Think Outside the 4-Wheeled Box— Connecting Cars

Shahin Farshchi, PhD

May 20, 2016

min read

Think Outside the 4-Wheeled Box— Connecting Cars

Most Luxury car owners don’t pay attention to the OnStar, Mercedes mbrace, and BMW Assist buttons prominently lit on their consoles. GM launched a huge marketing campaign around its OnStar service in the late 90s, as did Mercedes and BMW shortly thereafter. These systems use GPS and cellular technology to transmit location and diagnostic information to provide turn-by-turn directions, roadside assistance, vehicle maintenance, and repairs. They automatically dial 911 when an airbag is deployed, and track down stolen vehicles. As smartphones became more prevalent, car buyers became less likely to opt for these services, while most vehicles continued to be shipped with the technology pre-installed. Meanwhile the systems operate silently unbeknownst to drivers, and vast amounts of data generated: location, driving patterns, driving behavior, and conditions of the vehicles have gone largely unused.

How NOT to look at connected cars: smartphones on wheels. The billion dollar question is how to use emerging V2X capabilities as a platform for novel services. Anyone who viewed the iPhone as a pretty Blackberry likely missed out of Snapchat, WhatsApp, and Uber. Creative entrepreneurs who build applications to deliver these services will be handsomely rewarded — along with their investors.

As GPS and communications technology got cheaper, several startups launched with telematics devices that carried capabilities very similar to largely dormant systems already built into cars. Automatic, Dash, CarMD, Carvoyant, Torque, Zubi and several others are deploying across makes, models, and geographies. They are attracting interest from insurance companies for the same information automotive manufacturers captured in silos. They are solving the analytics problem automotive companies never had the inspiration, or motivation to solve. Have the automakers been sleeping behind the wheel?

Car companies are not in the business of collecting passenger and vehicle data- they are in the business of selling cars. However, to make their driver assistance, and autonomous technology work, they are building and adopting the Dedicated Short-Range Communications standard in collaboration with their suppliers and the US Department of Transportation. Startups, will be well-positioned to market their telematics devices direct to consumers. How relevant will they be as cars become more automated, and eventually driverless?

Carmakers are certainly alert and in the driver’s seat. They have been busy collaborating with the Department of Transportation on a protocol called Dedicated Short-Range Communications. DSRC is an open standard that allows cars to talk to other cars (V2V), weather/environmental infrastructure (V2I), and even pedestrians through their smartphones (V2P). Startups like Savari and suppliers like Delphi and NXP are working together to put the hardware in cars. It’s only a matter of time until the capability finds its way into all vehicles; driver-assisted or driverless. This creates a special opportunity for entrepreneurs to think about new businesses that can run on top of this newly-formed infrastructure: passengers looking for something to do while NOT driving.

Android Auto and Apple Car play have taken the first steps towards integrating mobile phones with vehicles. Unfortunately their connection with the vehicle ends with the speakers. Can richer apps be built if these platforms were more tightly integrated? Why haven’t they connected to the vehicle CAN bus as the telematics devices have?

Teslas and Cadillacs equipped with “Autopilot” and “Super Cruise” are rolling off of assembly lines; features that are expected to make their way into Corollas and Civics in a few years. Meanwhile, Uber and Lyft have announced their plans to put robotic cars on the road shortly thereafter. While passengers are already well connected through countless apps on their smartphones and wearables; the robots driving the vehicles will be connected through DSRC as well. Both driver-assistance and autonomous systems benefit from being connected to other cars on the road. Is a car stopped around that blind corner? Is the driver behind you approaching too quickly? Is a nearby vehicle experiencing a mechanical problem? Having insight into all of these circumstances can make the difference between an uneventful ride and an accident. It can also help an operator of driverless cars attract passengers, or perhaps even create an entirely new market where none existed.

The big question is how to build an attractive business. Is there an opportunity for some sort of “air-traffic control” for the autonomous and semi-autonomous cars? How about educational courses tailored for people driving/being driven by assisted/autonomous cars? How about a casual carpool app that suggests picking up passengers who indicate they are going in your direction? Is there a Paypal for cars where one car can pay another for letting them get ahead, or not have to stop at a red light? (I can hear the cringing). How about services that are tailored for consumption while being transported in a (semi)autonomous car? The opportunities are endless.

These circumstances remind me of the early days of GPS-enabled smartphones, which became the basis of the amazing companies. Skeptics at the dawn of the introduction of the iPhone could have doubted any utility beyond the email and Blackberry Messaging they held so dear, only to miss out on amazing investments such as Uber, SnapChat, WhatsApp. The biggest mistake made by investors who missed these opportunities was focusing on function rather than appreciating the power of the platform and its interface with its users. The iPhone was very different from the Blackberry, and those viewing the car as a smartphone on wheels are destined to miss out on the next great startup opportunity around connected cars.

written by

Shahin Farshchi, PhD

General Partner

Inspired by Knight Rider and Star Trek, Shahin grew up with a passion to endow superpowers to humanity through feats of engineering. He learned BASIC on an IBM PC XT clone he built at his aunt’s computer store and used to dial into Bulletin Board Systems when he was in the 4th grade. He learned about engines by taking apart an Alfa Romeo at his Uncle’s repair shop a few years later. He aspired to design microchips, software, and systems that could someday amount to the fictional K.I.T.T., and build warp drives that could propel humanity to far corners of the galaxy.

Shahin has had the privilege of partnering with amazing founding teams for over two decades. After working for several software startups, he built his first startup in 2004 building upon his PhD research designing chips, systems, and software to capture and interpret brain signals. He later had the pleasure of meeting Lux’s founding team, who invited him to partner with them in 2006, where he has cofounded and led Lux’s investments into companies that have gone on to become publicly traded (e.g., NYSE:AEVA and NYSE:PL), and acquired by the likes of Intel (Nervana), Amazon (Zoox), Silicon Laboratories (Silicon Clocks), and Lattice Semiconductor (SiBeam).

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