A Conversation with Padmasree Warrior, CEO at NextEV USA.
Kirkpatrick: Padmasree Warrior has been named, among other things, one of the one hundred most powerful women in the world. She’s been CTO of both Cisco and Motorola and now is the CEO of NextEV in the United States, which is basically building an electric vehicle and it’s doing it in a global fashion, which is what we’re here to talk about.
Warrior: We refer to ourselves as a global startup. We are building electric vehicles. We have two operating companies, I would say. One in Shanghai, that’s looking at the needs for the market in China. And we are based in Silicon Valley in San Jose. We are addressing the U.S. and the global markets. And we are focusing on autonomous electric vehicles here. China is focused on primarily electric vehicles but, in a way, using technology to optimize it. We call it, ‘joyful lifestyle.’ Meaning, every process in owning a vehicle is a pain today, so, we want to use technology to solve those pain points from ownership to maintenance to services after that. Slightly different business models.
We share expensive resources like design studios. The car designers are in Munich and they serve both of these operations, supply chain, manufacturing. A lot of things that are very capital intensive in the EV space that we share between the two companies.
Kirkpatrick: Now, I think I heard yesterday, 20 EV electric vehicles are going to be in the U.S. market by 2018, so, there’s a lot of movement in this space. Talk about when your cars are going to come out and what is going to differentiate them from the increasing number of other electric vehicles that are going to be there. I mean, pure autonomy is one thing. These are only going to be autonomous vehicles, or—
Warrior: The vehicle we are building for the U.S. market is what we call, ‘Level Four Autonomous Capable.’ And so, they will be capable of full autonomy and I think there was a discussion earlier about when will human beings actually be ready to let a robot drive you. So, we are launching the first vehicle with the intent that we be capable of being fully autonomous but there will be a human in the loop. So, the person will be able to drive it, if they want to.
I would think the transition will actually happen more quickly than we expect, but not abruptly.
Kirkpatrick: You mean that society expects.
Warrior: Society acceptance. I think the important thing, difference, in how we approach this problem, unlike other companies who are building the AI stack and the sensor stack for autonomy and then figuring out what the market is, we actually started the other way around. Why do we need to even build an autonomous vehicle? What problem is it solving?
So, we started there and tried to understand what are people’s problems with relating to cars and mobility in the U.S. We did almost six months of research. We interviewed hundreds of people in many different cities and rural areas across the United States. These are in-depth interviews, actually. Even I went on doing these interviews and talked to people. Talked about what is it that they like about the car, what is it that they not like about the car.
After all that, we discovered that essentially there are three sets of problem areas. The first problem area—again, this is all U.S. data, but it does apply to some other parts of the world—is commute. People kind of hate commute and I think there was a gentleman speaking here before me from Intel who said how much productivity loss. Actually, the number is $70 billion dollars’ worth of productivity lost because of traffic condition and the time spent.
Kirkpatrick: Not just commuting but being stuck in traffic during commuting.
Warrior: Being stuck in traffic. And in the U.S., usually on an average, people commute roughly 40 minutes each way from home to work and work to home. So, for roughly 40 minutes in the morning and 40 minutes in the evening you are stuck and you’re not productive. And that’s a big, big frustration for people. So, commute is a huge pain point.
The second big pain point is family transportation. People with both sets of parents working. You have children, dropping them off at school, daycare, picking them up, soccer practice, dance practice, whatever it is. Most families have like five different options to move themselves around and if one of those breaks, the entire thing comes to a stop.
And the third is really discovery. People love going on road trips. If you had an option where you didn’t have to fight commute and you didn’t feel like you had to always drive, most people say that’s the time where they use it as a quality time with their families.
So, we said, okay, these are the issues that people are having and autonomy really helps solve those issues. And this all U.S. research and that’s how we ended up as the autonomy being a solution for the mobility problem, versus a technology looking for an answer.
Kirkpatrick: You didn’t say when your cars are coming out.
Warrior: So, our cars, different, depending on which car, we’re actually launching our ‘super car,’ as we call it, which is mainly to prove the brand and prove the performance—EV, it’s a EV—before the end of the year. Very soon, actually. And so, we are kind of looking forward to that. In the next few weeks you’ll see us launch that car. Following that, our vehicle in China will be in the market in 2018 as a full EV. The vehicle in the U.S., we are targeting 2020 to be in the market.
Kirkpatrick: Which is a more mass-market vehicle, then.
Warrior: ‘Mass-market,’ meaning it’s more affordable than the normal. It’s not a cheap car, in the sense of mass-market. We are targeting something that people will want to own. I think car is one of those aspirational consumer products. When you think about an autonomous vehicle, most people think of this little car that’s like a toy that’s moving at low speed. I tell my team we’re not building a car, we’re building a robot that looks like a sexy car. At the end of the day, people enjoy being in vehicles. In the United States, people spend roughly 30% of their household income on buying a car. And so, it is something people aspire to own. So, it has to fulfill that aspiration in how looks and how it performs.
Kirkpatrick: Obviously Tesla has done an extraordinary job both with building, executing on creating vehicles in a marketplace and branding. Extraordinary branding. So, it’s almost impossible to talk to you and not ask you to compare what you’re doing to Tesla, so, do that.
Warrior: I’m a big Tesla Fan. I have a Tesla Model S. I was an early customer, I still have it. I’ve driven it now almost three and a half years. I think what Elon has done and what Tesla has done is remarkable. I think from the way I look at it—and I come from the tech industry, I’m not an auto industry veteran by any means—I think three big things that Tesla brought to us as consumers is, first, making a EV a serious vehicle. I think people started to take electric vehicles as a ‘Wow, this is an amazing vehicle.’ I bought my Tesla not because it’s necessarily only because it’s a EV, but it’s a great car. And that’s what I mean by it has to be an aspirational product.
Second thing they did was bringing us firmware over-the-air updates. So, you can update features in your Tesla over the air, like you would on your iPhone or smart phone. So, that’s amazing. It can’t be taken lightly. There’s lots of things in the future we’ll be able to actually when you go to more connectivity, more bandwidth, and more autonomous vehicles will be able to do lots of updates over the air. So, it’s the second big thing they did.
And third thing they did, was they made it a B2C, going directly to the consumer as a brand and having that relationship. The opportunity for us, we are a company being born almost 10, 12 years after Tesla. Learning from what they’ve done, where is that we can take it next, I think there’s a lot we can do with the advances AI is making and machine learning is making, to make the car very personalized to you. In other words, the car should know what route you prefer. It should know every day from where I live in Palo Alto to where I work in San Jose, I take 280 and not 101. It sort of needs to learn my preferences, it needs to be synced to my calendar, it knows what the traffic is going to be through Waze and other things, it should tell me, “Hey, you’re not going to be able to make it to your meeting. Do you want to initiate a conference call?”
There’s a lot of things we can bring from the mobile Internet world to make the experience—and again, I’m talking initially our focus is commute, just increasing, giving people their time back. People value their time incredibly and premium to people is no longer black leather seats and chrome buttons. I think this is where auto manufacturers really have to shift their thinking. Premium is one-click shopping and premium is ‘give me my time back.’ So, what can we do to optimize that experience? That’s our focus and I think we really look at mobility and the journey and how do we optimize the whole journey using technology.
Kirkpatrick: Do you presume that your vehicles will be owned by individuals?
Warrior: Yes, I think individuals, meaning ‘households.’ I think the word ‘ride-sharing’ is overused. I think of it as ‘on-demand.’ I think there will be a need for on-demand mobility, but however, I don’t think that’ll completely replace ownership. Just because we have Airbnb and hotels like Ritz-Carlton doesn’t mean we don’t own homes. Similarly, because we have on-demand doesn’t mean we will not own vehicles. If you live in San Francisco or live in New York City in Manhattan, most likely you may not want to own a car and probably you never owned a car. Previously, you were probably taking the subway and now you would take a ride share. So, it’s not that population. But there’s many of us that live, even if you live in San Francisco, you have to go work in San Jose or Redwood City, so, you will want to drive. And I think this is what I was saying. In the rest of the world, the first thing we do when we are children is play with cars, toy cars. And we aspire, many people around the world with their first paycheck, look forward to buying wheels. Whether it’s a motorcycle or a car, even before they buy a home. So, it’ll always be that aspirational product and that’s the market we want to shift.
I think somebody else talked about this yesterday. When you have autonomous vehicles, you can make mobility much more accessible to people who are unable to drive or cannot drive either because of a physical limitation they have or age. So, mobility truly now becomes much more democratic and much more accessible to many people.
Kirkpatrick: There’s so many things we can discuss, including the IoT discussion we just had about energy, because that’s relevant, but I want to make sure we talk about this idea of being a global startup, which is something quite distinctive and, I know, very important to you. And it’s easy to think of it being heavily Chinese company because a lot of the money and the leadership and the motivation initially arose there. But you don’t think it’s right to call it a Chinese company or a Chinese-American company. What does it mean to you be a global startup?
Warrior: So, we truly are a global startup and I think I was saying this to you. We have a lot of investors from China, our founder is from China. The first company that got started was in Shanghai because EVs is a big market in China and pollution is a huge issue in China. Having said that, we are a U.S. company. We are funded by the parent company. We have a design studio in Munich with over 60 top-notch, world-class designers. We have supply chain that’s distributed globally, a performance program, the super car. We participate in Formula E racing. That’s all run out of London.
So, truly we have these major R&D centers around the world. It is a startup. I think most global companies—even when I was at Cisco before this and before that at Motorola, I always had global R&D teams. So, you’re an American company with engineering teams distributed globally. We are different in the sense we are actually a China company and a U.S. company that’s part of a parent company. I actually think that’s the right model and here’s why: In previous to this I, like I said, I worked at Cisco and Motorola and we always built products in Silicon Valley or, in the case of Motorola, in Chicago, and try to sell it in other countries. And it doesn’t quite work that way because you don’t know the consumer in those markets. In China, people interact with technology very, very differently than they do in the U.S. And vice-versa, if you build a car in China and try to sell it here, that product definition will not take into account what consumers in the U.S. want.
So, I feel this model of really creating the product from the ground up in two of the largest markets in the world, U.S. and China, and making sure we’re taking into account what are the pain points that people have with mobility in those markets and sharing, like I said, the expensive parts of building a car, factories, supply chain, all of that, it seems to be a right model and we’ll see. It’s an experiment we just started.
Kirkpatrick: It’s interesting, this came up with Zuckerberg last night. Were you here?
Warrior: Yes, I was here.
Kirkpatrick: Because the thing he said about values and adapting to the cultures, and then acknowledging he’s in 180-plus countries, ultimately that inevitably is thus far a failure. There is no way they can instantiate the values of 180 countries, which can be so divergent. It really is kind of the problem of modern business as the economy goes global and this middle class arising, truly in every country, it’s really a new economic reality that requires a new way of thinking about business and, in some ways Facebook may be at the cutting edge of that, but they’re still not even close to fully adapting to it.
Warrior: And that’s why we started this way. And by the way, it’s not easy, it’s complicated. I mean, time zones are different and you are still trying to coordinate, you have to make sure roles are not duplicating, you’re not spending effort building the same thing twice. At the same time, you have to empower both teams to be successful in what they’re doing. So, it’s a great leadership challenge. And the other challenge I have as a leader, we’re trying to do, I call it “car 3.0.” It’s like the next, third generation of the automobile, what does it look like. And so, if you think of it as a computer in a robot and come at it from that point of view, you have to redefine the entire stack of the car, just like Apple did with iPhone when they first came up with the smart phone. It wasn’t just a better cellphone or a qwerty device, and I was at Motorola at the time working on flip phones. Apple didn’t start up saying, “How do I make a better a flip phone with AI on top or with Internet connectivity on top?” They just said, “What is the device we would use if we were connecting to the mobile Internet?” And created something very different. I think the car of the future has to be done that way. It is a full stack that we have to develop. And this is why, I think, people tend to pit Silicon Valley, Detroit, Germany, against each other. I think it is an opportunity for us to work together and really say, “Okay, our opportunity is starting today. If you know nothing about building cars, how would you build a car today?”
Which means you need people who have built cars before. And so, we have 280 people right now in Silicon Valley, 40% of my workforce, my talent, comes from the auto industry, very experienced with building cars, and 60% is from tech industry. It’s a challenge and very interesting to see how these cultures come together. The language people speak, the muscle memory of what worked for them in their previous job. As human beings, we all want to do that again. And I tell people, “I need your experience and expertise but I don’t want you to do what you did before.” So, it’s a big, big leadership challenge as well.
Kirkpatrick: Well, it’s also another emblematic challenge for the modern economy because you’re bringing together multiple industries, which is really what almost every new opportunity is going to involve to some degree because of IoT and all sorts of ramifications of an interconnected society. The old boundaries just don’t matter anymore, right?
Warrior: Right, absolutely. I agree. We are building a cyber-security platform. We are building a data platform. Because if you’re building autonomous vehicles, you have a terabyte of data every hour going into the cloud. So, you have to re-architect the database and the vehicle network in the car. I call it a ‘dial-up modem,’ equivalent of a dial-up modem. I come with a networking background. And how do you modernize that, the in-vehicle network, to become more like an Ethernet architecture, with a firewall, with encryption? There’s just like amazing sets of technical problems and then not to touch the AI part and the human-machine interface. The discussion we had earlier. Does the car talk to you and tell you, “Hey, you should be making a right turn now,” or “Go left.” And this is also, where does it get creepy and where does it get useful. You don’t want the car to tell you, “You’re looking too tired today, maybe I should play you this song.” That would be creepy. But maybe the car should say, “You know, you’re looking fatigued. You need to let me drive because I can drive now.” And so, this transition between the machine driving and the human driving and this is truly is there, I think, a human plus computer, is going to be better than just human or just computer. So, how do we blend that is a big challenge. So, it’s all of the topics we had discussed in the morning. Sort of bringing all that together to transform a hundred-year-old industry. That’s the opportunity and the challenge.
Kirkpatrick: I can see you’re excited by that. Okay, who has a comment or a question? Anybody have anything they want to chime in? Okay, can I ask you, as someone who is so experienced in business and a truly global person, what’s your reaction to this new political reality?
Warrior: [LAUGHS] I was publicly supporting Hillary Clinton, so, I think I’ve tweeted about that. And like most people in America probably, or some people in America, I’m disappointed with the results. But, at the same time, I have a huge amount of respect for the democratic process. I grew up in India, which is one of the largest democracies in the world and whether you like the ultimate outcome or not, I respect the process. I respect the fact that we have now a new president-elect. I think it’s made me very introspective. I think the last few days, I’ve thought a lot about what is it that perhaps some of us were in denial or not aware of and how can we use technology to be a unifying factor versus a divisive factor.
The old jobs are not going to come back to the United States, which means the challenge is how do we create new jobs. How do we make college education more affordable to more Americans? I grew up in India, like I said, and essentially I went to one of the best engineering schools in India. It was called India Institute of Technology. And when I attended it, my education was practically free. And it was one of the best technical educations I could have gotten. And so, I did my Masters in the U.S. and I did it on a fellowship. How do we make technical education much more affordable and more available to everyone in the U.S.? I sort of feel like there is an opportunity there where technology can be a unifying factor. So, I don’t know, I think it’s sort of a wake-up call, I think.
Kirkpatrick: Yes, and I hope you’re right about technology finding a way to be a unifying factor. It’s something we probably we all need to think about more. Well, thank you so much, Padma, for joining us.
Transcription by RA Fisher Ink