Self-Driving Cars and Horse-Drawn Buggies

The biggest insight this ole’ engineer had in his early years is that “technology is cool, but money counts.” The coolest technology will never be adopted if it doesn’t bring enough significant benefit – either financial or emotional – to enough people.

Technology for transportation is very cool, but is subject to the same laws. Its progression, at least in the short to medium range, has been fairly straightforward:

  1. Feet
  2. Animal back (donkeys, eventually horses as they evolved stronger breeds)
  3. Animal drawn cart
  4. Horse-drawn carriage
  5. Automobile – known in the early days as a “horseless carriage”
  6. Self-driving car

In some ways, the self-driving car seems like the biggest advancement of all of them, and it certainly is hyped as such.

Yet, the success or failure of any of these advancements was (and, in the case of self-driving cars, will be) determined entirely by the economic benefits. Quite simply, each of these advances has succeeded because it has made the cost of transportation cheaper. Toyota Prius is cool, but is more expensive, and hence remains a niche; Ford Model T, on the other hand, made automobiles affordable, and was a market success.

For transportation, the measure is simple: what is the cost of getting one person from A to B. And, like in most enterprises, the single biggest cost is: labour. Even in a capital-intensive business, like manufacturing chips, the machines and buildings are expensive because expensive people designed them and built them. Somewhere down the line, it is all about what you pay for people.

So what does each of these transportation methods cost? More correctly, how much value can I get from each of these?

  1. Feet: well, this is simple. It takes one person walking one mile to move one person… one mile. If a person walks a mile in half an hour, then this takes half an hour of labour. It doesn’t get simpler, or less efficient, than that. This is a value of 1.
  2. Animal backs: This is also simple. A person no longer needs to walk one mile, s/he can ride. But our rider still has to (or pay another person to) feed the animal, clean up its droppings, groom it, watch that it doesn’t run away. On the other hand, while it takes some effort, it doesn’t take half an hour worth to get half an hour of riding, around half of that. Riding an animal is a little less than twice as efficient as walking, or a value of ~2. Twice as efficient is twice as good, and so we rode animals.
  3. Cart: Now, for slightly more effort, we can get 4 people out of one animal, instead of 1. It takes the same effort to manage the ox, and we now need to maintain a wooden cart, but for some uplift in effort, we get 4 times as many people-miles out of it. Our value has more than doubled, to ~5.
  4. Horse-drawn carriage: We have moved from open carts pulled by oxen to horse-drawn carriages. Horses are more efficient than oxen, and carriages are closed, as well as having other benefits, giving us the ability to go further and be less weather sensitive. With the same number of people and slightly less effort, our efficiency improves slightly, to ~6.
  5. Automobile: Automobiles are a big jump, but not because they were cool (they were) or made out of metal. It is because they reduced the effort involved. Unlike animals, there no longer needs to be someone cleaning up droppings, or continually feeding the animal, or possibly driving it. The car requires no feeding or cleaning at all when parked, unlike the horse, and will not simply run away on its own if left unattended. The amount of human effort involved in a four-person automobile is far less than 1/6 of the time spent going. One can drive 60 miles in one hour with 3 passengers, all of whom (except the driver) are reading or sleeping, and the total effort is 1 hour of relatively effortless driving, and 5 minutes at the gas station. The twice a year maintenance check and oil change, which take two hours in total, are insignificant compared with the 15,000 miles the car traveled. Giving the driving itself an effort of 0.25, and the gas 1/60, we have a value of ~15-20.

Given the huge jump in efficiency of using cars, not to mention mass manufacturing which further reduced its costs as well as convenience factors of speed, distance and climate control, it is unsurprising that cars dominated the world very quickly.

As a matter of fact, cars are so efficient relatively, that the actual time spent driving is the biggest effort left. One can easily outsource it by using a taxi, but then one is paying someone else to do the same effort.

The last big efficiency jump left is… removing the labour of driving altogether!

This, then, is the real reason self-driving cars have potential: they are the remaining big efficiency jump in short-to-medium range transportation, by eliminating the labour during motion. If existing or new manufacturers successfully produce self-driving cars that capture that value but leave much in the hands of consumers, they can succeed.

 

 

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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