatory short-term loans in Africa and India at interest rates of 365 to 876%, so Hindenburg claims.

The firm’s reporting goes on to claim Opera’s payment products in Nigeria and Kenya are afoul of Google rules.

“Opera’s short-term loan business appears to be…in violation of the Google Play Store’s policies on short-term and misleading lending apps…we think this entire line of business is at risk of…being severely curtailed when Google notices and ultimately takes corrective action,” the report says.

Based on this, Hindenburg suggested Opera’s stock should trade at around $2.50, around a 70% discount to Opera’s $9 share-price before the report was released on January 16.

Hindenburg also disclosed the firm would short Opera.

Founder Nate Anderson confirmed to TechCrunch Hindenburg continues to hold short positions in Opera’s stock — which means the firm could benefit financially from declines in Opera’s share value. The company’s stock dropped some 18% the day the report was published.

On motivations for the brief, “Technology has catalyzed numerous positive changes in Africa, but we do not think this is one of them,” he said.

“This report identified issues relating to one company, but what we think will soon become apparent is that in the absence of effective local regulation, predatory lending is becoming pervasive across Africa and Asia…proliferated via mobile apps,” Anderson added.

While the bulk of Hindenburg’s critique was centered on Opera, Anderson also took aim at Google.

“Google has become the primary facilitator of these predatory lending apps by virtue of Android’s dominance in these markets. Ultimately, our hope is that Google steps up and addresses the bigger issue here,” he said.

TechCrunch has an open inquiry into Google on the matter. In the meantime, Opera’s apps in Nigeria and Kenya are still available on GooglePlay, according to Opera and a cursory browse of the site.

For its part, Opera issued a rebuttal to Hindenburg and offered some input to TechCrunch through a spokesperson.

In a company statement opera said, “We have carefully reviewed the report published by the short seller and the accusations it put forward, and our conclusion is very clear: the report contains unsubstantiated statements, numerous errors, and misleading conclusions regarding our business and events related to Opera.”

Opera added it had proper banking licenses in Kenyan or Nigeria. “We believe we are in compliance with all local regulations,” said a spokesperson.

TechCrunch asked Hindenburg’s Nate Anderson if the firm had contacted local regulators related to its allegations. “We reached out to the Kenyan DCI three times before publication and have not heard back,” he said.

As it pertains to Africa’s startup scene, there’ll be several things to follow surrounding the Opera, Hindenburg affair.

The first is how it may impact Opera’s business moves in Africa. The company is engaged in competition with other startups across payments, ride-hail, and several other verticals in Nigeria and Kenya. Being accused of predatory lending, depending on where things go (or don’t) with the Hindenburg allegations, could put a dent in brand-equity.

There’s also the open question of if/how Google and regulators in Kenya and Nigeria could respond. Contrary to some perceptions, fintech regulation isn’t non-existent in both countries, neither are regulators totally ineffective.

Kenya passed a new data-privacy law in November and Nigeria recently established guidelines for mobile-money banking licenses in the country, after a lengthy Central Bank review of best digital finance practices.

Nigerian regulators demonstrated they are no pushovers with foreign entities, when they slapped a $3.9 billion fine on MTN over a regulatory breach in 2015 and threatened to eject the South African mobile-operator from the country.

As for short-sellers in African tech, they are a relatively new thing, largely because there are so few startups that have gone on to IPO.

In 2019, Citron Research head and activist short-seller Andrew Left — notable for shorting Lyft and Tesla — took short positions in African e-commerce company Jumia, after dropping a report accusing the company of securities fraud. Jumia’s share-price plummeted over 50% and has only recently begun to recover.

As of Wednesday, there were signs Opera may be shaking off Hindenburg’s report — at least in the market — as the company’s shares had rebounded to $7.35.

Mobileye takes aim at Waymo

By Kirsten Korosec

Mobileye has built a multi-billion-dollar business supplying automakers with computer vision technology that powers advanced driver assistance systems. It’s a business that last year generated nearly $1 billion in sales for the company. Today, 54 million vehicles on the road are using Mobileye’s computer vision technology.

In 2018, the company made what many considered a bold and risky move when it expanded its focus beyond being a mere supplier to becoming a robotaxi operator. The upshot: Mobileye wants to compete directly with the likes of Waymo and other big players aiming to deploy commercial robotaxi services.

TechCrunch sat down with Amnon Shashua, Mobileye’s president and CEO and Intel senior vice president, to find out why and how — yep, acquisitions are in the future — the company will hit its mark.

NextNav raises $120M to deploy its indoor positioning tech to find people in skyscrapers

By Kirsten Korosec

NextNav LLC has raised $120 million in equity and debt to commercially deploy an indoor-positioning system that can pinpoint a device’s location — including what floor it’s on — without GPS .

The company has developed what it calls a Metropolitan Beacon System, which can find the location of devices like smartphones, drones, IoT products or even self-driving vehicles in indoor and urban areas where GPS or other satellite location signals cannot be reliably received. Anyone trying to use their phone to hail an Uber or Lyft in the Loop area of Chicago has likely experienced spotty GPS signals.

The MBS infrastructure is essentially bolted onto cellular towers. The positioning system uses a cellular signal, not line-of-sight signal from satellites like GPS does. The system focuses on determining the “altitude” of a device, CEO and co-founder Ganesh Pattabiraman told TechCrunch.

GPS can provide the horizontal position of a smartphone or IoT device. And wifi and Bluetooth can step in to provide that horizontal positioning indoors. NextNav says its MBS has added a vertical or “Z dimension” to the positioning system. This means the MBS can determine within less than 3 meters the floor level of a device in a  multi-story building.

It’s the kind of system that can provide emergency services with critical information such as the number of people located on a particular floor. It’s this specific use-case that NextNav is betting on. Last year, the Federal Communication Commission issued new 911 emergency requirements for wireless carriers that mandates the ability to determine the vertical position of devices to help responders find people in multi-story buildings.

Today, the MBS is in the Bay Area and Washington D.C. The company plans to use this new injection of capital to expand its network to the 50 biggest markets in the U.S., in part to take advantage of the new FCC requirement.

The technology has other applications. For instance, this so-called Z dimension could come in handy for locating drones. Last year, NASA said it will use NextNav’s MBS network as part of its City Environment for Range Testing of Autonomous Integrated Navigation facilities at its Langley Research Center in Hampton, Virginia.

The round was led by funds managed by affiliates of Fortress Investment Group . Existing investors Columbia Capital, Future Fund, Telcom Ventures, funds managed by Goldman Sachs Asset Management, NEA and Oak Investment Partners also participated.

XM Satellite Radio founder Gary Parsons is executive chairman of the Sunnyvale, Calif-based company.

The year of the gig worker uprising

By Megan Rose Dickey

2019 was a momentous year for gig workers. While the likes of Uber, Lyft, Instacart and DoorDash rely on these workers for their respective core services, the pay does not match how much they’re worth — which is a lot. It’s this issue that lies at the root of gig workers’ demands.

“This past year has been a pivotal year not only for gig workers but for workers across the tech economy,” Gig Workers Rising co-organizer Lauren Casey told TechCrunch. “That unto itself is a win — to see mass mobilization of workers across apps, across sectors and across positions.”

Instacart workers kicked off the year with a class-action lawsuit over wages and tips, and spoke out against Instacart’s practice of subsidizing wages with tips from customers. The suit alleged Instacart “intentionally and maliciously misappropriated gratuities in order to pay plaintiff’s wages even though Instacart maintained that 100 percent of customer tips went directly to shoppers. Based on this representation, Instacart knew customers would believe their tips were being given to shoppers in addition to wages, not to supplement wages entirely.”

Shortly after that lawsuit was filed, Instacart CEO Apoorva Mehta apologized and said the company would take steps to ensure tips were counted separately. Following Instacart’s capitulation, DoorDash and Amazon eventually followed suit and stopped offsetting worker wages with tips.

While Instacart now pays workers their full wages plus 100% of tips, workers take issue with the fact that Instacart’s suggested default tip decreased from 10% to just 5%.

In October, Instacart shoppers went on strike for 72 hours across the nation. Instacart responded by getting rid of a $3 quality bonus. This month, Instacart shoppers are engaging in six days of actions in protest of the company, including filing a complaint with the U.S. Department of Labor as well as filing a wage claim.

“We’re still just trying to get this one tiny thing: double the default tip percentage,” Instacart shopper and protest organizer Sarah (pseudonym) previously told TechCrunch. “We’ve tried endlessly to get them to raise the base guarantee pay. But we feel like, fine, at least give us the higher default tip.”

Meanwhile, DoorDash still has yet to offer back pay to workers who were subjected to the misappropriating of tips. In protest of Instacart, DoorDash and Postmates, labor group Working Washington delivered bags of peanuts their respective offices as a symbol of the pay workers receive.

“This was the year gig workers built a movement that seized control of the future of work from the tech lobbyists and venture capitalists,” Sage Wilson of Working Washington told TechCrunch.

Lyft is ceasing scooter operations in six cities and laying off 20 employees

By Megan Rose Dickey

In an industry where unit economics and rider utilization are key to running a profitable business, perhaps it’s better to cut your losses early on. Lyft notified employees today that it’s pulling its scooters from six markets: Nashville, San Antonio, Atlanta, the Phoenix area, Dallas and Columbus.

“We’re choosing to focus on the markets where we can have the biggest impact,” a Lyft spokesperson told TechCrunch. “We’re continuing to invest in growing our bike and scooter business, but will shift resources away from smaller markets and toward bigger opportunities.”

That means Lyft is laying off about 20 employees from its bikes and scooters team, which consists of about 400 people. Additionally, a number of contractors responsible for scooter charging and repositioning are also losing their jobs. This is the second round of layoffs in the bikes and scooters division this year. In March, Lyft laid off around 50 people, mostly those who came on board from Motivate following Lyft’s acquisition of the company last year.

Lyft landed on this decision because it found that cities with the greatest population density are best for micromobility, and those six markets are not included in that group. But Lyft is not the only company to pull out from markets this year. Competitor Uber has also pulled JUMP bikes and scooters from a handful of markets, including San Diego, Providence and Atlanta. In some cases, what led to ceasing operations were regulatory hurdles. For Lyft, however, the company said it came down to a lack of ridership.

Back in June, Lyft deployed its new scooters, built by Segway, which are designed for sharing. Since then, Lyft says its operating costs have decreased and ridership has increased about 20% in markets like Denver and Miami. These Segway-built scooters make up more than 65% of Lyft’s scooter fleet, and the company plans to upgrade the entire fleet by the end of January.

Lyft currently operates its scooters in Alexandria, Arlington, Austin, Denver, Los Angeles, Miami, Minneapolis, Montgomery County, Oakland, San Diego, San Jose, Santa Monica and Washington, D.C.

Lyft deploys 200 long-range EVs for its rideshare rental fleet in Colorado

By Darrell Etherington

Lyft is making 200 new long-range EVs available to rideshare drivers as part of its Express Drive program, the company revealed today. Express Drive is a program that Lyft offers to provide rental cars to drivers on its platform as an alternative to options like long-term leasing. Express Drive members get unlimited miles, as well as included insurance, maintenance and roadside service, with the ability to return the car after a rental period of as little as just a week.

These 200 new EVs (all Kia vehicles for this particular deployment, Lyft tells me) will be available to Express Drive Lyft drivers in December, and the rideshare company says that this is “the largest single deployment of EVs in Colorado’s history,” and there’s good financial reasoning for the timing of Lyft’s introduction of the program — in May, Colorado Governor Jared Polis signed a bill into law that provides rental programs for rideshare operators with the same incentives that it provides consumers at the state level: as much as $5,000 per car purchased.

EV deployments of this nature have benefits across all aspects of the rideshare economy: Lower operating costs for drivers are one immediate effect, for instance, and Lyft says that it has seen costs drop between $70 to $100 for drivers on average based on existing EV fleet deployments in both Seattle and Atlanta. For cities and residents, it’s obviously beneficial in terms of lowering net emissions resulting from cars on the road. The jury is still out on whether rideshare and ride-hailing programs ultimately decrease the total number of cars on the roads, but if programs like this can speed the adoption of EVs and ensure they represent a higher percentage of the mix of vehicles that are driving around cities, that’s a net win.

Large fleets of EVs in operation also provide incentives for infrastructure operators to ensure that there’s a good charging network on the ground for these vehicles to take advantage of. That, in turn, means the infrastructure is present for consumers to take advantage of, which helps with the general EV adoption curve.

Lyft also says it’s aiming to “electrify more of the Lyft fleet each year moving forward,” so expect additional cities and fleet deployments to follow as it works on those goals.

Lyft is adding Chrysler Pacificas to its AV fleet and opening a new dedicated self-driving test facility

By Darrell Etherington

Lyft has another year of building out its autonomous driving program under its belt, and the ride-hailing company has been expanding its testing steadily throughout 2019. The company says that it’s now driving four times more miles on a quarterly basis than it was just six months ago, and has roughly 400 people worldwide dedicated to autonomous vehicle technology development.

Going into next year, it’s also expanding the program by adding a new type of self-driving test car to its fleet: Chrysler’s Pacifica hybrid minivan, which is also the platform of choice for Waymo’s current generation of self-driving car. The Pacifica makes a lot of sense as a ridesharing vehicle, as it’s a perfect passenger car with easy access via the big sliding door and plenty of creature comforts inside. Indeed, Lyft says that it was chosen specifically because of its “size and functionality” and what those offer to the Lyft AV team when it comes to “experiment[ing] with the self-driving rideshare experience. Lyft says it’s currently working on building out these test vehicles in order to get them on the road.

Lyft’s choice of vehicle is likely informed by its existing experience with the Pacificas, which it encountered when it partnered with Waymo starting back in May, with that company’s autonomous vehicle pilot program in Phoenix, Ariz. That ongoing partnership, in which Waymo rides are offered on Lyft’s ride-hailing network, is providing Lyft with plenty of information about how riders experience self-driving ride-hailing, Lyft says. In addition to Waymo, Lyft is currently partnering with Aptiv on providing self-driving services commercially to the public through that company’s Vegas AV deployment.

In addition to adding Pacificas to its fleet alongside the current Ford Fusion test vehicles it has in operation, Lyft is opening a second facility in addition to its Level 5 Engineering Center, the current central hub of its global AV development program. Like the Level 5 Engineering Center, its new dedicated testing facility will be located in Palo Alto, and having the two close together will help “increase the number of tests we run,” according to Lyft. The new test site is designed to host intersections, traffic lights, roadway merges, pedestrian pathways and other features of public roads, all reconfigurable to simulate a wide range of real-world driving scenarios. Already, Lyft uses the GoMentum Station third-party testing facility located in Concord, Calif. for AV testing, and this new dedicated site will complement, rather than replace, its work at GoMentum.

Meanwhile, Lyft is also continually expanding availability of its employee self-driving service access. In 2019, it increased the availability of self-driving routes for its employees three-fold, the company says, and it plans to continue to grow the areas covered “rapidly.”

Corporate, public investments spur interest in Pacific Northwest startups

By Walter Thompson
Dan Burgar Contributor
Dan Burgar is President of the Vancouver VR/AR Association, where he has helped develop the city's ecosystem into the second largest VR/AR hub globally. He's also a partner at Shape Immersive, which creates innovative solutions for top brands and enterprises.
Kate Wilson Contributor
Kate Wilson is a Vancouver-based journalist. Previously technology editor at the Georgia Straight, Western Canada’s largest news and entertainment weekly, she has also written for The Independent, BetaKit, BC Business, and others.

Cities have always been America’s centers of power, driving the economy forward through competition. But now, they’re ceasing to lead the country’s innovation.

As jobs and talent have clustered, expertise has spilled over urban boundaries. In locations like the Gulf Coast, Texas Triangle, Great Lakes and Southern California, metropolitan areas are cooperating across borders to share new ideas. Eleven of these have earned the title of “megaregion,” and they host some of the continent’s cutting-edge centers of technology.

The Cascadia Innovation Corridor — the strip of land down the West Coast from Vancouver, Canada to Portland, Oregon — is perhaps the best example. Home to powerhouses like Microsoft, Amazon, Nike, Lululemon, Boeing and Intel, the area has seen large investments from companies hoping to encourage further cooperation. Over the past five years, state and provincial governments have signed formal agreements for collaboration, and executive-filled conferences are being held to encourage new partnerships.

Why are businesses and government organizations investing so much into the region? Challenge Seattle CEO and former Washington State Governor Christine Gregoire believes it’s the evolution of a trend that’s been unfolding for decades.

“For many years, a number of international companies from Seattle have been putting Canadian headquarters in Vancouver,” she says. “So without anybody deliberately thinking about how we could work together, it was already actually happening. These organizations have decided to capitalize on [what] was happening from the ground up, and build out a vision, and bring us all together so we can really magnify the success of what’s already happening on the ground.”

Local support

The West Coast’s urban centers are linked by more than shared geography and, as Gregoire jokes, a love of the Seattle Seahawks — the Pacific Northwest is characterized by an open and inclusive culture, heterogeneous populations and creating technology with a focus on social good. Economically, too, there are similarities. West Coast cities have historically turned to Asian and South Asian markets for trade, as well as looking to each other. Washington State exports more to British Columbia than it does to all other Canadian provinces combined, and if Washington State were a country, it would represent B.C.’s third-largest international export market

For Bill Tam, a member of the Cascadia Innovation Corridor steering committee and former president of BC Tech, Vancouver, Seattle, and Portland have different reasons to support the megaregion.

“In Vancouver, which has a great startup ecosystem, a lot of those companies and a lot of the research organizations have really bought into this idea of being part of something bigger and more substantive,” he says. “I think on the U.S. side, what was interesting was that we saw the impetus come from larger companies — particularly Microsoft, but they’re not the only ones. Everyone from the Nordstroms to the REIs really see the value in learning and working together to try and build leverage, and to accelerate the things they want to do.”

Tam’s hope for the region’s success comes from its ability to share resources across cities. Vancouver, for instance, is known for its highly-educated workforce: the location’s nature-filled setting and welcoming immigration policies attracts many qualified tech employees. With its industry focused on startups, though, it lacks larger brands and anchor companies that would help propel it onto the global stage. 

The Seattle area, however, has the opposite problem. America’s tight immigration regulations make it hard for companies to secure qualified talent, but the influence of tech giants like Microsoft and Amazon mean the city is a hotbed for international investment and innovation. By joining forces — and by integrating Portland, which sits somewhere between both poles — the Cascadia region, Tam believes, can emerge as a powerful global competitor. 

“I think the long-term vision for Cascadia is to feel like it is an economic region that is not only the best place to build new innovations, but also a cohesive area that understands the values of collaboration,” he says. “It ties together all the responsible aspects of how we live — whether it’s on the sustainability agenda, the environment agenda, and how we actually treat each other as an open and diverse society.”

Vancouver Skyline, (lee robinson) unsplash

Photo: Lee Robinson/Unsplash

Areas of expertise

Aside from giants Amazon and Microsoft’s dominance in ecommerce, software, and cloud-based computing, the area has spawned niche areas of expertise. President and CEO of the Business Council of British Columbia Greg D’Avignon believes those sectors will help elevate Cascadia’s profile.

“There’s a myriad of interesting companies here in British Columbia that are driving innovation,” he says. “In the quantum space, there’s D-Wave Systems, 1QBit, and others. D-Wave is the first commercial quantum computing company in the world, and it’s driving significant and complex computations on datasets to try to resolve issues that are endemic to challenges we have in terms of climate, personal health, aging, and growing populations. Life sciences is another important sector. There are some very interesting companies in the personalized medicine and health business — we’ve got Zymeworks […] and a myriad of other companies [that] are changing the nature of population-based healthcare.”

The region is also well-regarded in the virtual and augmented reality (VR/AR) space. Microsoft developed one of the leading AR headsets — the HoloLens — in the Pacific Northwest, and Vancouver has since been recognized as the world’s second-largest VR and AR ecosystem. More than 230 companies are located in the city, drawing on its history of gaming and visual effects to develop everything from surgical-training software to AAA-aspiring titles.

As well as individual successes in the consumer blockchain space with viral game Cryptokitties and data aggregation with Hootsuite, Cascadia is known for technical apparel, with the likes of Lululemon, REI, Eddie Bauer, Arc’teryx, and Nike choosing the region as their home. With Amazon’s monopoly on online retail, the West Coast leads North America in merchandizing tech.

“When we talk about some of the foundational pillars in the corridor, we’re talking about the movement of people and goods across the border,” D’Avignon says. “We’re talking about bringing together postsecondary in a way that is important. That’s all rooted deeply in how we look at making this region better. And then as we learn, how do we share that learning and those commercial opportunities with the rest of the world?”

TC Sessions: Mobility returns In 2020

By Kirsten Korosec

TC Sessions: Mobility is returning for a second year on May 14 in San Jose — a day-long event brimming with the best and brightest engineers, policymakers, investors, entrepreneurs and innovators, all of whom are vying to be a part of this new age of transportation.

Companies are racing to deploy autonomous vehicles and flying cars, scale their scooter operations and adjust to headwinds in the vehicle subscription and car-sharing businesses. At the center of the mobility maelstrom is TechCrunch. 

TechCrunch held its inaugural TC Sessions: Mobility event in summer 2019 with a mission to do more than highlight the next new thing. We aimed to dig into the how and why, the cost and impact to cities, people and companies, as well as the numerous challenges that lie along the way, from technological and regulatory to capital and consumer pressures.

We met our goal, and now we’re back to push further with TC Sessions: Mobility 2020.

Attendees of TC Sessions: Mobility can expect interviews with founders, investors and inventors, demos of the latest tech, breakout sessions, dozens of startup exhibits and opportunities to network and recruit.

If you’re wondering what to expect, take a look at some of the speakers we had onstage at the first event:

  • Amnon Shashua, Mobileye, co-founder, president and CEO
  • Dmitri Dolgov, Waymo, CTO
  • Summer Craze Fowler, Argo AI, chief security officer
  • Katie DeWitt, Scoot, VP of Product
  • Karl Iagnemma, Aptiv, president
  • Seleta Reynolds, head of the Los Angeles Department of Transportation
  • Caroline Samponaro, Lyft, head of Micromobility Policy
  • Ted Serbinski, Techstars, founder and managing director of The Mobility Program
  • Ken Washington, Ford, CTO
  • Sarah Smith, Bain Capital Ventures, partner
  • Dave Ferguson, Nuro, co-founder and president
  • Michael Granoff, Maniv Mobility, founder and managing partner
  • Jesse Levinson, Zoox, CTO and co-founder

TechCrunch will announce in the coming weeks and months the participants of TechCrunch Mobility’s fireside chats, panels and workshops.

Tickets are on sale now

Early-bird tickets are available now for $250 — that’s $100 savings before prices go up. Students can book a ticket for just $50. Book your tickets today.

Speaker Applications

We’re always looking for speakers for our events. Apply here.

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Hailing a driverless ride in a Waymo

By Kirsten Korosec
Ed Niedermeyer Contributor
Ed Niedermeyer is an author, columnist and co-host of The Autonocast. His book, Ludicrous: The Unvarnished Story of Tesla Motors, was released in August 2019.

“Congrats! This car is all yours, with no one up front,” the pop-up notification from the Waymo One app reads. “This ride will be different. With no one else in the car, Waymo will do all the driving. Enjoy this free ride on us!”

Moments later, an empty Chrysler Pacifica minivan appears and navigates its way to my location near a park in Chandler, the Phoenix suburb where Waymo has been testing its autonomous vehicles since 2016.

Waymo, the Google self-driving-project-turned-Alphabet unit, has given demos of its autonomous vehicles before. More than a dozen journalists experienced driverless rides in 2017 on a closed course at Waymo’s testing facility in Castle; and Steve Mahan, who is legally blind, took a driverless ride in the company’s Firefly prototype on Austin’s city streets way back in 2015.

waymo Driverless notificationBut this driverless ride is different — and not just because it involved an unprotected left-hand turn, busy city streets or that the Waymo One app was used to hail the ride. It marks the beginning of a driverless ride-hailing service that is now being used by members of its early rider program and eventually the public.

It’s a milestone that has been promised — and has remained just out of reach — for years.

In 2017, Waymo CEO John Krafcik declared on stage at the Lisbon Web Summit that “fully self-driving cars are here.” Krafcik’s show of confidence and accompanying blog post implied that the “race to autonomy” was almost over. But it wasn’t.

Nearly two years after Krafcik’s comments, vehicles driven by humans — not computers — still clog the roads in Phoenix. The majority of Waymo’s fleet of self-driving Chrysler Pacifica minivans in Arizona have human safety drivers behind the wheel; and the few driverless ones have been limited to testing only.

Despite some progress, Waymo’s promise of a driverless future has seemed destined to be forever overshadowed by stagnation. Until now.

Waymo wouldn’t share specific numbers on just how many driverless rides it would be giving, only saying that it continues to ramp up its operations. Here’s what we do know. There are hundreds of customers in its early rider program, all of whom will have access to this offering. These early riders can’t request a fully driverless ride. Instead, they are matched with a driverless car if it’s nearby.

There are, of course, caveats to this milestone. Waymo is conducting these “completely driverless” rides in a controlled geofenced environment. Early rider program members are people who are selected based on what ZIP code they live in and are required to sign NDAs. And the rides are free, at least for now.waymo VID 20191023 093743

Still, as I buckle my seatbelt and take stock of the empty driver’s seat, it’s hard not to be struck, at least for a fleeting moment, by the achievement.

It would be a mistake to think that the job is done. This moment marks the start of another, potentially lengthy, chapter in the development of driverless mobility rather than a sign that ubiquitous autonomy is finally at hand.

Futuristic joyride   

A driverless ride sounds like a futuristic joyride, but it’s obvious from the outset that the absence of a human touch presents a wealth of practical and psychological challenges.

As soon as I’m seated, belted and underway, the car automatically calls Waymo’s rider assistance team to address any questions or concerns about the driverless ride — bringing a brief human touch to the experience.

I’ve been riding in autonomous vehicles on public roads since late 2016. All of those rides had human safety drivers behind the wheel. Seeing an empty driver’s seat at 45 miles per hour, or a steering wheel spinning in empty space as it navigates suburban traffic, feels inescapably surreal. The sensation is akin to one of those dreams where everything is the picture of normalcy except for that one detail — the clock with a human face or the cat dressed in boots and walking with a cane.

Other than that niggling feeling that I might wake up at any moment, my 10-minute ride from a park to a coffee shop was very much like any other ride in a “self-driving” car. There were moments where the self-driving system’s driving impressed, like the way it caught an unprotected left turn just as the traffic signal turned yellow or how its acceleration matched surrounding traffic. The vehicle seemed to even have mastered the more human-like driving skill of crawling forward at a stop sign to signal its intent.

Only a few typical quirks, like moments of overly cautious traffic spacing and overactive path planning, betrayed the fact that a computer was in control. A more typical rider, specifically one who doesn’t regularly practice their version of the driving Turing Test, might not have even noticed them.

How safe is ‘safe enough’?

Waymo’s decision to put me in a fully driverless car on public roads anywhere speaks to the confidence it puts in its “driver,” but the company was cagey about the specific source of that confidence.

Waymo’s Director of Product Saswat Panigrahi declined to share how many driverless miles Waymo had accumulated in Chandler, or what specific benchmarks proved that its driver was “safe enough” to handle the risk of a fully driverless ride. Citing the firm’s 10 million real-world miles and 10 billion simulation miles, Panigrahi argued that Waymo’s confidence comes from “a holistic picture.”

“Autonomous driving is complex enough not to rely on a singular metric,” Panigrahi said.

It’s a sensible, albeit frustrating, argument, given that the most significant open question hanging over the autonomous drive space is “how safe is safe enough?” Absent more details, it’s hard to say if my driverless ride reflects a significant benchmark in Waymo’s broader technical maturity or simply its confidence in a relatively unchallenging route.

The company’s driverless rides are currently free and only taking place in a geofenced area that includes parts of Chandler, Mesa and Tempe. This driverless territory is smaller than Waymo’s standard domain in the Phoenix suburbs, implying that confidence levels are still highly situational. Even Waymo vehicles with safety drivers don’t yet take riders to one of the most popular ride-hailing destinations: the airport.

The complexities of driverless

Panigrahi deflected questions about the proliferation of driverless rides, saying only that the number has been increasing and will continue to do so. Waymo has about 600 autonomous vehicles in its fleet across all geographies, including Mountain View, Calif. The majority of those vehicles are in Phoenix, according to the company.

However, Panigrahi did reveal that the primary limiting factor is applying what it learned from research into early rider experiences.

“This is an experience that you can’t really learn from someone else,” Panigrahi said. “This is truly new.”

Some of the most difficult challenges of driverless mobility only emerge once riders are combined with the absence of a human behind the wheel. For example, developing the technologies and protocols that allow a driverless Waymo to detect and pull over for emergency response vehicles and even allow emergency services to take over control was a complex task that required extensive testing and collaboration with local authorities.

“This was an entire area that, before doing full driverless, we didn’t have to worry as much about,” Panigrahi said.

The user experience is another crux of driverless ride-hailing. It’s an area to which Waymo has dedicated considerable time and resources — and for good reason. User experience turns out to hold some surprisingly thorny challenges once humans are removed from the equation.

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The everyday interactions between a passenger and an Uber or Lyft driver, such as conversations about pick-up and drop-offs as well as sudden changes in plans, become more complex when the driver is a computer. It’s an area that Waymo’s user experience research (UXR) team admits it is still figuring out.

Computers and sensors may already be better than humans at specific driving capabilities, like staying in lanes or avoiding obstacles (especially over long periods of time), but they lack the human flexibility and adaptability needed to be a good mobility provider.

Learning how to either handle or avoid the complexities that humans accomplish with little effort requires a mix of extensive experience and targeted research into areas like behavioral psychology that tech companies can seem allergic to.

Not just a tech problem

Waymo’s early driverless rides mark the beginning of a new phase of development filled with fresh challenges that can’t be solved with technology alone. Research into human behavior, building up expertise in the stochastic interactions of the modern urban curbside, and developing relationships and protocols with local authorities are all deeply time-consuming efforts. These are not challenges that Waymo can simply throw technology at, but require painstaking work by humans who understand other humans.

Some of these challenges are relatively straightforward. For example, it didn’t take long for Waymo to realize that dropping off riders as close to the entrance of a Walmart was actually less convenient due to the high volume of foot traffic. But understanding that pick-up and drop-off isn’t ruled by a single principle (e.g. closer to the entrance is always better) hints at a hidden wealth of complexity that Waymo’s vehicles need to master.

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As frustrating as the slow pace of self-driving proliferation is, the fact that Waymo is embracing these challenges and taking the time to address it is encouraging.

The first chapter of autonomous drive technology development was focused on the purely technical challenge of making computers drive. Weaving Waymo’s computer “driver” into the fabric of society requires an understanding of something even more mysterious and complex: people and how they interact with each other and the environment around them.

Given how fundamentally autonomous mobility could impact our society and cities, it’s reassuring to know that one of the technology’s leading developers is taking the time to understand and adapt to them.

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