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They have already spent an enormous amount of money. It’s hard to see how they could make it back quickly, if ever. I’d like to be wrong, but I expect they will

They have already spent an enormous amount of money. It’s hard to see how they could make it back quickly, if ever. I’d like to be wrong, but I expect they will continue to be a money losing experiment for a long time yet.

crazygringo 1y ago
How much money do they make off the average person in the value of ads shown per year? Now compare to how much money the average person spends on driving per year. If Waymo winds up running half the market in autonomous transportation over the next several decades, it'll make search look like peanuts in comparison.
- robotresearcher 1y ago
  The entire global taxi market is ~$250B a year. Google made ~$265B from its ads last year.
  - crazygringo 1y ago
    Not the global taxi market. The global driving market. When these are ubiquitous enough, the vast majority of people who currently own cars won't need to. It'll be so much cheaper and easier to use rideshare.
    - ghaff 1y ago
      I can't really imagine the circumstances where I wouldn't want to still own my own vehicle even if it had an autonomous mode. I drive it places where I don't have cellular service. I keep lots of stuff in the vehicle. It's customized with accessories like roofracks. I can hop in my vehicle from my house immediately whenever I want to. If I lived in a city and garaging a car were inconvenient/expensive? Maybe. But that's not me or a lot of other people.
      - crazygringo 1y ago
        It's not going to be for everybody. But if it's half the price over the course of a year? And you can summon it in advance cheaply? And it basically never takes more than 5 min to arrive anyways, since they're everywhere? You might decide it's worth it to keep the stuff you really need in a messenger bag or backpack or something, the way people in NYC do. And maybe roof racks don't matter if you can just summon a second autonomous van behind you to hold whatever you were going to put on your roof. Obviously if you're a contractor or something you'll need your own vehicle. But the point is that for most people, sure they can't keep stuff in their trunk all the time, but that's a happy tradeoff if the total cost of driving is 50% less.
      - lokar 1y ago
        I would switch in an instant and get rid of my car
      - rgmerk 1y ago
        Statistically, and from a global perspective, the apartment-dwelling car owner (most likely with a lower income than yours) is a heck of a lot more common than living in American-style suburbia or a small town.
      - prawn 1y ago
        Of course there will be exceptions or holdouts, but it will come for gig drivers, then for second cars, and go from there. There will be versions with roof racks, with extra luggage space, with child seats.
- somenameforme 1y ago
  You need to consider profit margins. The cost of showing somebody an ad is very near $0, which is what makes digital products so profitable. But when you do things in the real world, especially in highly competitive markets where the customer is extremely price sensitive, your profit per mile is going to approach $0. For instance WalMart's profit per item sold is less than 3%, and for driving this will likely be substantially lower (given the combination of customer price sensitivity + competition). The way you make up for this is in massive volume, but Waymo for now remains a heavily ringfenced operation and so it's not entirely clear how they reach scale. Google also has a very poor record of long-term performance in competitive markets. The winner in self driving will likely be enabled by extreme vertical integration - you want to be building your own cars, cleaning your own cars, repairing your own cars, and so on.
  - crazygringo 1y ago
    The average American sees something like $500 of ads that go through Google per year. There's a profit margin of around 50% since Google has to pay publishers and pay for running search. So that's $250/person in profit per year. The average American spends something like $12,500 in car+taxi/rideshare per year. Suppose with Waymo that goes down to $7,000 and it's 20% profit. That's $1,400/person in profit per year. Obviously it gets much more complicated -- the profit margin depends on whether there are serious competitors to Waymo and how much Waymo's head start matters. Waymo will bring costs down further with shared vans and buses on demand. Profitability will rise with video ads in vehicles that you pay not to see. And so forth. But autonomous rideshare is going to be larger than search any way you look at it. Profits won't be as high as search, but the barriers to entry are so high that profits will be high for a long time.
    - somenameforme 1y ago
      Those data you referenced are per household, not per person, and the majority of that is loan+insurance. The actual cost in terms of maintenance, fuel, etc is quite low, and that's the price that eventually will be the goal line for autotaxi companies. 20% [net] profit margins do not generally exist in competitive real world industries, outside of perhaps something like real estate. A net profit margin of 5% would be huge, and I think it will likely be much closer to 1%, or even less, simply because in the end it's going to be a commodity where all that matters is price. I also think you're overestimating the impact of things like ads, buses, etc. The second Waymos become less pleasant than any remotely comparably priced option, they will lose customers.
1024core 1y ago
Imagine if you could buy your own "Waymo-equipped car". No need for driving lessons. No aggravation. No road rage. How many people would pay for such a luxury car? With the US population aging and public transit non-existent in most places, Waymo probably has a market for cars.
- free652 1y ago
  I am I really hate driving long road trips.. So yes! Or they could even sell private taxi between states so I don't even have to own a car :)
- deleted 1y ago
  [deleted]
- hedora 1y ago
  Assuming there are multiple providers of the software, I’d pay expect to pay normal automotive margins on top of the hardware cost. That’s probably $1000-2000 per car, or about a penny a mile. I’m not sure how much a few lidars will cost at scale. The compute board is a few hundred. Modern cars already have plenty of cameras.
- rgmerk 1y ago
  There’s clearly a demand for self-driving privately owned vehicles as well, but think of it this way - why own a self-driving Chevy when you could hire a self-driving Cadillac when you need to go somewhere?
- senordevnyc 1y ago
  I would pay $100k today for a basic EV with Waymo tech. Maybe more. It would essentially be like having a 24/7 personal car and driver available.
minwcnt5 1y ago
How much money they've spent in the past is irrelevant. That money all came from investors, in exchange for a stake in the company. It never needs to be "paid back". Besides which, those investors have earned all those funds back already, and then some (on paper). All that matters at this point is how much money they'll lose/earn in the future. There are no shortage of investors willing to put money into this effort, and they're growing exponentially, so there won't be any pressure for them to turn overall profitable for several more years.
- deleted 1y ago
  [deleted]
- Zigurd 1y ago
  Boeing may never make back the development costs of the 787. That was an absolutely epic disaster of a project. But that doesn't mean Boeing shouldn't build and sell every 787 they can profitably sell. If Waymo is at breakeven including capex, opex, and overhead, operations logistics becomes the limiting factor. While Alphabet is capable of investing more money into Waymo, I think they've reached the tipping point. If you see Waymo expansion accelerate, bet on that tipping point having been reached.
fragmede 1y ago
Uber took 14 years to make it to profitability. Money's frequently characterized as impatient, unable to look past the next quarter, but when it wants to be, it can wait. Waymo's older than Uber, but they hold many key patents by this point. Now that they've started running a taxi service, it seems straightforwards to scale up, assuming that is the business they want to be in. Then it's just a matter of charging more than it costs to run the service, and wait.
- andriesm 1y ago
  What makes investors patient when no profits for years, is when they see growth, entrenched commanding lead and network effects, large user base etc. As long as investors can imagine a good likelihood of eventual profitability, then growth in the present is a fantastic substitute for profits. Growth tells you the eventual profits will be bigger. Leadership and moat gives certainty that the company will actually get the profits for the market they grew.

crazygringo 1y ago

How much money do they make off the average person in the value of ads shown per year? Now compare to how much money the average person spends on driving per year. If Waymo winds up running half the market in autonomous transportation over the next several decades, it'll make search look like peanuts in comparison.

robotresearcher 1y ago
The entire global taxi market is ~$250B a year. Google made ~$265B from its ads last year.
- crazygringo 1y ago
  Not the global taxi market. The global driving market. When these are ubiquitous enough, the vast majority of people who currently own cars won't need to. It'll be so much cheaper and easier to use rideshare.
  - ghaff 1y ago
    I can't really imagine the circumstances where I wouldn't want to still own my own vehicle even if it had an autonomous mode. I drive it places where I don't have cellular service. I keep lots of stuff in the vehicle. It's customized with accessories like roofracks. I can hop in my vehicle from my house immediately whenever I want to. If I lived in a city and garaging a car were inconvenient/expensive? Maybe. But that's not me or a lot of other people.
    - crazygringo 1y ago
      It's not going to be for everybody. But if it's half the price over the course of a year? And you can summon it in advance cheaply? And it basically never takes more than 5 min to arrive anyways, since they're everywhere? You might decide it's worth it to keep the stuff you really need in a messenger bag or backpack or something, the way people in NYC do. And maybe roof racks don't matter if you can just summon a second autonomous van behind you to hold whatever you were going to put on your roof. Obviously if you're a contractor or something you'll need your own vehicle. But the point is that for most people, sure they can't keep stuff in their trunk all the time, but that's a happy tradeoff if the total cost of driving is 50% less.
    - lokar 1y ago
      I would switch in an instant and get rid of my car
    - rgmerk 1y ago
      Statistically, and from a global perspective, the apartment-dwelling car owner (most likely with a lower income than yours) is a heck of a lot more common than living in American-style suburbia or a small town.
    - prawn 1y ago
      Of course there will be exceptions or holdouts, but it will come for gig drivers, then for second cars, and go from there. There will be versions with roof racks, with extra luggage space, with child seats.
somenameforme 1y ago
You need to consider profit margins. The cost of showing somebody an ad is very near $0, which is what makes digital products so profitable. But when you do things in the real world, especially in highly competitive markets where the customer is extremely price sensitive, your profit per mile is going to approach $0. For instance WalMart's profit per item sold is less than 3%, and for driving this will likely be substantially lower (given the combination of customer price sensitivity + competition). The way you make up for this is in massive volume, but Waymo for now remains a heavily ringfenced operation and so it's not entirely clear how they reach scale. Google also has a very poor record of long-term performance in competitive markets. The winner in self driving will likely be enabled by extreme vertical integration - you want to be building your own cars, cleaning your own cars, repairing your own cars, and so on.
- crazygringo 1y ago
  The average American sees something like $500 of ads that go through Google per year. There's a profit margin of around 50% since Google has to pay publishers and pay for running search. So that's $250/person in profit per year. The average American spends something like $12,500 in car+taxi/rideshare per year. Suppose with Waymo that goes down to $7,000 and it's 20% profit. That's $1,400/person in profit per year. Obviously it gets much more complicated -- the profit margin depends on whether there are serious competitors to Waymo and how much Waymo's head start matters. Waymo will bring costs down further with shared vans and buses on demand. Profitability will rise with video ads in vehicles that you pay not to see. And so forth. But autonomous rideshare is going to be larger than search any way you look at it. Profits won't be as high as search, but the barriers to entry are so high that profits will be high for a long time.
  - somenameforme 1y ago
    Those data you referenced are per household, not per person, and the majority of that is loan+insurance. The actual cost in terms of maintenance, fuel, etc is quite low, and that's the price that eventually will be the goal line for autotaxi companies. 20% [net] profit margins do not generally exist in competitive real world industries, outside of perhaps something like real estate. A net profit margin of 5% would be huge, and I think it will likely be much closer to 1%, or even less, simply because in the end it's going to be a commodity where all that matters is price. I also think you're overestimating the impact of things like ads, buses, etc. The second Waymos become less pleasant than any remotely comparably priced option, they will lose customers.

1024core 1y ago

Imagine if you could buy your own "Waymo-equipped car". No need for driving lessons. No aggravation. No road rage. How many people would pay for such a luxury car? With the US population aging and public transit non-existent in most places, Waymo probably has a market for cars.

free652 1y ago
I am I really hate driving long road trips.. So yes! Or they could even sell private taxi between states so I don't even have to own a car :)
deleted 1y ago
[deleted]
hedora 1y ago
Assuming there are multiple providers of the software, I’d pay expect to pay normal automotive margins on top of the hardware cost. That’s probably $1000-2000 per car, or about a penny a mile. I’m not sure how much a few lidars will cost at scale. The compute board is a few hundred. Modern cars already have plenty of cameras.
rgmerk 1y ago
There’s clearly a demand for self-driving privately owned vehicles as well, but think of it this way - why own a self-driving Chevy when you could hire a self-driving Cadillac when you need to go somewhere?
senordevnyc 1y ago
I would pay $100k today for a basic EV with Waymo tech. Maybe more. It would essentially be like having a 24/7 personal car and driver available.

minwcnt5 1y ago

How much money they've spent in the past is irrelevant. That money all came from investors, in exchange for a stake in the company. It never needs to be "paid back". Besides which, those investors have earned all those funds back already, and then some (on paper). All that matters at this point is how much money they'll lose/earn in the future. There are no shortage of investors willing to put money into this effort, and they're growing exponentially, so there won't be any pressure for them to turn overall profitable for several more years.

deleted 1y ago
[deleted]
Zigurd 1y ago
Boeing may never make back the development costs of the 787. That was an absolutely epic disaster of a project. But that doesn't mean Boeing shouldn't build and sell every 787 they can profitably sell. If Waymo is at breakeven including capex, opex, and overhead, operations logistics becomes the limiting factor. While Alphabet is capable of investing more money into Waymo, I think they've reached the tipping point. If you see Waymo expansion accelerate, bet on that tipping point having been reached.

fragmede 1y ago

Uber took 14 years to make it to profitability. Money's frequently characterized as impatient, unable to look past the next quarter, but when it wants to be, it can wait. Waymo's older than Uber, but they hold many key patents by this point. Now that they've started running a taxi service, it seems straightforwards to scale up, assuming that is the business they want to be in. Then it's just a matter of charging more than it costs to run the service, and wait.

andriesm 1y ago
What makes investors patient when no profits for years, is when they see growth, entrenched commanding lead and network effects, large user base etc. As long as investors can imagine a good likelihood of eventual profitability, then growth in the present is a fantastic substitute for profits. Growth tells you the eventual profits will be bigger. Leadership and moat gives certainty that the company will actually get the profits for the market they grew.