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Self driving software will be winner takes all, or a maybe two companies will sell software. Pretty easy to see 20M units/year at $5000 each, so call it 100B

Self driving software will be winner takes all, or a maybe two companies will sell software. Pretty easy to see 20M units/year at $5000 each, so call it 100B in revenue per year with profit margins of 50%. The winners will likely see close to a trillion increased valuation. There is a natural monopoly for the first successful movers. As a side note, risk/reward ratio is the same, but when making bets with positive expected return, you must consider bankroll size and risk of ruin. The VCs are realizing they can’t play a $300M/year game where the probability of winning is 20%, even though the expected return is 100x.

sjg007 6y ago
Why is it winner take all?
- MagnumOpus 6y ago
  First mover advantage snowballs: real-life client deployments increase the miles driven hundredfold and the revenue increases the resources devoted to mapping and to fix rare situations with manual fixes to either maps or AI. The behemoth company with custom mapping of every road in your country and manual remapping of construction sites will provide a far better experience than the scrappy AI start-up. (And they can probably leverage that to gain better insurance rates, or to get driving licences in places where second movers can't.)
  - sjg007 6y ago
    This doesn't mean that self driving is a winner take all market.
    - lumost 6y ago
      It does mean that buying the alternative will usually be a "crappy" choice. Leaving the incumbent with the ability to charge a margin and hire better devs. There will be other players who are competitive locally, or provide "good enough" solutions for some customers. * Assuming any player finds a viable business model, and that our current understanding of ML, Computer Vision, and control systems is sufficient to produce a commercially viable product.
      - sjg007 6y ago
        Why? I am sure self-driving will have regulations around it for specific performance guarantees.
        lumost 6y ago
        I think that's where "good enough" comes in. It's likely that some companies will be just compliant, whereas the market leader is well ahead of compliance. e.g. a car that safely comes to a stop in an unhandled situation vs. a car that can handle the situation. It's also possible that the space also reaches commodity status where no differentiators emerge ( as one would expect with a big S curve in performance ).
  - kortilla 6y ago
    Then Tesla already won because they have the most miles/data? Doesn’t seem sound.

sjg007 6y ago

Why is it winner take all?

MagnumOpus 6y ago
First mover advantage snowballs: real-life client deployments increase the miles driven hundredfold and the revenue increases the resources devoted to mapping and to fix rare situations with manual fixes to either maps or AI. The behemoth company with custom mapping of every road in your country and manual remapping of construction sites will provide a far better experience than the scrappy AI start-up. (And they can probably leverage that to gain better insurance rates, or to get driving licences in places where second movers can't.)
- sjg007 6y ago
  This doesn't mean that self driving is a winner take all market.
  - lumost 6y ago
    It does mean that buying the alternative will usually be a "crappy" choice. Leaving the incumbent with the ability to charge a margin and hire better devs. There will be other players who are competitive locally, or provide "good enough" solutions for some customers. * Assuming any player finds a viable business model, and that our current understanding of ML, Computer Vision, and control systems is sufficient to produce a commercially viable product.
    - sjg007 6y ago
      Why? I am sure self-driving will have regulations around it for specific performance guarantees.
      - lumost 6y ago
        I think that's where "good enough" comes in. It's likely that some companies will be just compliant, whereas the market leader is well ahead of compliance. e.g. a car that safely comes to a stop in an unhandled situation vs. a car that can handle the situation. It's also possible that the space also reaches commodity status where no differentiators emerge ( as one would expect with a big S curve in performance ).
- kortilla 6y ago
  Then Tesla already won because they have the most miles/data? Doesn’t seem sound.