Bill Ford, the executive chairman and former CEO of Ford, took the stage at the TED Conference in 2011, and gave a speech that did not make waves at the time, but was surprisingly prescient in retrospect. As if he was channeling Uber’s Travis Kalanick, the great-grandson of Henry Ford discussed how the future of transportation is really about the beginning of the end of traditional car ownership.
“When you factor in population growth, it’s clear that the mobility model that we have today simply will not work tomorrow,” Ford said. “Frankly, four billion clean cars on the road are still four billion cars, and a traffic jam with no emissions is still a traffic jam.”
The solution for global gridlock, said Ford, is a new notion of mobility — one that incorporates public transit, shared car services and communication between cars. What his great-grandfather stood for was not cars, Ford explained to the audience of muckety-mucks, but the freedom to move that cars once stood for, and decreasingly do now.
Recalling the speech now, it can be viewed as almost an acknowledgement by Motor City that it had lost the plot line. The car industry watched Asian carmakers thrive since the 1970s energy crisis. It was oblivious to the forces that would make services like the monstrously successful car-hailing service Uber ($40 billion valuation) an alternative to car ownership. It missed out on working with its own customers to collectively fight traffic, like Waze ($1 billion acquisition). And it has basically ignored Tesla ($26 billion market cap), even as the upstart electric carmaker racks up car of the year awards.
And perhaps even the stable but slow-moving automotive industry, with its seven-year car development cycles, is ready to step up its tech game.
For all the attention Google gets for its goofy-looking autonomous car prototype with no steering wheel or brakes, Google tapped Roush Enterprises, based just outside of Detroit, to assemble the vehicles. “To say Silicon Valley is the only place where innovation happens is wrong,” Chris Urmson, Google’s director of self-driving cars, told the Detroit Free Press. “It is not a crusty Detroit/shiny Silicon Valley. Anyone who thinks that is crazy.”
Two years prior to his TED Talk, Ford had set up a venture capital firm in Detroit called Fontinalis Partners that operates independently from Ford Motor Company. Fontinalis Partners has $100 million under management and has made 20-some investments in parking, bike-sharing and family location-sharing startups. Not a single one is based in Detroit.
Venture capitalists weren’t very interested in funding car-related startups, until recently. It’s partly because of the miserable financial failings of clean tech, including some car companies like A123 and Fisker. Another big factor is that venture capitalists want to see opportunities to sell the startups they’ve invested it. And car companies are not big acquirers.
There are a few exceptions. Daimler bought myTaxi and RideScout last year. Ford has only bought one software company, ever. It was in 2013. And it was a Detroit startup, believe it or not.
This was Livio, founded by Jake Sigal. It started as a digital radio device company, and morphed into software that helped apps connect to cars. Ford paid less than $10 million for the startup, open-sourced the software, and Sigal and his co-founder left. They now have a new company called Tome, also in the Detroit area, but it has nothing to do with cars. It makes connected desks to help office workers be more healthy.
According to Ford’s Bill Coughlin, who led the deal, the acquisition was more of a one-time thing than a strategy.
But venture capital is starting to flow into cars and mobility. The investment lust over Uber has helped rekindle the attraction to transportation. In San Francisco, where I live, the latest venture-backed crops are valet-parking startups and public-bus alternatives that can be hailed with an app (the city has approximately four of each). Venture capitalists are now seeking more places to make bets. A new fund called AutoTech Ventures, based in Palo Alto, Calif., just raised $100 million from strategic partners to invest exclusively in transportation.
The attraction has even spread to Motor City. In a move that the Detroit technology community was stage-whispering about this fall, the TechStars startup incubator plans to open a local chapter with partners Ford, Fontinalis and Detroit Venture Partners, as well as automotive supplier Magna International, Verizon Telematics and Renaissance Venture Capital.
Though TechStars already has programs in a dozen cities, this is seen as a major validation for Detroit. And, fittingly, the TechStars companies will explicitly work on projects in the space of mobility, as defined by Bill Ford’s TED Talk. In June, 10 companies will receive $120,000 in funding and a three-month mentorship program. And the whole thing will take place in downtown Detroit.
The goal is to uncover something about mobility and transportation that consumers don’t know they want yet. There’s a Henry Ford quote that has been cited by Steve Jobs and many others, and still resonates after all these years:
“If I had asked people what they wanted, they would have said faster horses.”
Written By: Liz Gannes