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Hari Sripathi shares an article on how Waymo (formerly known as the Google self-driving car project) will monetize and scale their business.

Autonomous driving will be huge a beneficiary of the lingering effects of social distancing. Just as with e-Commerce for grocery, telemedicine and video conferencing, the pandemic has lowered one of the biggest, most significant costs for innovative companies – customer education. Customers will now be increasingly supportive of avoiding contact with strangers. Waymo, being the world’s leading consumer facing Autonomous Vehicle company, stands to benefit immensely.

At this inflection point, it is exciting to speculate on pathways Waymo will take as it begins to commercialize its first customer facing autonomous vehicles. Specifically, who will Waymo target, how will they monetize and how will they scale their business?

Alphabet’s Historical Playbook

Historically, Alphabet’s (Google’s) business models have relied on earning few dollars per user but enabling a vast number of users. For example, the average video on YouTube earns just $3 a year. But the revenues keep coming in since there are 2 billion users with over 5 billion videos. Android has 85% share of the smartphone market but revenues far less than Apple. 

Also, Alphabet tends to capture value from software rather than produce consumer products end to end. They provide underlying platforms on which others can deploy their creations on top. YouTube does not produce its own content. Android does not make the cellphone. Google revolutionized search by taking you away from their page. In the same vein, I doubt Waymo will ever make a car.  

Who Will They Target?

Waymo’s recent funding of $2.5 billion from external investors has two implications. First, investors other than Alphabet think it has a legitimate chance at success. And second, it has a path to satisfy an investor appetite for around $8 to $10 billion dollars in returns over the next four to five years. 

This would require a pre-IPO valuation in the hundreds of billions, which would need a user base of a hundred million to a billion users very soon. To keep investors from getting anxious, Waymo has to commercialize quite soon and think big, really big.

Key points include:

• The android of Autonomy
• Advertising and autonomous vehicles
• Traffic increase with autonomous vehicles

Read the full article, How Will Waymo Monetize Autonomy?, on Fleetforward.com.