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GM to Acquire Autonomous-Vehicle Technology Developer Cruise Automation (YC W14)
- Aoyagi 11y agoYeah, Cadillac must be really happy that they wasted their time on the SuperCruise technology... or how is this going to work out?
- ig1 11y agoIf the rumours are true on GM acquisition of Cruise for >$1bn it's a major home run for YC; founder Kyle Vogt’s second YC unicorn (after Twitch) and third YC exit (after SocialCam). (Twitch and Cruise will be the only two YC unicorns to have exited and Kyle is co-founder of both. I imagine he'll soon have a queue of VCs lining up to fund his next thing....)
- BinaryIdiot 11y ago> I imagine he'll soon have a queue of VCs lining up to fund his next thing.... That's assuming he's not going to continue working on Cruise at GE. I would suspect he'll work on it for at least a year or two though depending on how passionate he is about it he may just stay at GE for along time.
- ig1 11y agoNormally acquisitions requires key employees to contractually commit to staying for a minimum period after the acquisition. It's fairly common for founders to leave after this period though.
- chatmasta 11y agoI suspect the vesting schedule of his GM options will impact his decision making more than mere passion. ;) Speaking of, what does a typical vesting schedule look like in stock-based acquisitions? Is it always negotiable or is there an industry standard? I assume it's not the same 4/1 used in normal employee options, or else no founder would sell to a company requiring him to work four years to realize the full value of the acquisition.
- hkmurakami 11y agoThere's no standard. It can be anywhere from 1-4 years with various cliff terms.
- replicatorblog 11y agoI imagine he'll have a queue of VC firms looking to bring him on as a partner :)
- zeeshanm 11y ago> GM recently formed an internal autonomous vehicle development team and entered into a strategic alliance with rideshare service Lyft earlier this year – adding a whopping __$500 billion__ to Lyft’s latest funding round to help build a connected network for self-driving cars. WTF?
- Cyph0n 11y agoGood to hear. Cruise seems like a pretty interesting little startup with a smart approach to the expected problem of having both regular and self driving cars on the road in the future. Now that it has the backing and resources of a large automaker, the sky is the limit. Good luck guys!
- jamesfzhang 11y agoAcquisition price of over $1 billion: http://recode.net/2016/03/11/gm-spent-over-1-billion-on-self-driving-startup-cruise-the-largest-y-combinator-exit-ever/ http://recode.net/2016/03/11/gm-spent-over-1-billion-on-self...
- Animats 11y agoThat cites another story which doesn't have a figure. Neither GM nor Cruise has announced a number. Fortune says "No financial terms were disclosed, but Fortune has learned from a source close to the situation that the deal is valued at “north of $1 billion,” in a combination of cash and stock."
- sachinag 11y agoYC company, as well.
- FreedomToCreate 11y agoSeems like a typo. GM is investing heavily into research and development. There jobs postings in Detroit for electrical and software engineering has skyrocketed. Being more objective and looking into Cruises history, they are not remotely worth 1 billion dollar, nor does it look like they have any technology that would be worth that much. Unless GM was that desperate and the Cruise guys amazing negotiators, I am skeptical on the 1 billion dollar price.
- jamesfzhang 11y agoGive them some credit beyond being "amazing negotiators." Have you used their kit? The publicly released one, or the one actively in development? How do you know if their tech isn't that valuable? EDIT: It's very hard to pinpoint an exactly value for R&D heavy startups. Their tech could easily be worth well over $1 billion if it plays a crucial role in developing & accelerating GM producing & selling driverless cars. Just know that GM sold $154 billion worth of car last year.
- deleted 11y ago[deleted]
- foobarqux 11y agoThey are probably behind in R&D and saw that as a critical risk. Moreover, there aren't any alternatives besides Cruise which pushed the price up.
- tommynicholas 11y agoDefinitely not a typo, validated by many sources, and the founder of Cruise already has 2 9 figures exits so selling for much less than this wouldn't make too much since to him 2 years in.
- shubhamjain 11y agoI guess Twitch.tv is the only startup the founder had an exit from.
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- revorad 11y agoIsn't this the biggest YC exit yet?
- makoz 11y agoWasn't Twitch around one billion as well?
- adventured 11y ago$970 million in cash
- deleted 11y ago[deleted]
- jonknee 11y ago$1B sounds like a lot, but remember last year when car makers spent $3B for Nokia's mapping company HERE? http://thenextweb.com/mobile/2015/08/03/nokias-here-maps-sold-for-3-billion-to-audi-bmw-and-mercedes/ http://thenextweb.com/mobile/2015/08/03/nokias-here-maps-sol... There will be fortunes made and lost on the basis of automated features in cars over the next decade, GM definitely wants to be in the winner's circle.
- mtgx 11y agoWhich was actually a major loss for Nokia, considering it bought the service for $8.1 billion a few years earlier. http://www.bloomberg.com/news/articles/2007-10-01/nokia-to-pay-8-dot-1-billion-for-navteqbusinessweek-business-news-stock-market-and-financial-advice http://www.bloomberg.com/news/articles/2007-10-01/nokia-to-p...
- ams6110 11y agoOnly a little more than they paid in the ignition switch settlement. Not exactly pocket change, but certainly not something that they'd really think twice about if they thought the value was there.
- rgbrenner 11y agoExcept Here was a company with 6000 employees, 1.1 billion in revenue, and 80% market share in the car maps market[0]. 0. http://www.nytimes.com/2015/05/08/business/uber-joins-the-bidding-for-here-nokias-digital-mapping-service.html?_r=0 http://www.nytimes.com/2015/05/08/business/uber-joins-the-bi...
- rokhayakebe 11y agoGM sold 9.9 million cars last years. $1B is 3,000 to 4,000 cars. Maybe this technology will help them boost sales by 1%, 100k cars.
- mtgx 11y agoHow much, or how little, is the Cruise kit's focus on digital security as well, and not just the "self-driving" part?
- pj_mukh 11y agoWoo! Go Kyle! First Twitch then Cruise. Maybe this will help GM catchup with Tesla (in terms of deploying tech and not just R&D).
- hobo_mark 11y agoDo you want to feel bad about yourself? Kyle appears to be 30-31 years old. You're welcome.
- noir_lord 11y agoWhy would someone else's success who is younger than me make me feel bad?
- hobo_mark 11y agoIt was meant as an encouragement to do better.
- noir_lord 11y agoIt's nice to be reminded how differently people look at the world, to me someone doing great things at a young age is someone doing great things, jealously doesn't even cross my mind. If you compare yourself to everyone else there are going to be lots of people 'ahead' of you all the time (to quote a well known film 'there can be only one'), seems like a waste of time to be concerned with how other people are doing. I ride in a bicycle club, I'm probably one of the slowest riders there but I don't care since the only performance I care about is me from a month ago.
- pj_mukh 11y agoPointless snark aside, I am in his space (Robotics). For years, we've slaved away in Labs so its amazing to see some of us do so well! I'm happy AND excited, big things are coming. (Age is highly irrelevant).
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- HLSalumin2 11y agoThe acquisition price can't be right. If the price was north of $1B, GM would be required to file and disclose the price as the acquisition was material. GM itself is worth less than $50B, so an acquisition for over 2% of the value of the company certainly would be considered material and require disclosure to the SEC and investors. That price can't be right.
- foobarqux 11y agoGM probably desperately needed to jump start their tech to be competitive and there was only a single acquisition option. Not acquiring Cruise may have cost them more than $1 billion.
- ocdtrekkie 11y agoWe're a decade out from self-driving technology being consumer-ready. Plenty of time to acquire or develop in-house down the road. As more people experiment with it, and more hardware and software specifically designed for it is available, it'll be easier to put together such a system.
- JangoSteve 11y agoThe article says the acquisition is expected to close in Q2. Wouldn't it not need to be disclosed until it actually closed?
- akramhussein 11y agoReally great outcome - it's hard to fight this space with so many well backed players - and Cruise had a novel solution and strategy.
- peter303 11y agoThere could be a market for the "IBM PC" or Android of smart cars, i.e. standardized hardware and software interfaces for interchanging parts and manufacturing them cheap. The IBM PC was not the top technology, but standards made it easier for most to get into the market.
- bliti 11y agoIt won't happen. Car companies suffer from a huge NIH syndrome. The entire parts supply chain benefits from re-engineering everything. Its baked into the culture.
- ocdtrekkie 11y agoAt the very least, any inter-car communication will need to be standardized. And even if they add some proprietary cruft to ensure replacement parts are acquired directly from them, it's likely over time the different technologies developed by different manufacturers will start to converge.
- bliti 11y agoI don't think this will happen either. Manufacturers won't even standardize connectors. It's futile because it's cultural.
- ocdtrekkie 11y agoWe managed to get OBD2 standards out there. And driving systems are a matter of public safety.
- bliti 11y agoTrue, although the obd standard defines an interface and not an implementation. Which would make things much simpler. I hate to be a Debbie downer but it just seems impossible.
- packetized 11y agoBetween this and the $500mm investment by GM in Lyft [0], it's interesting to see the battle lines already being drawn in autonomous transport: Uber/Tesla vs. Lyft/GM. [0]: http://www.marketwatch.com/story/why-general-motors-invested-in-lyft-2016-01-04 http://www.marketwatch.com/story/why-general-motors-invested...
- ghaff 11y agoAlong with any of a number of other auto companies and their suppliers. I'd be very surprised if this plays out as any sort of winner takes all over the coming decades that this will play out.
- packetized 11y agoOh, of that there's no doubt. It's just interesting to already see some battle lines being drawn, at this relatively early stage of the technology.
- bduerst 11y agoThey'll probably settle into a cost leader / quality leader duo.
- roymurdock 11y agoDon't forget Google/Toyota (currently retrofitting Lexus and Prius).
- newjersey 11y agoI would have thought Toyota was firmly in Microsoft's hands. Bing hits the road with Toyota Entune https://webcache.googleusercontent.com/search?q=cache:lUwC9Al93CUJ:https://blogs.bing.com/search/2011/01/03/bing-hits-the-road-with-toyota-entune/+&cd=3&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:lUwC9A... http://www.winrumors.com/bing-to-be-featured-in-new-toyota-navigation-system/ http://www.winrumors.com/bing-to-be-featured-in-new-toyota-n... http://www.neowin.net/news/toyota-drops-bing-from-entune http://www.neowin.net/news/toyota-drops-bing-from-entune Is the deal between Google and Toyota strictly for autonomous driving? One would think Google would try to get Toyota to use its cloud platform for everything if they could persuade Toyota to do so.
- fudged71 11y agoCongrats to the Cruise team and YC! Hard tech is alive and well :)
- vivekmgeorge 11y agoSmart move in the near term, but at the end of day this is a race to the bottom for everyone invovled in the car ecosystem. Cars and ride sharing will become a commodity in 10-15 years just like online storage is today. Tesla is best position overall. They're building the best battery tech (for any use) and charging stations all over the world.
- csours 11y agoI think that the business will be split between sharing and owning in the future, but the exact proportion remains to be seen. Be careful not to fall prey to the Availability Heuristic[1]: If you live in a city, remember there are a lot of people who live in the 'burbs or far outside a city. Also, many people actually like driving. Disclaimer: I work for GM, any opinions here are solely my own. 1. https://en.wikipedia.org/wiki/Availability_heuristic https://en.wikipedia.org/wiki/Availability_heuristic
- misterlittleb 11y agoThe article I read said Cruise took $18mm in funding and still had $10mm in the bank. Just from a back-of-the-envelope perspective, something seems strange here. If you asked me how much money autonomous cars would take to create and perfect, I'd guess maybe $10 billion. What could Cruise have built that justifies this price? Why wouldnt GM just put $100mm or even $500mm into their own funded startup? Time will tell, but I suspect GM got swindled here.
- mikeyouse 11y ago$1B is less than 1% of annual revenues to GM, and some portion of the deal was in stock.. It's really a small bet that could speed their own efforts considerably. GM has a lab in Silicon Valley so the Cruise team will likely stay here and continue development with many more resources at their disposal.
- adventured 11y agoGM is also generating a billion per quarter in operating income and has $25 billion in cash. Given how important this area of technology is going to be to the future of GM, they can easily afford and justify making an acquisition like this every quarter.
- tardo99 11y agoBut, doesn't the price they pay matter? Doesn't paying more than 100x the amount invested in the company seem foolhardy?
- Matt3o12_ 11y agoI have not been following cruise's development very well. Can somebody tell me how advanced their technology is to this day? What products have they developed so far and what are they currently developing? Their homepage just tells me that they have (or will) merge(d) with GM and has a link to job offerings.
- cyrux004 11y agoThey did run into a parked Prius the other day and then Geohot made fun of that http://www.theverge.com/2016/1/21/10810726/cruise-automation-self-driving-car-accident http://www.theverge.com/2016/1/21/10810726/cruise-automation...
- ModernMech 11y agoTheir whole model was that they would beat the competition to the punch by using off-the-shelf hardware (mostly Velodyne pucks [1]), retrofitting stock cars (they started with an Audi A4 and then moved over to Nissan Leafs), and using textbook algorithms (Kyle competed in the DARPA grand challenge in 2004. Most of the algorithms and methods Cruise used date back to that era. e.g. map-based localization, sample-based planners, etc. ). Their business model was to develop a fleet of autonomous cars and then license them out to other companies to use. Honestly, as far as I can tell their biggest asset is a relatively complete 3D LIDAR map of San Francisco. Other than that, I don't think they were really set up to compete against the likes of Google, who has the resources and man-power to develop custom cars, algorithms, and sensors. Given this, from the start I thought the company was designed to flip. Originally I figured they'd sell to Google, but looks like I was wrong about that. [1] http://velodynelidar.com/vlp-16.html http://velodynelidar.com/vlp-16.html
- tavert 11y agoThey had been hiring quite a few people from Tesla's autopilot team, FWIW.
- Animats 11y agoI don't think GM spent $1BN to buy Cruise. That's might be GM's total spending on autonomous vehicles, including the Cadillac/CMU effort and the Delphi work. I'm surprised GM bought them. Cruise is basically lane keeping plus smart cruise control, with extra hype. Their driving record isn't very good.[1] [1] https://www.dmv.ca.gov/portal/wcm/connect/bc21ef62-6e7c-4049-a552-0a7c50d92e86/Cruise_Automation_01.08.16.pdf?MOD=AJPERES https://www.dmv.ca.gov/portal/wcm/connect/bc21ef62-6e7c-4049...
- brusincruzin 11y agoI agree.. I work for a big company in the valley and have a lot of professional experience doing similar things. Cruise approached me early on (before A, after YC). They seemed very inexperienced and naive. The LIDAR alone cost about an order of magnitude more than their claimed total package cost. A bunch of young kids way way over their head. But this is really the punchline of the story - they offered $60K (for a senior role), about 1-3% equity - but I could pick from the "prize closet" as a signing bonus. What's in this prize closet? XBoxes! Snowboards! trips to Tahoe! Ha! No idea how they managed to build a team worth an small acquihire - much less a billion $ with that. I expect they were acquired for 50-100M. Still nothing to sneeze at, but a comment on the state of the market considering their maturity.
- dang 11y agoWe've received a complaint alleging that this comment is a fabrication. Obviously we're not going to delete it, but I think it's fair to attach a caveat lector.
- justin 11y agoThis comment is a fabrication. Cruise doesn't have a prize closet, although maybe they should. As for the rest of it, sounds like sour grapes and honestly a lack of understanding about how companies value other companies in acquisitions. I question whether you really have any experience in this industry at all.
- nabeel 11y agoIt is entirely fabricated. The team have never conducted themselves that way. Sad this was posted.