Archiv für den Monat März 2016

What is the largest obstacle to Apple getting into the car industry

It should be pretty clear by now that Apple (NASDAQ:AAPL) is very seriously considering making an electric car, having hired upwards of a thousand auto engineers. What’s completely up in the air is whether the company will actually release one or not. And no, it won’t look like the unicycle Apple Ride that the company teased last year.

As management debates this question internally, here is the most important argument on why Apple might be better off staying on the sidelines.

„A destroyer of capital“
Easily the most prominent reason is the sheer capital intensity of the auto business. This is a well-known characteristic of the auto industry, but it’s worth exploring in detail.

Last year, Fiat-Chrysler CEO Sergio Marchionne put out a detailed presentation, aptly entitled „Confessions of a Capital Junkie,“ arguing (again) for continued consolidation of the industry, in part citing severe overlap in development costs that could save the industry billions of dollars if they were shared. Combined with all of the capital required to manufacture vehicles, the auto industry is plagued with low returns on capital and low valuation multiples.

fca consolidation_largeFCA

A group of industry veterans discussed the argument on Automotive News, and while there was consensus about the industry’s problems, there are no easy solutions. In no uncertain terms, Bob Lutz acknowledged, „The automobile business is a destroyer of capital.“

Apple has plenty of capital, but probably isn’t anxious to begin destroying it.

Apple’s newest investing metric: „gobs of money“
Cook was recently asked if Apple can afford to spend freely to explore new areas without commercializing products (in the context of its auto hires), to which he replied, „But once we start spending gobs of money — like when we start spending on tooling and things like that — we’re committed.“ When pressed further on whether or not hiring those auto engineers qualified as „gobs of money,“ Cook answered, „No. I wouldn’t call it gobs of money.“

Apple indeed has many gobs of money (roughly a millionty gobs by my count), and is also spending heavily on both capital expenditures and research and development. In fact, you might not realize that Apple spends more in both of these categories than incumbent Detroit automakers General Motors (NYSE:GM) and Ford (NYSE:F). Tesla’s (NASDAQ:TSLA) figures are also relevant as a neighboring Silicon Valley company just entering the auto market.

Company Fiscal 2015 R&D Fiscal 2015 Capital Expenditures
Apple $8.1 billion $11.2 billion
General Motors $7.5 billion $7.8 billion
Ford $6.7 billion $7.2 billion
Tesla $718 million $1.6 billion

DATA SOURCE: SEC FILINGS.

While Apple spends heavily on capital expenditures, the key difference here is that it earnssignificantly higher returns on invested capital, since Apple scales to incredible unit volumes.

Company Return on Invested Capital (TTM) Return on Assets (TTM)
Apple 29.6% 19.4%
General Motors 10.7% 5.2%
Ford 5% 3.4%
Tesla (21.6%) (12.8%)

DATA SOURCE: MORNINGSTAR. TTM = TRAILING 12 MONTH.

If you look at Tesla’s figures, this is what Apple should expect from its capital investments in the early years of building electric cars. Getting into the auto industry would inevitably dilute these profitability figures in a meaningful way.

(Domestic) cash is king
Another important consideration is the location of Apple’s capital. Apple’s foreign reserves are well documented. Since Apple currently makes the vast majority of its products abroad via contract manufacturers, it is able to utilize those foreign reserves for the product tooling and manufacturing infrastructure. At the end of last fiscal year, Apple had $8.7 billion (net of depreciation) worth of long-lived assets in China.

But it wouldn’t be realistic or viable for Apple to manufacture vehicles in China and ship them home. An electric car weighing thousands of pounds is logistically quite different than a smartphone that fits in your pocket. Most automakers perform final assembly near the end market.

We don’t know what manufacturing model Apple would pursue, though. Contract manufacturing does exist in the realm of autos, but it’s not prevalent. For example, Magna Steyr assembles vehicles for Daimler Mercedes-Benz and BMW, and Rousch assembles prototype self-driving cars for Alphabet (domestically, no less, but in very small volumes).

If Apple pursued a similar contract manufacturing model (which Cook has hinted at), it would still likely purchase its own equipment like it does in its current model — that equipment just resides within partner facilities. There’s no avoiding the capital requirements, particularly as you increase volume expectations. And based on Cook’s comments above, the point of no return is when the company decides to start investing in tooling and manufacturing infrastructure.

However, Apple’s domestic reserves are primarily used to fund its capital return program, so committing to domestic manufacturing infrastructure would put pressure on its domestic cash position. Apple could continue raising debt to bolster domestic cash — the company enjoys extremely low costs of capital — but it would still be highly preferable to use foreign cash since most of it just idles anyway.

Itchy trigger finger
It would be incredibly expensive to develop, manufacture, and launch an electric vehicle, which is partially why many traditional automakers historically disdained EVs and other alternative fuel vehicles so much, often referring to „compliance vehicles“ with great hostility. GM’s famous killing of the EV1 is the quintessential example, although GM has changed its tune under CEO Mary Barra, who recently declared that „your petrol-fueled car will become a thing of the past“ and has prioritized EV development in a big way.

All of this being said, capital efficiency is likely a secondary concern to Apple. The company has never been a follower of traditional resource allocation policies taught at business schools, even though Cook has a traditional MBA. Apple’s primary goals have always been to make great products that have a positive impact on people’s lives and the world at large. That’s especially true if Apple believes that it can help bring positive change to an industry (such as its efforts in TV).

In many ways, the auto industry is stuck in the past, particularly on the distribution side with antiquated dealer protectionist laws, and Apple has an opportunity to help catalyze its modernization. The company is also a big believer in climate change and environmental sustainability, adding to how an Apple EV would have a positive impact on the world.

Despite the high costs, I bet Cook pulls the trigger.

http://www.businessinsider.de/largest-obstacle-apple-car-industry-2016-3

life virtual 3D teleportation in real-time (Microsoft Research)

life virtual 3D teleportation in real-time (Microsoft Research) changes meetings, events and private entertainment drastically.

Celebrities can join at remote locations with a fraction of the cost of a normal setting, enabling more flexibility in their time-schedules.

holoportation is a new type of 3D capture technology that allows high quality 3D models of people to be reconstructed, compressed, and transmitted anywhere in the world in real-time. When combined with mixed reality displays such as HoloLens, this technology allows users to see and interact with remote participants in 3D as if they are actually present in their physical space. Communicating and interacting with remote users becomes as natural as face to face communication.

Apple Ditched Secrecy for Openness

Apple CEO Tim Cook waves goodbye after an event at the Apple headquarters in Cupertino, California

BMW and Apple are have cut ties amid an electric-vehicle arms race

For investors, the attempts by many of the tech industry’s most powerful incumbents to disrupt the auto industry make for some exciting, and potentially lucrative, opportunities.

For the auto industry, the barbarians are at the gate.

A BMW logo is seen at the North American International Auto Show in Detroit, January 12, 2016.   REUTERS/Mark BlinchA BMW logo is seen at the North American International Auto Show in Detroit

This understandable tension underscores much of the back-and-forth between the technology and automotive communities at the moment.

Initially friendly and collaborative, relations between the two industries have turned increasingly adversarial as each develops its own self-driving cars.

Take, for example, tech giant Apple and luxury automobile standard-bearer BMW — one-time potential collaborators whose relationship appears likely to turn increasingly competitive, as a recent move by the automaker demonstrates.

BMW unveils now tech-heavy strategy

Earlier this month, BMW’s new CEO, Harald Krueger, announced an important official shift in the company’s strategy, one that clearly seeks to counter the looming competitive threats from the likes of Apple, Alphabet, and Tesla. Claiming, „We will lead the BMW Group into a new era,“ he said the company’s plans now involve launching additional versions of its i-Series of electric vehicles, including a model dubbed iNEXT.

The iNEXT will feature BMW’s forthcoming electric powertrain and lightweight body materials, and will feature an optional self-driving mode. The company will also place a greater emphasis on in-car software and services. Mobile software giants like Apple, Alphabet, andBlackBerry have each tried to consolidate market share in the budding market for smart-car software, but BMW remained largely mum on the topic in its strategy presentation.

BMW’s iNEXT vehicles won’t reach market for at least five years, which largely mirrors the product launch schedule at tech firms like Apple. This raises the possibility of a glut of electric, fully autonomous cars reaching market at roughly the same time: Google, for example, hopes to have its autonomous vehicles ready for market by then. Only Chinese search giant Baidu has an appreciably earlier target launch date for its autonomous driving project — 2018 — though its applications may be relatively limited early on.

electric vehicles hybridsREUTERS/Robert GalbraithA hybrid Toyota Prius is electrically charged at a municipal charging station near City Hall in San Francisco, California August 6, 2009.

Circling the wagons

BMW’s moves could signal the end of its relationship with Apple, with whom the German auto giant has held meetings in the past. As recently as last July, Reuters reported that Apple and BMW had met to discuss potentially working together to realize their electric-vehicle ambitions. However, Reuters said, caution on BMW’s part led to a cooling of sorts. BMW likely wishes to avoid simply becoming another parts supplier for Apple, a la Apple’s infamous assembly partner Foxconn.

More broadly, this exemplifies the natural tension currently playing out between automakers and tech companies today. Though virtually everyone sees a massive economic opportunity in revolutionizing the transportation of people and goods around the world, the automotive and technology industries each, by and large, lack a core expertise the other possesses.

Apple’s software is used and beloved by hundreds of millions of people around the world, but at present, it lacks the requisite manufacturing skills to bring its Project Titan to market at scale. Conversely, BMW produces millions of cars annually, but lacks expertise in developing software and services.

Both industries are hard at work poaching talent from each other in an effort to cover their knowledge gaps, which has led to the arms-race scenario we see playing out in the headlines. So while BMW’s more revolutionary EVs won’t reach the market for at least five years, the company’s recent moves speak to the broader continued race to shape the future of the auto industry.

 

http://www.businessinsider.de/bmw-apple-cut-ties-over-electric-cars-2016-3

Approaches for Navigating Influencer Marketing

shutterstock_292452563

For the first few years of its life, Instagram was an ad-free community. By 2017, however, it will produce nearly $3 billion in mobile ad revenue, and 34 percent of American agency professionals cite it as the social network of choice for client campaigns.

The opening of the advertising floodgates definitely has Instagram users on edge. They fear that the feed they tap into for inspiration and escape will be tainted by the presence of advertisers, who are simply in the business of paying for eyeballs. But for savvy marketers and advertisers, there’s a key tactic to turn to when approaching the platform: influencer activation.

Influencers may have fewer followers than mainstream celebrities, but they powerfully impact their fans, who take their advice seriously. Companies such as Burberry, American Apparel, Land Rover, TOMS and Johnnie Walker partner with Instagram celebrities to reach consumers and create positive buzz around their brands.

But massive multinational companies aren’t the only ones that can leverage the power of this growing trend. Brands of all sizes are already enjoying success from influencer-driven Instagram campaigns. It’s a different conversation than the one centered on traditional paid media, and it’s growing in importance as brands try to forge meaningful connections with their audiences.

Here are a few tips and trends marketers should consider when looking to add an influencer strategy to their plans:

1. Marketers are diving into their own data

Tech tools are enabling companies to analyze opportunities and target highly segmented user groups with relevant content. If Neiman Marcus wants to launch a last-call promotion in some of its markets, it can approach fashion personalities who have influence in those areas, narrowing the options based on their number of followers and potential reach. Neiman Marcus can sign a deal with an influencer—paying for the exposure he or she can deliver—and drive sales through his or her followers.

Marketers should be tracking customers’ data so they can identify the influencers among them. Pay attention to social media trends, and use metrics to effectively market through them. This tracking will require layering on a few data points, from first-party data to social monitoring tools. Brands can see real-time numbers on their followers, how followers interact with their accounts, and how active followers are with other accounts. They may be surprised by the amount of exposure a core base of fans can bring to a brand via social channels.

2. Scalable technology is breaking down barriers to activation

Until recently, only top influencers and brands had been involved in this space. However, new platforms not only take the legwork out of influencer activation, but they also let marketers activate more influencers for less money. It’s the rise of the mid-tier influencer—and “there’s an app for that.”

Apps like Popular Pays allow brands to not only identify a pool of potential influencers, but also submit creative briefs with pricing and restrictions to that pool. Influencers can choose whether to opt in. This is an excellent way for a brand to generate social-ready creative that aligns with its brand in an efficient and cost-effective manner. Platforms like these are eliminating the barriers to entry and decentralizing the market—much like what Uber and Airbnb have done for transportation and lodging.

3. A shift from aspirational to transactional posts is underway

Consumers often follow people for their inspirational or aspirational content—think Kirsten Alana’s luxury travel-themed Instagram. But 2016 will be the year of transactional posts, with influencers guiding followers toward specific purchases or providing product information.

Marketers must identify content creators who are popular among their target audience members and strategize which products or services they can promote through them. But don’t lose sight of why customers followed these people. Make sure promotions advance their goals and meet a specific need.

4. Influencer content will be run directly

Many companies are chomping on the influencer activation bit, but others—including brands like McDonald’s and Ben & Jerry’s— are starting to integrate this technique into their more traditional media buys. Despite consumer pushback, there’s something to be said for running ads directly through the platform.

Influencers can gain brands valuable word-of-mouth marketing, but when it comes to targeting, reach and frequency, buying platform direct is the better option. Going site direct guarantees marketers get their brands’ content in front of someone in their market—something that’s not possible with influencers because brands simply don’t have access to the full scope of their followers’ data. Activate the influencer, take the content and run it directly to amplify it beyond his or her individual stream.

It makes sense why marketers are waking up to the power of these savvy personalities on Instagram and other social channels. Word of mouth has always been the most powerful form of marketing, and we’re seeing that on a much larger scale with the ease of content creation. Essentially, anyone with access to a smartphone has the ability to become his or her own publishing company. As marketers continue to refine their messages for a specific audience, they need to work with influencers who can educate their followers about their brand and help them sell to the right people.

Aubry Parks-Fried is a senior manager of digital innovations, social, and native at Centro. Centro develops digital advertising and media management software to help advertisers streamline and scale digital campaigns.

http://www.adweek.com/socialtimes/4-approaches-for-navigating-influencer-marketing-in-2016/636380

HIV Genes Successfully Edited Out of Immune Cells

HIV Genes Successfully Edited Out of Immune Cells
An electron micrograph of HIV particles infecting a human T cell. Image: National Institute of Allergy and Infectious Diseases

Researchers from Temple University have used the CRISPR/Cas9 gene editing tool to clear out the entire HIV-1 genome from a patient’s infected immune cells. It’s a remarkable achievement that could have profound implications for the treatment of AIDS and other retroviruses.

When we think about CRISPR/Cas9 we tend to think of it as a tool to eliminate heritable genetic diseases, or as a way to introduce new genes altogether. But as this new research shows, it also holds great promise as a means to eliminate viruses that have planted their nefarious genetic codes within host cells. This latest achievement now appears in Nature Scientific Reports.

Retroviruses, unlike regular run-of-the-mill viruses, insert copies of their genomes into host cells in order to replicate. Antiretroviral drugs have proven effective at controlling HIV after infection, but patients who stop taking these drugs suffer a quick relapse. Once treatment stops, the HIV reasserts itself, weakening the immune system, thus triggering the onset of acquired immune deficiency syndrome, or AIDS.

Over the years, scientists have struggled to remove HIV from infected CD4+ T-cells, a type of white blood cell that fights infection. Many of these “shock and kill” efforts have been unsuccessful. The recent introduction of CRISPR/Cas9 has now inspired a new approach.

Geneticist Kamel Khalili and colleagues from Temple University extracted infected T-cells from a patient. The team’s modified version of CRISPR/Cas9—which specifically targets HIV-1 DNA—did the rest. First, guide RNA methodically made its way across the entire T-cell genome searching for signs of the viral components. Once it recognized a match, a nuclease enzyme ripped out out the offending strands from the T-cell DNA. Then the cell’s built-in DNA repair machinery patched up the loose ends.

Not only did this remove the viral DNA, it did so permanently. What’s more, because this microscopic genetic system remained within the cell, it staved off further infections when particles of HIV-1 tried to sneak their way back in from unedited cells.

The study was performed on T-cells in a petri dish, but the technique successfully lowered the viral load in the patient’s extracted cells. This strongly suggests it could be used as a treatment. However, it could be years before we see that happen. Still, the researchers ruled out off-target effects (i.e. unanticipated side-effects of gene-editing) and potential toxicity. They also demonstrated that the HIV-1-eradicated cells were growing and functioning normally.

These findings “demonstrate the effectiveness of our gene editing system in eliminating HIV from the DNA of CD4 T-cells and, by introducing mutations into the viral genome, permanently inactivating its replication,” Khalili said in a statement. “Further, they show that the system can protect cells from reinfection and that the technology is safe for the cells, with no toxic effects.”

This technique for snipping out alien DNA could have implications for related research, including treatments for retroviruses that cause cancer and leukemia, and the suite of retroviruses currently affecting companion and farm animals. As noted by Excision BioTherapeutics’ CEO and President Thomas Malcolm, “These exciting results also reflect our ability to select viral gene targets for safe eradication of any viral genome in our current pipeline of gene editing therapeutics.”

And Malcolm has good reason to be excited: his company holds exclusive rights to commercialize this technology.

http://gizmodo.com/hiv-successfully-edited-out-of-immune-cells-1766413957?rev=1458672609052

Tesla will unveil its much-anticipated Model 3 mass-market vehicle in Los Angeles at the end of March 2016

Tesla will unveil its much-anticipated Model 3 mass-market vehicle in Los Angeles at the end of March.

Elon Musk Bill Pugliano / GettyNo Tesla-topianism, please.

Buzz before the event has pushed Tesla stock back up above $230 a share, from a crater of about $140. That’s a 40% upswing in only a month.

It has also set off a new round of what I’ll call „Tesla-topianism.“

This is the notion that the arrival of a $30,000 all-electric car in a market dominated by gas-burning vehicles will be the disruptive-innovation earthquake we’ve all been waiting for.

The Model 3 means it’s RIP for the internal combustion engine. So long, ICE! But hey, that century was a nice run.

The mistake remains the same

Bernstein’s Michael W. Parker and Mark C. Newman published a research note last week in which they enthusiastically encapsulated this bullish sentiment regarding electric vehicles, or EVs. (I’m quoting it at some length because it’s both informative and entertaining):

For car manufacturers, it is still possible to dismiss the electric vehicle as simply a rich person’s toy. This misinterpretation of „new“ as being „niche“ and „impractical“ has real pedigree. Blackberry and Nokia viewed the iPhone in these terms in 2007: why would anyone pay $600 for a phone with only one button? But with a mid-priced addition to Tesla’s product mix, the company will no longer be competing just with the BMW 5-series and Audi A6. It will be competing with the Honda Accord and Toyota Camry.

We didn’t think so. Our expectation is that the auto industry is going to have a common response to the launch of a modestly priced, attractive, electric vehicle in the first quarter of 2017: accelerate whatever they are doing in the EV space immediately.

It is very likely that the prestige, engineering and visceral thrill of German motoring has dissuaded many people from buying a Tesla Model S over the last few years. But if you agree with that statement, do you also agree with this statement: „It is very likely that the prestige, engineering and visceral thrill of Japanese motoring will dissuade many people from buying a Tesla Model 3 over the next few years“?

This is where the analysis of Tesla’s future competitive prospects tends to go wrong. The basic idea is actually correct: Tesla is aiming to transform the mobility landscape and accelerate the switch from fossil fuels to sustainable electric power. CEO Elon Musk has said as much.

But viewing Tesla’s current vehicles as luxury-market competitors doesn’t work. There’s demand for luxury cars, and there’s demand for Teslas. And the two flavors of demand aren’t the same.

Tesla was able to sell just over 50,000 vehicles last year because there are that many buyers out there who think a long-range electric car with a lot of luxury appointments and excellent performance is something they want to put in their garage.

There could be many more of this type of buyer, but EVs — even Teslas — are still difficult to own, mainly because they take a long time to recharge (gassing up, by contrast, takes just a few minutes, and gas stations are almost everywhere). And that means there’s probably a ceiling on this first wave of Tesla owners.

TeslaKim Kyung Hoon/ReutersA Tesla Model S being charged.

Why people buy Japanese cars

Enter the Model 3, which is supposed to bash through this ceiling. Hence Parker and Newman’s suggestion that no one will buy a Japanese car in the face of the overwhelming challenge from the Model 3.

The problem here is that demand for Japanese cars, especially in the US, defines a huge chunk of the mass market and has for decades, just as demand for German luxury brands like Mercedes and BMW defines the luxury segment.

Demand for Honda Accords and Toyota Camrys is demand for reliable, affordable, fuel-efficient products. It has nothing to do with demand for alternatives to gas-burning engines. You buy a Toyota Corolla because you want a way to get around that won’t let you down. You buy a Tesla because, to a degree, you want to change the world.

Anyone shopping for, say, a Honda, Toyota, Nissan, Mazda, Subaru or for that matter a Kia or a Hyundai, is unlikely to have Tesla on his or her radar. Once the Model 3 has been around for five or 10 years, that could change. But in the short term, given the miserable sales that traditional automakers have seen with EVs, it will be up to Tesla to prove that the market exists.

2015 Toyota Camry XSEToyotaA Toyota Camry.

A tough virus to get rid of

Yes, General Motors is said to be trying to beat the Model 3 to market with the Bolt EV, due to arrive in late 2016 (the Model 3 won’t hit the road until late 2017). But GM is simply doing the Bolt now because it can — the automaker is fully recovered from its 2009 bailout and bankruptcy, is printing money on big pickup trucks and SUVs, and has a CEO in Mary Barra who thinks it’s worth it to invest in the technologies and mobility services of tomorrow without betting the farm on them.

Tesla-topianism has been a tough virus to eradicate. Every time you think Tesla watchers, particularly in the finance industry, have figured out that the automaker is becoming a real car company (not a go-go growth tech company), those Tesla watchers crank up some new narrative that has Tesla doing something monumentally awesome that alters reality as we know it (that’s why the Apple analogies come fast and furious).

But then you look at the facts. For example, Toyota sold over 9 million vehicles worldwide in 2015.

Tesla and Musk could move humanity forward in terms of eventually retiring the gas-burning engine. But against staggering numbers like that, it will take Tesla decades, if it survives, to have a meaningful impact. And adding one new car to the portfolio isn’t going to speed things up.

 

http://www.businessinsider.de/mistake-about-tesla-and-the-model-3-2016-3

Most Cars Will Have Automatic Emergency Braking Standard By 2022

In a significant move, 20 automakers have agreed to make automatic emergency braking standard on their cars by September 1st, 2022. This was announced by the National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety today. The announcement mentions that these automakers represent “more than 99 percent” of the auto market in this country.

Automatic emergency braking systems have long been hailed as effective measures for preventing collisions. Cars are equipped with forward-looking sensors which detect the risk of crashing into the car in front and ping the car to automatically brake should the driver not take any action.

 

These systems were initially only available in expensive luxury vehicles like the Mercedes-Benz S-Class but have since trickled down the cars you and I can afford. This agreement will go a long way in ensuring that mass market cars feature this technology which can prove to be the difference between life and death in such unfortunate scenarios.

Keep in mind though that this is an agreement and not regulation so there’s nothing compelling car manufacturers from abiding by this agreement. The fact that major car manufacturers in the country have decided to sign their names to the document shows their willingness to work together to bring the benefit of this system to as many people as possible.

Source: http://www.reuters.com/article/us-autos-regulations-safety-idUSKCN0WJ27E

The Journey how Google became the most valuable business in the world

By the middle of 2010, it was clear that something was broken at Google.

Investors, analysts and members of the media who once touted the company’s fast growth started to wonder if Google was just a „one-trick pony“ that cleaned up Internet searches and made a nice advertising business out of it.

Inside Google, teams had begun moving forward with a wide range of groundbreaking and potentially lucrative projects to dominate the smartphone market, scan millions of print books, map every street in the world and even build cars that would drive themselves.

Google’s problem wasn’t a lack of ambition, but rather a fundamentally flawed decision-making process at the very top of the company that kept slowing things down, according those in the C-suite at the time.

 

 

For nearly a decade, Google’s two brilliant youthful founders, Larry Page and Sergey Brin, made all major business decisions together with the seasoned executive they had selected as CEO, Eric Schmidt.

„They were so close at the beginning of the company and they made so many great decisions together. It was very powerful,“ Patrick Pichette, Google’s former chief financial officer, said in an interview this week with Mashable. „But as the company grew and grew in complexity and momentum, that became an issue.“

The vexing issue, and Google’s eventual fix for it, set in motion a more „mature“ management strategy that helped it move faster, eventually influenced its move to create a new holding company called Alphabet and arguably propelled it (however briefly) to overtake Apple this year as the most valuable business in the world.

Looking back, Google’s flaw was obvious, but serves as a case study for the need to consistently re-think the leadership structure of businesses as they grow and adjust their goals.

Google’s leadership triumvirate in 2009.

2.5 hour long debates

As CFO, Pichette enjoyed a rare birds-eye view into Google’s exclusive and influential executive suite from 2008 until he left last year to travel the world and find better work/life balance.

From that perch, Pichette watched as this triumvirate at Google unintentionally created a massive bottleneck simply because they believed all three men needed to be in the same place at the same time deciding on the same things.

On multiple occasions, Pichette says, product teams would wait eagerly for the executives to emerge with a decision after some „2.5 hour“ long debate — all three are prone to intellectual sparring — only to be crestfallen to learn that no decision had been made because Page or Brin or Schmidt happened to be somewhere else at the time, necessitating yet another debate.

„No decision was made without the three of them being in the room and all nodding,“ Pichette recalls. „I can tell you at some point this created such a slowdown in momentum.“

Without necessarily realizing it, those outside the executive suite caught occasional glimpses of this dysfunction and relentless debating.

During one joint public appearance in 2008 (starting at the 3:20 mark in the video above) for which the three men have flown in from three different parts of the world, they are asked a question about the impact of Microsoft potentially acquiring Yahoo.

Brin admits not having had time to catch up on the news. Schmidt takes the lead in offering a corporate response, then asks a quiet Page if he agrees. The latter says yes.

„Great,“ Schmidt jokes. „With us you never quite know.“

Fixing Google

After a „dozen“ or so frustrating decision-making roadblocks, Pichette says Google’s management team recognized „there’s something broken.“

The fix was announced several months later, at the very beginning of 2011.

Google shocked the technology world by revealing that Page would take over as Google’s CEO, bumping Schmidt to the sometimes ceremonial position of executive chairman. Brin would remain „cofounder.“

Their roles became more clearly defined as a result: Page would oversee key technology and business-related decisions. Brin would focus on „new products“ like Google Glass and the self-driving car.

Schmidt, in turn, would function as an advisor to both with more of a focus on „broader business relationships, government outreach and technology thought leadership.“

„As Google has grown, managing the business has become more complicated,“ Schmidt wrote in a blog post at the time, hinting at the troublesome management arrangement that had plagued Google. „So Larry, Sergey and I have been talking for a long time about how best to simplify our management structure and speed up decision making.“

Even now, the sense of relief from this arrangement is audible in Pichette’s voice.

„To hear Sergey say, ‚On this issue, it’s Larry’s call,‘ that was a transformative moment for the company,“ he says. „It gave us a ton of momentum.“

The beginning of the Alphabet

For Page, that significant leadership restructuring was only the beginning.

From the moment he took over as CEO again in 2011, Page was interested in finding a new business structure that would help Google be more ambitious — and bring its ambitious projects to market — while also freeing him up from humdrum day-to-day management responsibilities.

„He talked about a million things he wanted to do, but he spent 100% of his time managing and trying to get his executives to work together,“ one former Google executive told Mashable in an earlier interview.

The solution came in two parts.

First, Page groomed a quasi-successor, Sundar Pichai, to assume more operational roles inside Google, while simultaneously empowering executives of other key divisions, freeing him up to focus more on the big picture.

Then, last year, Page once again shocked the technology world by announcing plans to create a new holding company called Alphabet. Google would be just one of its many subsidiary companies, along with Nest, Google Ventures and others.

Page, Brin and Schmidt remained the top execs at Alphabet, but more executives would potentially earn CEO titles and the autonomy to make crucial decisions on their own — without always waiting for the triumvirate to come together and finish a long debate.


Google’s stock has soared in the five years since its big leadership change in 2011, at one point making it the most valuable business in the world.

Image: screengrab, mashable

„Alphabet is about businesses prospering through strong leaders and independence,“ Page wrote in his note announcing Alphabet. „In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed.“

Pichette, who played a role in preparing for Alphabet before leaving, sees this decision as a continuation of the growing maturity on the leadership team that prompted the first big change back in 2011.

„You see that same maturity coming up with Alphabet,“ Pichette says. „Larry saw there is great management in place so he doesn’t need to run day-to-day Google.“

„They are amazingly good at adapting to where they are and thinking ahead,“ he continues. After all, the one thing that hasn’t changed: „These are three crazy ambitious people.“

 

http://mashable.com/2016/03/13/how-google-grew-up

Apples long way to build Cars

Apple has built no cars. Google has designed and outsourced the production of a small fleet of self-driving pod mobiles.

The newest carmaker on the block, Tesla, managed to build just 50,000 cars in 2015.

Meanwhile, in the US alone, the traditional auto industry built and sold 17.5 million cars and trucks.

This glaring imbalance between current reality and a highly speculative vision of the future hasn’t stopped pundits and tech and auto observers from transforming Apple and Google into serious auto-industry challengers.

For example, this is from a recent report by Reuters:

[G]oogle may choose to build its own engineering and design prototypes, then partner with a Chinese automaker or an Asian contractor such as Hon Hai Precision Industry’s Foxconn Technology Co that wants to enter the automotive field, several experts said.

Given Apple’s extensive iPhone and iPad manufacturing in China, it’s also been suggested that the Cupertino, California, colossus would skip out building a car in the US and would do it in the Middle Kingdom.

It’s an attractive idea, but it overlooks the vast gulf that exists between assembling smartphones and making cars. Tesla is among the most technologically advanced automakers around, and it still has to make its vehicles in a large factory with millions of dollars of giant robots and huge machines designed to bend metal. A large factory in Northern California.

The rest of the US auto industry builds the cars it sells in the US predominantly in the US. As such, the Detroit Big Three are major employers, as are the Japanese and German „transplants,“ as they’re know, which build cars and trucks in southern US states with nonunion workforces.

Some production has been moving to Mexico, but Mexico has been positioning itself as a NAFTA manufacturing partner to US companies for some time and has invested is developing an automotive supply chain.

China calls the shots

China is a different story. Ford, GM, Volkswagen, and others build cars there and sell them under familiar brands, but they can’t do this without entering into a joint venture with a Chinese partner. There’s an obvious compromise baked into this arrangement: Foreign automakers gain access to the enormous Chinese market, but they also end up sharing R&D.

Foxconn Kin Cheung APKin Cheung/APThey aren’t building cars.

It isn’t exactly a joining of equals, but Chinese automakers don’t see themselves as mere assembly lines for Western designs. They see themselves as developing a robust national manufacturing base. And while they’re building Buicks, they’re also building Chinese-brand cars and trucks.

With Apple and Google, the idea seems to be that these companies will try to transform consumer-goods manufacturers into automakers. There might be something to this in theory: Remake the automobile by designing and building it like a piece of internet-enabled consumer tech. But in practice, the car-building part of building an automobile, even an innovative self-driving one, tends to catch up to the visionaries, as Tesla has learned.

Profit margins under stress

Additionally, in Apple’s case it would be necessary to harvest a much wider profit margin than the auto industry typically throws off: 30% vs. 10% — or less, in bad times. And if you think Apple or Google has designs on selling all-electric driverless tech to willing Chinese customers, making China and not the US or Europe the main market, then you haven’t thought through either China’s congested big cities, a nightmare for driverless cars, or its still-developing roadway system, which is friendlier to trucks and SUVs.

So the game plan, as it’s being discussed outside Apple and Google, would be to build cars outside the US, using cheaper Asian labor, and then import them.

It sounds great because for Apple, in particular, that’s been a pathway to massive success.

But when it comes to the auto industry, it would be impossible. Not impossible to build some kind of more or less traditional car, but impossible to build the wildly disruptive car of the future.

www.businessinsider.de/impossible-apple-or-google-car-china-2016-3