The CEO of Argo AI, a self-driving startup backed by Ford, reveals the one thing that is absolutely necessary for an autonomous-driving company to survive (F)

Brian Salesky Argo AI small

The CEO of Argo AI, Bryan Salesky, thinks self-driving companies need to partner with major automakers.
Salesky said it's too hard to go it alone without an automaker's expertise and scale.
In 2017, Ford invested $1 billion in Argo AI.

The past few years have been good for entrepreneurs who were early to the self-driving-car game.

In the aftermath of the financial crisis and the bankruptcies of General Motors and Chrysler, markets were focused on the overall health of the auto industry. As far as new technology was concerned, electric cars were considered the future.

But, under the radar, entrepreneurs were tackling the problem of getting vehicles to drive themselves. Google, the most prominent player among many, set up an autonomous skunkworks. In the Bay Area, Cruise Automation was experimenting with a bolt-on self-driving system. And in Pittsburgh, home to Carnegie Mellon University, a tiny startup called Argo AI was tinkering away.

By 2016, with the arrival of Uber, Lyft, and other app-based ride-hailing services, it became clear that putting smartphones and self-driving cars together could be a lucrative business. The Google Car project, later renamed Waymo, was already well funded — but it was a tech firm with little knowledge of how to manufacture automobiles.

Enter the Detroit dinosaurs, fresh off their near-death experience in 2009 but now flush with cash after several years of record-setting sales in the US, rapid and profitable growth in China, and a resurgence of high-margin pickups and SUVs amid low gas prices.

GM bought Cruise for an all-in price, including future hiring plans, of $1 billion. Fiat Chrysler Automobiles partnered with Waymo. And in 2017, Ford invested $1 billion in Argo AI and CEO Bryan Salesky's team.

"We looked at venture investment, but Ford was able to put up enough of a commitment," Salesky said in an interview with Business Insider.

So why would experts in software and robotics look to a 115-year-old car company in Ford?

Simple: money and scale.

"It's very capital-intensive," Salesky said. "It's not just the self-driving-car tech. We're talking about funding and deploying tens of thousands of vehicles. Going it alone without a carmaker would be too hard. Ford has scale and a strong brand."

Salesky isn't alone in pointing this out. Cruise founder Kyle Vogt and John Krafcik, the CEO of Waymo and an auto-industry veteran, have also stressed the pluses of having a big automaker on board.

Who's going to pay for all this?

Argo AI small

Working at what was then Google Car Project with Chris Urmson, another Carnegie Mellon veteran, Salesky knew that the entire self-driving proposition was making impressive process.

"We shocked ourselves," he said of their results in 2006 and 2007. But they were also asking a critical question: Who's going to pay for all this?

"We would bang our heads against the wall trying to come up with a business model," he said. Google was happy to invest heavily in the undertaking, but that was the only significantly funded self-driving project around. But then Uber happened, and suddenly a commercial prospect took shape. An expensive, autonomous technology could be monetized on a per-mile basis, defraying the cost.

Argo AI formed in 2016 and, according to Salesky, planned to join with a major automaker from the beginning.

"Bill Ford saw a lot of this before others did," Salesky said of the Ford's chairman, a longtime advocate of new-mobility ideas. "He knew it would be a game changer."

A critical piece of Ford's approach to autonomous vehicles is to think carefully about how they'll be deployed. The company has cultivated a relationship with cities to ensure that unintended consequences don't hamper the rollouts of innovative transportation solutions.

Making the magic happen

jim hackett ces 2018

"We don't want to create tech that doesn't solve problems," Salesky said. "Communities don't want more cars on pavement, so we have to come up with ways to ensure that they're happy and excited."

In this sense, Salesky and Argo AI aren't just taking advantage of Ford's ability to manufacture millions of cars every year, with the goal of launching safe, fully autonomous vehicles in 2021. They're also leveraging Ford CEO Jim Hackett's commitment to "design thinking" — looking at opportunities through the complex lenses of how they can best be pursued.

A good example is some of the pilot autonomous-delivery services that Ford has been exploring with partners such as Domino's. For these applications, gas-electric hybrids might be better platforms than all-electric vehicles, given the demands of the business model.

"Ford has whole city team," Salesky said of the company's City Solutions group. "It's all part of an ecosystem, and that's where the magic happens."

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