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Waymo is patronized by Alphabet for as long as it needs to be. This has been good, as it takes off a lot of pressure to virtue signal fake progress to impatient

Waymo is patronized by Alphabet for as long as it needs to be. This has been good, as it takes off a lot of pressure to virtue signal fake progress to impatient investors; a fate many of Waymo's potential competitors haven fallen victim to. When Uber and Tesla were acting like cowboys and creating plenty of drama for the media Waymo (under the sensible and boring leadership of non-techy car industry vet John Krafcik) was quietly structuring itself to be in the game for the long haul, following the whole "Fuck You Money" episode that saw most of the Google Self Driving Car Project's original talent leave for easy Venture Capital elsewhere. Waymo is very tight lipped about their operational costs, I would really love to know how close they are to being revenue positive. Recent moves by Waymo suggest they believe they are getting close.

devmor 2y ago
Considering just how many of their cars I see driving around Atlanta covered in sensor arrays every day, I would certainly hope they’re making real progress.
sanderjd 2y ago
Yep, I look forward to reading good books about it in a decade or so. I think there are lots of lessons to be learned here for how to do a certain kind of difficult new thing.
- laddershoe 2y ago
  I'd like to read that book too... but "how to do a certain kind of difficult new thing" in their case involved more than solid execution. It also needed an owner/investor with extremely deep pockets and technical capabilities that vastly accelerated their work, who was willing to throw huge amounts of money at the problem for years, along with favorable economic conditions (zero-percent interest rates) for long periods of time, at the right period of time. I give Waymo tons of credit for their work here, but the conditions that enabled it aren't easily repeatable IMO.
  - minwcnt5 2y ago
    It is fascinating how Google simultaneously provides a great lesson in how to leverage their primary competency of AI, as well as how not to (losing to OpenAI in LLMs).
  - sanderjd 2y ago
    The reason it's interesting (IMO) is that other companies that also had owner/investors with extremely deep pockets and technical capabilities have been throwing huge amounts of money at it in the same favorable interest rate environment, but with seemingly a lot less success. I think their (apparent) success probably does have a lot to do with some combination of having the deepest pockets and (I think?) being a few years earlier to get started than everyone else, but still, it also looks like they had a better strategy, and I'm pretty curious how that worked.
ahartmetz 2y ago
> non-techy He studied mechanical engineering and worked in that field for a while. Do we agree that there is other technology than software?
- dymk 2y ago
  Techy does not mean technology
  - fisian 2y ago
    I also understood it to mean the "move fast, break things" attitude, that many techy VC startups have.
- ErikBjare 2y ago
  So did my father, but I would not consider him "techy".
mechagodzilla 2y ago
There is absolutely no way they are remotely close to being revenue positive (unless you're asking strictly if they are charging more than the gas they're burning without counting anything else). They have like 700 very expensive taxis and a burn rate measured in billions of dollars per year.
- bryanlarsen 2y ago
  > (unless you're asking strictly if they are charging more than the gas they're burning without counting anything else). Yes, I assume they're asking about the operating margin. That's the number everybody cares about. If it's positive, then Waymo can theoretically become revenue positive by adding more cars and regions to their fleet.
  - gitfan86 2y ago
    Bird scooters operating margins are very good if you only measure specific locations on specific times of the week. It is risky to ignore total profit and loss of the entire company
  - mechagodzilla 2y ago
    That number needs to include car depreciation + any remote 'safety drivers' + the maintenance depot overhead + fuel and insurance + any other costs that scale with the number of cars then.
    - bryanlarsen 2y ago
      Exactly. They have revenue in the low 6 figures per vehicle annually, so they probably need to get the number of operational employees per vehicle down to around 1/10. Seems feasible, but they're probably not anywhere close to that yet.
      - minwcnt5 2y ago
        On the other hand, HN has consistently underestimated them for the last two years or so as they've begun to commercialize. Their trajectory has been 10x growth in rides served per year for a while now. At the current scale it's hard to imagine they could grow another 10x in the next year without being close to break even on operating cost.
RivieraKid 2y ago
They're probably at a point where scaling is at least slightly profitable. Otherwise they wouldn't be scaling.
- jjfoooo4 2y ago
  Scaling out now helps along their regulatory moat, being the first trusted operator in a given market means they get a seat at the table for setting the rules
chollida1 2y ago
> Waymo is very tight lipped about their operational costs, I would really love to know how close they are to being revenue positive. Recent moves by Waymo suggest they believe they are getting close. What specific "moves" by them indicate they are close to being profitable? All the industry research I get indicates they are still negative to the tune of $1B+ a year.
ketzo 2y ago
They're doing 100k paid trips/wk now, per the CEO in a recent LinkedIn post. If average trip value is (very generously) $20, that's still only $100MM in annual revenue. I would bet that doesn't even pay for the direct physical + digital costs of operating the cars, let alone salaries, office leases, etc. Waymo has started onto a very good trendline now, for sure, and a path to revenue-positive is becoming clearer. But they have a loooooooong way to go before they are offsetting even their operating costs, let alone beginning to pay down their (absolutely massive) fixed costs. I think the bear case is actually pretty tough for Waymo. Their scaling is not cheap. - The cars are, by all account, expensive as hell; I've seen $200k+ - The cars require ongoing cleaning, maintenance, mechanical work - There's a massive customer support operation; not just people to call for support when your car gets stuck, but people who can step in and remote-instruct the vehicle. - Expanding to a new city requires a massive data-gathering operation before any paid trips can begin. None of this is taking into account the massive fixed costs that come with being a tech company - hundreds of $400k+TC employees, server bills in the tens of millions, thousands of top-of-the-line GPUs for training clusters.
- bryanlarsen 2y ago
  With 700 cars, 100MM is $140K per car per year so that should be covering direct car non-employee expenses.
- RestlessMind 2y ago
  > that's still only $100MM in annual revenue. Given how fast Waymo is scaling, we should look at forward revenue projections, if available. Also, when it comes to TAM, Uber is a good standard to compare against. In Q2 2024[1], Uber had - 10.7B revenue (42.8B ARR), out of which 6.134B (24.5B ARR) was from "mobility" and others from delivery/freight. - Real fun part: Gross booking revenue for mobility was 20.554B, but revenue for Uber itself was 6.134B, or 30% of gross revenue. If 70% is going to drivers, that is Waymo's opportunity. It can price at 40% discount to Uber's prices while still reaping twice the revenue per ride. Start with the most lucrative markets where Uber is already profitable and expand from there. [1] https://s23.q4cdn.com/407969754/files/doc_earnings/2024/q2/earnings-result/Uber-Q2-24-Earnings-Press-Release.pdf https://s23.q4cdn.com/407969754/files/doc_earnings/2024/q2/e...

devmor 2y ago

Considering just how many of their cars I see driving around Atlanta covered in sensor arrays every day, I would certainly hope they’re making real progress.

sanderjd 2y ago

Yep, I look forward to reading good books about it in a decade or so. I think there are lots of lessons to be learned here for how to do a certain kind of difficult new thing.

laddershoe 2y ago
I'd like to read that book too... but "how to do a certain kind of difficult new thing" in their case involved more than solid execution. It also needed an owner/investor with extremely deep pockets and technical capabilities that vastly accelerated their work, who was willing to throw huge amounts of money at the problem for years, along with favorable economic conditions (zero-percent interest rates) for long periods of time, at the right period of time. I give Waymo tons of credit for their work here, but the conditions that enabled it aren't easily repeatable IMO.
- minwcnt5 2y ago
  It is fascinating how Google simultaneously provides a great lesson in how to leverage their primary competency of AI, as well as how not to (losing to OpenAI in LLMs).
- sanderjd 2y ago
  The reason it's interesting (IMO) is that other companies that also had owner/investors with extremely deep pockets and technical capabilities have been throwing huge amounts of money at it in the same favorable interest rate environment, but with seemingly a lot less success. I think their (apparent) success probably does have a lot to do with some combination of having the deepest pockets and (I think?) being a few years earlier to get started than everyone else, but still, it also looks like they had a better strategy, and I'm pretty curious how that worked.

ahartmetz 2y ago

> non-techy He studied mechanical engineering and worked in that field for a while. Do we agree that there is other technology than software?

dymk 2y ago
Techy does not mean technology
- fisian 2y ago
  I also understood it to mean the "move fast, break things" attitude, that many techy VC startups have.
ErikBjare 2y ago
So did my father, but I would not consider him "techy".

mechagodzilla 2y ago

There is absolutely no way they are remotely close to being revenue positive (unless you're asking strictly if they are charging more than the gas they're burning without counting anything else). They have like 700 very expensive taxis and a burn rate measured in billions of dollars per year.

bryanlarsen 2y ago
> (unless you're asking strictly if they are charging more than the gas they're burning without counting anything else). Yes, I assume they're asking about the operating margin. That's the number everybody cares about. If it's positive, then Waymo can theoretically become revenue positive by adding more cars and regions to their fleet.
- gitfan86 2y ago
  Bird scooters operating margins are very good if you only measure specific locations on specific times of the week. It is risky to ignore total profit and loss of the entire company
- mechagodzilla 2y ago
  That number needs to include car depreciation + any remote 'safety drivers' + the maintenance depot overhead + fuel and insurance + any other costs that scale with the number of cars then.
  - bryanlarsen 2y ago
    Exactly. They have revenue in the low 6 figures per vehicle annually, so they probably need to get the number of operational employees per vehicle down to around 1/10. Seems feasible, but they're probably not anywhere close to that yet.
    - minwcnt5 2y ago
      On the other hand, HN has consistently underestimated them for the last two years or so as they've begun to commercialize. Their trajectory has been 10x growth in rides served per year for a while now. At the current scale it's hard to imagine they could grow another 10x in the next year without being close to break even on operating cost.

RivieraKid 2y ago

They're probably at a point where scaling is at least slightly profitable. Otherwise they wouldn't be scaling.

jjfoooo4 2y ago
Scaling out now helps along their regulatory moat, being the first trusted operator in a given market means they get a seat at the table for setting the rules

chollida1 2y ago

> Waymo is very tight lipped about their operational costs, I would really love to know how close they are to being revenue positive. Recent moves by Waymo suggest they believe they are getting close. What specific "moves" by them indicate they are close to being profitable? All the industry research I get indicates they are still negative to the tune of $1B+ a year.

ketzo 2y ago

They're doing 100k paid trips/wk now, per the CEO in a recent LinkedIn post. If average trip value is (very generously) $20, that's still only $100MM in annual revenue. I would bet that doesn't even pay for the direct physical + digital costs of operating the cars, let alone salaries, office leases, etc. Waymo has started onto a very good trendline now, for sure, and a path to revenue-positive is becoming clearer. But they have a loooooooong way to go before they are offsetting even their operating costs, let alone beginning to pay down their (absolutely massive) fixed costs. I think the bear case is actually pretty tough for Waymo. Their scaling is not cheap. - The cars are, by all account, expensive as hell; I've seen $200k+ - The cars require ongoing cleaning, maintenance, mechanical work - There's a massive customer support operation; not just people to call for support when your car gets stuck, but people who can step in and remote-instruct the vehicle. - Expanding to a new city requires a massive data-gathering operation before any paid trips can begin. None of this is taking into account the massive fixed costs that come with being a tech company - hundreds of $400k+TC employees, server bills in the tens of millions, thousands of top-of-the-line GPUs for training clusters.

bryanlarsen 2y ago
With 700 cars, 100MM is $140K per car per year so that should be covering direct car non-employee expenses.
RestlessMind 2y ago
> that's still only $100MM in annual revenue. Given how fast Waymo is scaling, we should look at forward revenue projections, if available. Also, when it comes to TAM, Uber is a good standard to compare against. In Q2 2024[1], Uber had - 10.7B revenue (42.8B ARR), out of which 6.134B (24.5B ARR) was from "mobility" and others from delivery/freight. - Real fun part: Gross booking revenue for mobility was 20.554B, but revenue for Uber itself was 6.134B, or 30% of gross revenue. If 70% is going to drivers, that is Waymo's opportunity. It can price at 40% discount to Uber's prices while still reaping twice the revenue per ride. Start with the most lucrative markets where Uber is already profitable and expand from there. [1] https://s23.q4cdn.com/407969754/files/doc_earnings/2024/q2/earnings-result/Uber-Q2-24-Earnings-Press-Release.pdf https://s23.q4cdn.com/407969754/files/doc_earnings/2024/q2/e...