This Week in Startups - E1076: The Power of Accelerators E9 Sunny Madra, Head of Ford X on innovating mobility for a post-COVID world, going from idea to product at a large corporation & more

Episode Date: June 18, 2020

0:52 Jason intros Ford X's Sunny Madra 4:39 How Sunny got his start in Accelerators working on Tinder with Hatch Labs at IAC 11:47 What is Ford X's thesis on mobility and how do they decide whether to buy or build a company? 16:18 How does Ford X evaluate new ideas & how do they source talent? Sunny speaks about his personal investment in Cabana 22:56 Going from idea to product at a large corporation like Ford 29:29 Assessing risk-taking in early-stage ventures at a major company 35:02 How COVID has impacted Ford's stance on mobility & micro-mobility 42:10 Thoughts on bikes, car subscriptions, Ford's resilient commercial business 50:36 Ford's movement in the EV & autonomous vehicle space

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That's really what this show is about. It's about entrepreneurship. And one of the great entrepreneurs I've met in my life is Sundip Madra. We call him Sunny. And I've met him as he was working on many different companies, including his extreme labs, was building a little app you may have heard of called Tinder. He's not allowed to say it, but there was a rumor they built a social network's first app. I don't think he's allowed to say that. But I can mention I heard a rumor that they built one of the first major social networks apps for them. and he went on to build a company that was working in autonomy and I got to be a, you know, just a tiny investor in it as I am apt to do with my friends. I love to back my friends. And that company got bought by Ford.

And now he is the VP in the head of Ford X. And we're going to find out today on the, I think this is the ninth or the 10th episode of the ninth episode of the Power of Accelerator series we're doing. For those of you who are just tuning into this series, If you go to this week in startups.com slash accelerators, we're going to put up a page with a list of these episodes. But we had Dream Adventures on. We had Star Dex, which is Stanford's amazing accelerator. We had Mass Challenge, which is an interesting Boston-based competition.

We had SOSV, which operates out of China in a number of other cities working in hardware, one of the hardest areas you could ever work. We had my friend Josh from Capital Factory in Austin and now moving into San Antonio in Houston. We had the founder of the largest accelerator in the world, David Brown, the co-founder of tech stars. He was an amazing guest. We recently had Ravi from Alchemist Accelerator on, and that was amazing. And of course, representing the startup lab or startup studio model, my good friend Mike Jones from Science was recently on. So what an amazing run we've had in this series. and we thought big corporates, big corporations need to innovate, but big corporations have big

multi-billion, tens of billions of dollar lines of businesses. So it's kind of hard for them to do something tiny, right? They're good at doing big things, but it's hard to do the little thing. So they typically find somebody really smart and entrepreneurial and they say, hey, you do the entrepreneurial things. And I think, Sonny, that's what Ford did with you and making you the vice president and the head of Ford X and welcome to this week in startups. Thanks for having me.

You know, we've been meaning to do this for a long time. We finally did it. And awesome to chat with you about it and share my experiences in the accelerator space. Yeah, so tell me, what is Ford X and how should entrepreneurs or people who have startups already look at Ford X and why does Ford even have an accelerator? You know what would help with that is, and I'll touch a little bit on your wonderful intro that you did for me, but our experience in accelerators, what didn't start just with Ford X, during Extreme Labs, as you talked about, we were able to partner with Barry Diller's company, IAC. You're familiar with them. Of course. And a lot of people don't know these details.

So I'll just share some of them at a high level. But the incubator that was created within IAC, it's called Hatch Labs. And that was created during the start of the boom of the mobile app era. And one of the things that IAC had kind of seen very early on, they had just acquired Urban Spoon. I don't know if you remember that app. You shook your phone and had the rollers, like a slot-me- machine rollers. So they just acquired that app and they had realized that, you know, they had good insight given the business that they were in. They were sort of a holding company of a lot of other

companies that, you know, this was going to really explode. And they decided to create this internal incubation lab called Hatch Labs. And how extreme got involved with that was we were doing a lot of app development for them. And so as they were going to look to stand up these ideas, they needed a partner that could help them, you know, execute those ideas. And so we got involved And a lot of people don't realize, but Tinder actually came out of Hatch Labs. And what's interesting, there's a lot of learning that happened for us there. That was a big corporate trying to take advantage of the growth of mobile and, you know, create ideas on their own, try to disrupt themselves. You have to remember, for IAC to create something like Tinder, it's a really big undertaking because they have two really big dating properties at that point, which is Match.com and OKCupid.

Right. And so they have to disrupt themselves before someone else disrupted them, sort of the classic innovators dilemma problem. And they were able to do that incredibly well. And now the entity that exists as the match entity, it's publicly traded, is a multi-billion dollar entity. And it's been quite a successful venture for them. And it shows that big corporates have the ability to be successful. And we, you know, we had a seat right there to see that happen with that. And it's been, it was a really. really exciting. And why, and this is going to sound like a stupid question, but why couldn't IAC just say to the OKCupid team or to the Match.com team make something innovative from mobile? Why do they feel the need to put it over here on the side and say, let's do experimentation over here? Yeah, I think it's more of an and, right? I don't think that they limited those businesses from doing it. I think what happens is, again, you just fall into that innovator's dilemma. You have your existing business, you have your existing metrics, you have your shareholders and you're trying to appease them.

And this is a really interesting conversation specifically in the COVID time. We'll get to that in a second. But that's what happens to those teams. I don't think you limit them from innovating. But I think if you give another group an opportunity to disrupt, they're not sort of held down by the metrics of running a sustainable business. You know, match is very profitable, right? So every dollar that goes into something that's not the current business is, you know,

in some ways viewed as a distraction or taking away from something that's existing. and it was well documented in the books. Christensen wrote, others I've put out there over the years. And so with Ford X, we saw a similar opportunity to do the same, but not in mobile this time, but in transportation,

because we really felt as though this next era of startups are going to be focused in and around mobility. And we think there's an opportunity internally to create a group that can create disruptive new technologies or experiment with disruptive new technologies and help the other groups learn.

And so that was, That was sort of the genesis that got us to the Ford X concept. All right. When we get back from this quick break, I want to know what type of spaces you're working on. And then is, am I correct in thinking, hey, car ownership is going to change over time? And so Ford realizes that and they need to have some other businesses for people who maybe don't want to own their car, which was previously the American dream and the standard by which we thought every American would live. One person, one car. Answer that question when we get back on this week and start.

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With me today, Sandeep Madra. He is Sundeep on the Twitter, S-U-N-D-E-E-P. But he goes by Sunny, my friend, Sundeepe, aka Sunny. So when we went to break, I wanted to know if the core thesis here at Ford is, hey, maybe not everybody is going to own a car in the future. They're going to live in cities. And maybe millennials, there was this kind of idea that they were commitment-phobic. And I think we all know that there are three or four very considered purchases in your life.

I think it's the home is number one, college number two, and car number three. maybe having a kid or getting married, you know, number four or five, in terms of how much consideration people put into them, those are the big five. So is that the central thesis? Like, hey, maybe core ownership is going to change? Or is it just cities are changing? What was the core thesis here that you had to put this Ford X laboratory together? Yeah, I think it's more along the lines that mobility is changing.

And, you know, if you really go back to the roots of even Ford, its roots is like sort of as a first major mobility company with the Model T. It really enabled the world to become mobile in a much different way. And so we feel strongly that mobility is going to change. That means there be new modes. There may be new business models. And so we're not limiting ourselves just to say car ownership or vehicle ownership. We're kind of looking at across the board.

That became sort of really relevant with our acquisition of spin. That actually started off as a Ford X. project called Jelly that we did with, in conjunction with Purdue University. Explain to me what that is. Yeah. So we, you know, we saw the start of what was happening with the scooter companies, birds and limes and we really wanted to get an insight ourselves into, you know, how good this product market fit was.

And so we ran a small experiment together with Purdue University to put scooters on the market. And even before we could put the scooters out, the day we were rolling them out the evening before we let the app up, students wanted it. badly. And what became obvious to us was there's a tremendous product market fit here. And there's a product market fit that's not necessarily someone that's taking away from vehicle ownership, but that just needs mobility in a different type of way. And so that work really led us to realize that there was an opportunity to excel ourselves in that space. And we went from, you know, sort of the incubated effort that we had. And we went, you know, and any time you're

doing that, you have kind of this build by purchase that you can look at. We, we quickly went through that arc and got to purchase and decided to acquire spin. And that's been great for us. So that's how we've been really thinking about it. Not just the changing business models, but just changing modes of transportation that are out there. How does a big company make the decision to buy or build? You know, we looked at, say, Facebook buying Instagram. They could have easily built it. And they did build, you know, when they couldn't buy Snapchat.

So obviously the availability of the asset is part of the decision to buy or build. but assuming the asset is available for purchase, how does a big company, you know, in those, you know, conference rooms, how does that dialogue, even if it's just not Ford, you obviously have this experience with other companies, how do they make that decision? What is the dialogue like? What is the decision tree like?

Yeah, I think it breaks down to the following in my experiences. Like, you know, first of all, there's time to market. You know, whenever you're going to build something versus buy, you have to take into account, like, how much time does that take? second is there's existing scale versus what you can bring to it yourself. And the last, and a lot of people don't realize is it's sort of the team. And I'm not saying those are the order and most importance, but those are the three elements. And a lot of times you have to look at, can your existing team have the passion?

One of the things that you know, Jason, as doing the accelerator and being an investor in startups, you know, one of the key things for survival of those startups and the proliferation of that startup is the passion of the founders. And sometimes you may have one and two inside the company, but you don't have someone that's passionate about an idea that's going to work on it, 24-7, wake up thinking about it, go to sleep thinking about it, talk about it all the time. And so I think when we look through that arc, those are the type of things that you look at and when you go through that build-by curve. How does Ford X look at coming up with new ideas and which ideas to bring into the accelerator

and invest in. I believe you invested in this company, Cabana, is it? That's doing the vans, the conversion vans? That was a personal investment. Oh, that was a personal investment. Oh, yeah. Yeah, very good. Yum. Yum. Oh, yum. Yum. Well, little sacks assist on that. I like it. Well, explain that investment, because it is related to mobility and they happen to be using a Ford, a very fine Ford product that I've actually researched a whole bunch called the Ford Transit. Explain what Cabana is and why you made that personal investment. And then, back to that original question, you know, how does Ford X look at new ideas and either generating ideas or figuring out where to back founders? Yeah, I think on Cabana, like the real notion,

you know, pre-COVID was that the way real estate is allocated, you know, specifically around short-term rental, whether that's a hotel or, you know, Airbnb is really ineffective. You know, you see this surge that happens when big conferences come into a town or you see this need around big events and hotels, you know, for the most part, are not able to, you know, take advantage of that properly. And the idea is that with the advancement that's happening in vehicles, the transition to electric, that you can really solve that. And the real estate is sort of mismatch. Like, I'll give you a classic example. Think of a Costco parking lot.

Highly utilized during the day, empty at night. What a perfect place to park a bunch of vans at night during. the middle of a conference to, you know, provide housing or, you know, lodging at nighttime. So I've really been a big fan of it. I'm a big fan of the Van Life movement. And so I think this kind of brought those things together. And it's really exciting. And I think there'll be much more that comes out of it over the next few years. That's on the Cabana side. Yeah. Now, what about in the, in the Ford X side, how do you pick founders or companies to work with? And does it work like a Y Combinator, launch or Techstar is in that you have a cohort? Is it rolling? Do you provide space? Do you find capital? Do

you automatically provide access to the Ford customer base? How does it all work? Yes. So I'd say like a big difference here is this is internal, right? So there's no external financing or equity or any of those type of things. This is a process and methodology for a large company to operate like a startup internally. And, you know, when you have a big company like Ford, hundreds of thousands of workers. There's lots of people that want to take more risk, but they want to take it in the confines of a bigger company, and we give them the framework based on our experience to do that internally.

And Cisco has a similar program where they know, hey, some entrepreneurial employees who are here, they might leave to go start a new company because they see some opportunity in the world. And obviously their work at Cisco or their work at Ford might inform their worldview. So instead of just letting them walk out the door, you might want to keep them in there or at least incubate them and get some ownership in those ideas.

So can anybody at Forge, you know, somebody who works in customer support or marketing pitch you? And how do you get them to pitch you? And then how do you evaluate the ideas and then take them off their teams and say, hey, come here to Silicon Valley and work on this? Yeah. So, you know, from a location perspective, you know, we allow the teams to be somewhat mobile. We've been really supportive of that. Like we don't need them to all be in Silicon Valley. Yeah, we do.

And in fact, our team is made up of people that have come from all different aspects of Ford. Some people come from IT. Some people have come from our dealership side of the business. People have come from all over. And it is as simple as you say, like, you know, kind of inspired by you, Jason. Like I've seen you go through your process, you know, through the launch festivals and everything else. We allow the companies to pitch. We go through all their work.

And in fact, even the companies that, or sorry, the ideas by the employees that, you know, don't make it through. We try to give them guidance so that in the future they continue to. evolve their ideas. One of the things we also try to help people with, we're not just a place to lob ideas to us. This is a place where you bring an idea and you bring yourself to help execute that idea. Because going back to that point I made earlier is, you know, it's a lot of the time, the success is driven by the passion of the, you know, the founder as much as important as the idea to be handed over to us. Somebody who's listening to this, who works in a big company, who has a great idea and, you know, the ability to execute on some portion of it. How does,

does ideation work in these early stages? Because I know Extreme Labs and the company you sold to Pivotal Labs, they actually ran courses in product design and how to take ideas from like kind of rough ideas and then, you know, refine them a bit. When we get back from this quick break, I want to know the process of coming up with great ideas and just moving them from an idea into a prototype and from a prototype into a product when we get back on this weekend startups. Now more than ever, we need people with the right skills to support our communities, especially the frontline workers who provide resources and care for those most in need.

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not everybody has, trust me. Well, they use LinkedIn jobs to find the perfect candidate with a PhD and computer vision. And this employee has been with them for over a year now. And as I heard in the board meeting just moments ago, they have rolled out several major projects that are a game changer. So here's your call to action. To post a healthcare or essential services job for free, visit LinkedIn.com slash power. That's right. LinkedIn.com slash All right, everybody, welcome back to this week in startups. Sandeep is with me, the Sunny Madra, my pal, at Sundip on the Twitter. So you've worked with a lot of entrepreneurs.

You've worked with a lot of big corporations, obviously pivotal labs and extreme labs, service big companies. You can't say the name of the giant social networking company that you may have built their first app for because you're under NDA. But you've worked with big companies. We have, we have. And you cannot say the name of that company, even now, three or three, or four companies later.

We cannot. We cannot because the NDAs are so strong, but I've heard rumors. And how does that process work of ideation to say productization? So the biggest challenge that I think entrepreneurs, both internal to startups or even external to, internal big companies and externally faces sort of that, you know, zero to one. And in the zero to one, you know, big companies tend to have very constrained budgetary processes, right? So, you know, there isn't just money around to start something and, you know, not have everything fully defined because big companies are subject to their shareholders and public earnings and every dollar in pennies accounted for. And so that becomes challenging.

One of the first things that we really need to do inside large companies is unlock some amount of dollars so that we can, give a small team a budget and don't have to constrain them by going and, you know, for the first 250K, very similar to what you do with your investments, to allow them to have the flexibility. But alongside that we have to give them some KPIs and we have to measure them and we have to make sure that, you know, we understand something's coming out of it. So that's like the very first step inside a big company is unlocking the budgetary constraints. Ah, how does one know how much money you need and what's too much money and what's just enough?

You know, this has been like a really interesting question. And for me, it's been evolving over time. Like, to be honest, when we even started Ford X, we thought it was like about 250K to get something built. One of the things that we're learning is like that number is probably increasing over time. And I'd love to hear from you like what you're seeing with your startups. But it's probably itching towards like 500,000 now. And that's sort of contrary to what you think because there's all these tools out there from like the cloud services and all these SaaS services. But it just seems like,

the barrier of what the expectation is is higher too. So that, so you, you can do a lot more, but the expectation of the investors, whether that's an internal group or whether that's an external investor is higher. So, you know, I feel like to get to that very first MVP of one product with one feature that you can sell to a customer is probably around $500,000 at a minimum now. Yeah, I think that's probably about right, because if you just think about the human capital involved, if it takes a year and you had, you know, three, you know, three, three or four people getting paid, you know, some reasonable salary to live in a major city, that would kind of account for their salaries, two, three, four people and some money on

designers, external developers or some other pieces. And a couple of SaaS services. A couple of SaaS services, yeah. And what you would see in accelerators is typically they give a portion of that, 100, 150. And the reason they do that is because they want people to learn how to fix it. and get money from investors, and that is one of the key skill sets. Whereas inside of Ford, well, you've already got the investor, so you might as well just give them the full 500.

And also you have people who are internal, so I don't think you're going to ask them to take a pay cut to work on their idea. Correct. And so that is another interesting nuance to what you're doing. If somebody was getting paid, a great salary to working the corporate office, and then they go work on this, well, they're not going to go. down to a 5K a month draw, which is typically what founders of year one startups get 60,000 a year. They take a 5K draw.

I've seen people take a 2 or 3K draw, and maybe their spouse is taking the brunt of the hit or they're living, you know, they're a young person living three to a two-bedroom apartment kind of situation. So people, yeah, it's a different level of cost. How do you know if that first product is successful enough to merit? additional funding. Yeah. So for us, and I think this applies for many businesses, we like to see an actual external transaction occur. And, and there's a lot of barriers that have to get on block to do that. And you know, you've seen this as well. In order to accept money,

it's not as simple as, you know, setting up a lemonade stand going outside. There's a lot involved with that. And so we believe that if you can get to like a external financial transaction, that's a really big signal that you've kind of unblocked a lot of stuff. One, you know, you've found someone to pay for your product, but two, you've built something that someone's willing to pay for. And so that's the measure that we really kind of focus on initially. And then, you know, there's a ton of other KPIs that you can build, you know, similar things that you'd see, like how fast they come back, what's the turn rate around those things, you know, what does it take to get them to the funnel, all those more typical metrics.

But out of that initial funding, we'd like to see external transactions started, and we'd like to see the data associated with those external transactions. And if the idea doesn't work, they can't get an external transaction or the product doesn't come out amazing. There isn't product market fit, let's say,

as a general term. How do you shut it down? What's the process? I mean, in startup land, you run out of money and therefore it's over. There's, you can't pay salaries, you, you, you wind, you, you wind, you do the wind down. What do you do for the wind down or ending the experiment inside of Ford? Yeah.

So we do the same thing. We basically shut that project down and then you go back on the bench and you maybe regroup with the same team members or other team members, then, you know, go with the next idea. And so tying back to that first thing I shared with you, you know, we set aside budget at the start of the year to work on some fixed number of projects. And so we know, we take into account. that teams are going to go through that start, stop, some are going to continue, some are going to

need more funding, others are going to stop. And we account for that and how we look at the program on a yearly basis, multi-year basis. And approximately how many projects are you trying to get done? Is it 10, 150? You know, it's kind of always a little bit of a moving target because it depends on which ones you want to keep going. But our goal would be between like 10 and 20 a year. We'd like to get started. And, you know, that may vary depending on what we're doing, kind of scaling up as well. How do you look at risk-taking in big companies? I just had Rory Sutherland of the book Alchemist, which is a great book if you haven't read it. I recommend it. And he taught, he's an advertising agency person. And he makes a really good point, which is in big companies, you want to make safe

bets because if they work, you get credit. And if they don't work, well, you made a safe bet. So it's not like, you know, it was your fault. Whereas if you take an outrageous or outlandish bet and you fail, well, you look stupid because you did something crazy. And if you succeed, well, you know, you might get some credit for it, but you're taking on a huge risk because most things fail. And the more outlandish or world changing, the more risk taking the art, the greater the chance they fail. So how do you mitigate against everybody picking safe projects so they don't fail versus is the whole point of doing this, I would expect is for you to have competitive advantage with ideas that are outrageous. And then what percentage do you expect to actually become

sustainable actual business product lines? One in 100, one in 50? Yeah. So, I mean, that's part of the filtering process. And you have to make sure you're not signing up for things that are generally just features of other parts of our business. And so, you know, we try to take a very hard lens at making sure, you know, what is the ability? for this idea to stand up on its own and become a business on its own. In terms of hitting ratio, I'll go back to the experience that we had with Hatch Labs. And the really interesting thing, that was like the 15th or so idea out of the incubator. And so my feeling is you'll probably hit one, and you won't hit a Tinder every single time,

which is a multibillion dollar entity, but I think one in every 15 will probably be something that you can scale that is worthy of then the capital allocation at the corporate level as a separate business. And inside of a big company, new efforts are not expected to hit one in 15. They're expected to hit one and two. Well, that's exactly it. Yeah. Yeah.

So it's a distinct difference inside that process. Hey, by the way, the book is alchemy. sorry. Alchemy, like the Dire Straits' phenomenal album is the name of Alchemist, is Paolo Colo's famous book as well. Two famous ones. Hey, when we get back from this last

break, I want to talk to you about what the world looks like for startups and then also for transportation in the age of COVID and this crazy pandemic, which we don't know if we've beaten or if we're about to get beaten down a second time. Time by when we get back on this week and start it. Hey, founders, you know that if you don't have your SOC II compliance buttoned up, you can't close major customers.

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Way to go, Vanta. Okay, let's get back to this amazing episode. Hey, everybody, welcome back to this week in startups. If you want to reply to our accelerator, it's launch.com, slash apply. And if you know somebody and you refer them to us and we invest, we'll give you 10% of our carry. In other words, 10% of any profit we make on that first investment. We've done that 15 times out of the last 100 plus companies that went through the accelerator. So, you know,

one out of six or seven times, we share some of the upside and we love doing that. So today on the program, Sunny Madra, you can follow him on the Twitter, Sun Deep, S-U-N-D-E-E-P. He gets a little cheeky on the Twitter. He mixes it up a bit. We'll leave it at that. And, yeah, I'll do it at that. When we left, I wanted to know how you, Ford, Ford X, look at what's happening with COVID. People are moving out of cities, which was exactly the opposite trend to what everybody thought would happen. And if everybody moves out of cities, you know what you need when you're not in a city? you need a car.

You need that new Ford Mustang, the electric one that's coming in 2021. Ooh, I covet that one. That's my first car and I love a good Mustang. So how does Ford look at the world? Is people moving out of cities actually going to be wind in your cells? And then that works against micromobility or does micromobility do well because people want to get off public transportation? I'm trying to figure out the chessboard here and I'm sure you are too. What's your latest take on it in June of 2020, month four or five of this pandemic,

depending on when you started from? Yeah, really interesting question. I just want to say, like, one of the things that, you know, really touched me a lot in terms of the overall Ford Motor Company was the effort that the company put in to help with the crisis, right? And, you know, you probably saw some of the news, but from face shields to the ventilators, There's a lot of efforts that the overall company kicked in to help with the crisis. And that continues to show us why manufacturing is such an important part of our ecosystem that we need to have in the country.

So I just wanted to put that out there. I was just really amazing to see what the team did to pull that off. Well, I mean, I think it's an important point worth considering, which is we became so good as a country and as an economy at optimizing for just, in time manufacturing and for what I guess they call supply chain, which is the ability to build things, you know, on demand essentially. And we would get our phones from, you know, they would announce the new AirPods and then you could order them online and they would come from China and you'd get the box like two days later. And I think they were packing it with your label in China. And what Apple did in supply chain and other companies was just phenomenal.

And then when it gets disrupted, oh my Lord, does it get disrupted? And we can't even get a mask for the hospitals and you're like, this is a serious risk factor. So we clearly became too good at it for our own good. And we need to have some amount of this manufacturing here in the United States, or at least on the larger continents of North and South America. Yeah. So yeah, I just want you to say that. And thanks for that message. Because I think it's important for all the listeners. But I will say like, you know, when it comes to COVID, you know, there are changes that are going to happen. You know, when it comes to, you know, when it comes, comes to public transportation, you know, think about New York City, right? And think about the impact

that was had in New York City. Really, you know, for me, I think it boils down to, and I'd love to get your thoughts, it was the public transportation system. We've all been on those subways. We've all seen how packed they get, how close people are. And so that is going to change, right? We see the impact that's going to have not just on the subways, but other aspects of public transportation. Now, and then, you know, we're already seeing these announcements with businesses starting to say, you know, don't come back to work for the rest of this year, don't even come back to work, work from home permanently, and people are starting to evaluate those decisions, right? Why should I stay in the barrier? Why should I live in this expensive town, you know, expensive town? So I think all of those things are going to have an impact on transportation.

Does that lead directly into vehicle sales? Maybe, but I think more indirectly, what it does is it, it causes a change in how people think about transportation. and that's why it's important to continue to innovate around business models. And so I think overall, you know, with Ford having the ability to, you know, have products that are used in different ways, I think we're in a good position there. We don't know what the final answer is nor do we want to anticipate, but I think we have a broad enough set of offerings in terms of products that we can adapt those over time as we learn what happens post-COVID.

But, you know, we're still in the middle of it. I think it's too hard to make those bets just yet. Yeah, there is one. theory that if we do beat COVID because of masks, because of a vaccine, or if it's seasonal, or if only a certain number of people are actually impacted by it, maybe the social distancing and the masks make it go away, there is a theory that everything goes back to normal. That does not seem like the likely scenario in the short to midterm to anybody. This thing's going to linger, clearly.

And if it does linger, that means you're going to need a way to get around that's safe. And it would seem that micromobility would be the number one choice or being in a car, like a lift or an Uber, et cetera, with a partition, because a partition would solve the problem, obviously. So what are your thoughts on? Are cities now suddenly reversing their position where they kind of pump the brakes on micromobility? And we're like, oh, this is a nuisance. There's too many of these things. And people were complaining and being all nimbie. and now they need them. And these cities are probably going back and begging people, please put more of these on the street so they can go visit local,

so people can get to work. Because people don't want to get on a bus or a subway. It's scary to get on the bus or subway in this day and age, given what we know. Yeah, you know, we actually saw that with Spin. You know, in eight of the cities that we were operating in, Spin was designated in an essential service. And it was designated an essential service.

service because the distributed nature of shared mobility and how it's run by a private company allowed the ability for the company to continue running during the most peak times of the crisis. So I actually do see resigning a reversal. You know, we're also seeing cities right now in trying to contend with the crisis and, you know, the flattening of the curve. They're taking streets and closing them down, downtown Palo Alto, downtown Menlo Park, downtown Mountain View are all starting to close down their main thoroughfares, and that's forcing people to move to micromobility as well, not just scooters, but, you know, e-bikes and bikes and

everything else. And so I do think we're going to see a big reversal there in terms of trends of how people commute within cities right now. What does Ford think of the bike space? I'm curious. Do you want, would we ever buy a Ford Mustang bike, e-bike? Do you guys make e-bikes for sale, or are you just dabbling in these sort of ride-sharing kind of situations? Or I'm sorry, micro-mobility. Yeah, we're big fans of micromobility and your bikes are there. Like, you know, the Mustang brand is cherished and appreciate your passion towards it. You know, I don't think it shows up on a bike anytime soon.

But what I will say is, you know, we really support micromobility. And the real effort with spin is working in conjunction with cities. That's why we like that company when we acquired it. We work very closely with the cities to understand the needs of the constituent. And so we're, you know, we kind of look at what the needs are and we kind of say, hey, like, because scooters have one good use case and bikes have a different one and you sort of need all of them in a city at a given time. It seems to me that the scooters are really nice for short rides.

You don't have to throw your leg over the bike. You don't sweat. They're kind of good on the sidewalk, although I'm not sure if that's legal in all cases, but the bike is a little bit more of a commitment. You've got to put a helmet on. you're going to, I don't know if the, I guess the bikes do go faster, theoretically. Do you guys make any of those scooters or bikes yet? And how do you guys make that decision?

Do you want to be in the hardware business? Because you're a manufacturer that you want to actually manufacture battery powered bikes or battery powered scooters. Do you make them now? No, we don't make them now, but we're, you know, we have, we have the partners that we work with to get custom ones. You know, the entire industry started sort of buying retail scooters and then putting them on the road.

and everyone's gone to a custom space. I think, you know, I do think there's an evolution that we have to get to in the form factors, and that's an evolution from e-bikes and evolution from scooters. And I think as that evolution plays out, you know, then you never know where we end up in terms of the manufacturing side of it. How do you think of subscription businesses in relation to transportation? We've seen Amazon Prime, Netflix, Spotify. People love the idea of paying for a subscription.

And I know that some car companies, I don't know which ones they were, were dabbling with, hey, pay us $500 a month, get a car, get insurance, you're all set. Maybe even some of the rent-a-car companies were dabbling with that. Did Ford ever dabble in the like subscription car business? Because I know finance has always been part of car sales and then you have the distributors, what do they call them, the franchisees or whatever it happens to be? Like, how do you think about subscriptions? Because it would be amazing if you could subscribe to $4. and get a Mustang and get the spin bikes and just have one subscription with X number of miles involved.

Yeah, you know, we've experimented in this space a lot of different models, but I'm going to answer your question in a very specific way because it ties to sort of what's happening for startups right now and for big companies. You know, there's always been this S curve and startups have, you know, that's really the advantage startups have where we started this conversation over traditional businesses is that they have the ability to innovate quicker. And so they usually represent sort of of the top part of the S curve where the innovation is happening and the change is happening. But one of the thing that's COVID's done, and I'm trying to tie this all together here is

it's flattened that curve. And this is both an opportunity for large companies because that gap has usually been too big. And what COVID has done is really, you know, I guess flattened that curve. And the example I'm going to give you, it took 10 years for equal. commerce to grow from 6% to 16% of U.S. overall sales. But in the 10 weeks from the start of the crisis, it grew from 16% to 26%. So what happened in 10 years happened in 10 weeks. And now, that's both an opportunity for big companies because that's a flattening of a particular curve that startups are taking advantage of. But it's also something that startups need to look at. So I think when it comes to these business models, whether or not people have dabbled in them before,

you have to look at them in this new reality that we're in, right, this unprecedented world, this new normal. And I think everything's going to be reevaluated now. So that's what's super exciting in terms of that. I would say you have to kind of put away all everything that happened before. And what we said before, are people going to travel more? Are they going to work further away? And you have to reevaluate these business models in this new reality. It definitely happened as well with Zoom and work from home.

The number of people who had ever worked from home was probably 20% whoever had a job where you explicitly work from home. And probably the active people working from home was no more than 5 or 10%. And then all of a sudden it went to, in most companies, 100% working from home. And if everybody has to work from home, there's a certain threshold where I believe it no longer, you're no longer a second class citizen. you're no longer an oddity. Everybody has equal footing. So when we're all in the conference remotely, it's different than like, you know,

eight people are in the main office, one person's in New York, and one weird person lives in Tahoe. And that weird person in Tahoe, who knows who gave them permission to work from Tahoe? But everybody's kind of like, oh yeah, we forgot you were on the phone call and that person has to fight to get any airtime.

And it's like this oddity. Now it's like everybody's, where are you? Oh, does it matter? I'm in Salt Lake. I'm in Tokyo. Who cares? and what's the number of people who've used Zoom now? 100%.

So it does change the entire thinking. And even in a big company, you kind of have permission while you're on the pause, right? Because you guys couldn't sell cars during the pause? Actually, you know, vehicle sales continued. A lot of the people that were needed, like Ford's a big commercial, like we're the number one commercial seller of vehicles in the U.S., right?

And so we continued our business. Obviously there was a decline, but, you know, it continued. It was really, really, again, is inspiring to see that, you know, people kind of realize that this was an essential service needed for folks that needed to get to work and all these, a lot of people that relied on other forums they were going. And, you know, we had these great programs around financing and business models that we were adapting real time for customers at the height of the crisis. Yeah, interesting on the subscription side, Cadillac was the one who was doing it. It was $1,800 a month. But you could pick one of, you know, whatever, five cars or six cars. and that that seems to me to be like one of these like I don't know if you've got pitched on these

being like a CEO who's done well like the car sharing clubs where you like join the exotic car club and yeah the high end cars yeah and they're just like yeah you can take a Ferrari or a Lamborghini out you know get like whatever 100 days a year I've always found those like really classing you know fascinating what is the future of rent a cars you know this hurts going bankrupt during all of this. It feels to me like that's a group that maybe doesn't need to exist anymore because ride sharing is so strong. Micromobility is going so strong. And car ownership's getting easier and easier. And there's such a vibrant competition there. There's so many options available. Who's going to Hertz? Who's going to Avis? I know you guys sell a lot of cars to those kind of

places, I assume. But are they going to make it through this, you think? Well, I think they have to look at this flattened S curve as well. And they have to grasp with the reality that airline travel is down, some huge amount greater than 50%, right? Maybe even greater than 70%. And a lot of their business is done at airports, which maybe may not be it there. But go back to the point that we just said, if a lot more people are going to work remotely, I think they're going to need to go to some kind of office, whether it's once or twice a week or a couple times a month, they may not need a car full time for that.

So maybe it doesn't make sense where there'd be a huge rental center at SFO over the next couple of years, but maybe there needs to be a much bigger rental center in Tahoe. Or maybe there needs to be a much bigger rental center, you know, way out in the East Bay. And, you know, somewhere in Stockton and Modesto where those people can get in.

They don't need a car full time, but it's not feasible for them to take a scooter, her bike, or even public transportation, or an Uber from that distance. So I think you have to look at all these changes that this crisis is driving and you have to reimagine your businesses right now, even if you tried it before. How is the shift to electric vehicles going on inside of a giant company like Ford that obviously

basically created the entire sector of the ice engine? And now here we are, the internal combustion engine. Feels like it's, you know, in the whatever it is, seventh, eighth inning. And we're going to be moving 100% of these cars eventually will be electric. I don't know there's any doubt about that. It's just the timeline. How's that timeline going internally? Oh, really well.

You know, there's a lot of people don't realize this, but, you know, Bill Ford has, you know, been a huge fan of, you know, electric vehicles for a long time and, you know, big support of climate change, you know, fighting against climate change. And so, you know, we have a multi-billion dollar commitment in and around electric vehicles. You know, obviously you mentioned we're launching the Mock-E. We're also made commitments to launch electric F-150 and lots of, we have an investment in Rivian as well. So, you know, there's huge commitment by the company into the space. And we agree that, you know, there's a change happening. There's benefit there. At the same time, you know, we also have to look at, you know, customer use cases.

And, you know, there's a physics problem. And, you know, if you think about something like towing, right, that's not the, a lot of commercial vehicles are used to tow. and that's not the best use case for electric vehicles today, and until we kind of solve some of the problems related to that. You would need double the density, right? You just need twice as much battery power to really be doing towing. Exactly. And then twice as much battery power may mean twice as much weight of batteries,

which then, you know, works against you, right? It's like putting too much gasoline in the plane, you know, jet fuel in the jet. Like, now you've... Can't take off. You can't take off, right? Yeah, that is a really challenging. And that, what's going on with that Ford Mustang electric car? Because I've been reading about that.

Looks pretty sexy to me. Internal dashboard looks good. Super exciting. You know, obviously lots of great inspiration from the iconic brand. And we're really excited. I think it's, you know, this is the moment that the industry is needed, right? There's been a shift to occur. And then now I think we've got to give customers choice.

And the Mustang is a brand. It represents a lot of things for people. There's nostalgia for folks. There's excitement around the brand. It's a really awesome car. I think we've got to get you in a test drive at one of these and get you to talk about it. Looks gorgeous. Yeah.

I'm a big fan of electric cars. I just actually upgraded my Model 3 to the Model Y. So I'm going to get that in July. I'm pretty excited about that. Here's a silly question. I wonder if this has ever come up. The old, you know, you have this asset inside of a company like Ford that few people have. Obviously, Chevy has it too with the Corvette.

You have the Mustang. There is such a tradition in those cars. Why don't you do a throwback and take the classic pony car, 1966, convertible, cherry red, Mustang, and make that car available again for sale, but with modern technology in it? I looked at the Ford, and it's like, it's got echoes of the original. What I've never understood is if those cars were so iconic and people, love them and people, you know, collect them, why don't you make, still make them? You know, like it's a classic format. Has that ever come up as an idea? If not, I'd like to pitch it right now.

Well, I'm going to take it. I'm going to take it up the chain. I think it's, you know, so there's an external company that does this. I don't know their name, but yeah, but yeah, I think it's a really cool idea. You know, we're doing a flavor of that right now. You know, we're bringing back some of our iconic brands of Broncos coming back next month. Yes. Yeah, right? Those trade for more than they cost originally. Yeah. So, you know, the iconic name plates, you know, we're building a story around and it's awesome. But I'm going to take your idea up the chain.

I think it's great. Take the Ford Bronco, the original one that people covet, and make the same exact one. Oh, yeah, there's the people. Oh, Mays has a contest. They just threw on the screen of the, that's the original, crazy-looking one. And when I was looking for an old Jeep, people were like, no, you don't want an old Jeep. You want the old Ford Bronco. That's the one people clubbed.

Now, if you made that new and it had anti-lock brakes, and it was electric, and it had this and that, that would be amazing. You just think, I don't know if you saw the new Land Rover Defender. Have you seen that yet? Yeah, I did. Yeah, I did. And how did you feel about it? You know, I've never been like a Land Rover guy, but like, you know, it brought good nostalgia back. Yeah.

And, you know, it's like they modernized it. but I just want the classic one. Yeah. And I wanted to, and I looked, I was like, you know, I'll just buy one of those used ones. You know what they want for the old ones? Yeah, they're crazy. 90 to 120 large. You could buy two brand new Land Rover defenders for 50 or 60K.

It makes no sense. Yeah, yeah. But this is my big idea. And I'm giving it to you for free, Sonny. All right. You take this idea. I think that people would go crazy to buy like an old. Ford,

Mustang or Ford Bronco in the original styling, and you could do it like limited edition. There's only 10,000 being made. They could have like a semi-premium. Are cars profitable? And what car segments are profitable? I've always wondered this about, like I see some cars are so cheap,

you know, 15 to $30,000 cars. Do car companies make money on those or do they only make money off the mid-tier ones or the trucks or the high-end? Car companies are profitable, right? Yes, we know that. You can go to the public earnings and you can see that.

I think it varies, right? And it's a real challenge because the answer is never straightforward because, and this took a lot of learning for me. Selling a car isn't as simple as, you know, putting a product online and selling it. You know, there's emissions regulations, there's different taxes, there's different tariffs that exist. And so it's never, and I'm not even trying to get around the answer here. It's just never a simple answer.

Right. You know, like in a certain state, you have to sell a certain number of low emission vehicles, so you can sell the high emission vehicles. And so there's always this interesting trade that has to happen in order to just meet the regulations, right? And so, and even outside of Ford, like companies like Tesla spend a lot of effort selling their credits to other companies. Yeah, that's a fascinating thing. is some companies haven't been able to, I think a lot of Tesla's profitability in those early and mid years, even now. Even now come from selling those tax credits to people who didn't, who didn't hit their goals.

Yeah, that's fascinating. Do you think that a company like Ford would ever be in the ride sharing business and run a fleet of ride sharing cars? That was always a speculation that at some point a manufacturer might want to be in that. Obviously, Tesla has talked about they want to have an auto-examination. autonomous fleet, that feels to me like it's five or ten years away, minimum. But has Ford ever considered that? Like going head to head with a Lyft or an Uber? Or has there ever been speculation that, you know, there should be a full stack, as it were? Well, autonomy is like sort of, you know, not my area of focus within Ford. But I would say like it's, it's all reset with COVID

as well. I think, you know, with this, like, look, we're investing heavily in autonomous vehicles. We have, you know, we believe like the second to none in Argo, right? It's a premium autonomous platform made up of folks that come from all the top players. We're really excited there. I do think we need to understand, you know, how the landscape evolves right now, you know, from what the ride-sharing companies are going to do and what they're, you know, what it's going to look like. I mean, Jason, you were early on with Uber. Like, when's the last, when's the last time you were in an Uber? I have not taken an Uber since quarantine.

So March 12th was when I started. So I haven't been in an Uber. I was in an Uber probably the week before that, certainly. So it has been a long time. That being said, I have, my Uber Eats has gone 10X. Yeah. Because I don't go to restaurants anymore. So I'm just popping out my Uber Eats and doing that.

I feel like that is the most, I mean, think of it. about what an incredible asset that was for Uber compared to Lyft as public companies, that they had two lines of business, right? And that one happened to be counter to the other. As people went into quarantine, they used more Uber Eats and less Uber. And everybody's like, oh, Uber should just be. I remember Jim Kramer, somebody's like, they got to get rid of the Uber Eats business. It's just be pure play.

I want them to be pure play. And it's like, it's sort of like the redundancy we talked about in the supply chain. If your supply chain is too perfect and then you hit a bump, it's not resilient. It's not anti-fragile, right? And that Uber might be a little anti-fragile in that regard. But Ford's got a big business in fleets and connected cars already. So it would seem to me that you will be players in autonomous moving of stuff at some point, correct? How do you think about moving stuff?

Yeah, you know, being a leader in commercial vehicles, I think is important. and there's a lot of effort on our side to work with our existing partners and work with them to help them adapt to the moving of stuff, right? So, you know, there's a lot of effort happening on our side there. You know, we've done projects within Fort X, and our autonomous teams are doing a lot of projects with some big name players. You know, I think we've openly done stuff with Domino's. We've shared that.

And so, you know, there's a lot of effort there. We're really bullish about the moving of stuff space. Yeah, there was some company Zoom Pizza, I think you remember, and one night we were hanging out. I don't know if you were there that night, but a bunch of us were hanging out one night, and the Zoom Pizza truck came, and we tested it. And the pizza was okay. It wasn't bad. It wasn't great. But they literally had the ovens in the truck. In the truck. So the idea was you put a bunch of pizzas into ovens. As people order them, the ovens automatically turn on and start cooking them. when they get to you, they're cooked. And it felt like it was almost too much.

But Domino's has got a tremendous business. Yeah. I think like top performing stock in the last 15 years or something, right? And I don't know if you've seen any of those stats. Yeah. But, you know, the interesting thing in the Zoom pizza example was, and it goes back to this whole idea of, you know, are we focusing on the right thing?

Domino's pizza or any, you know, pizzas delivers really well. It's one of the things that you didn't need to disrupt. Now, if you think of something we need to disrupt is like French fries. Yes. You can't order French fries on Uber Eats or any of these platforms. Soggy. You can have soggy fries.

Yeah, exactly. You can't have crisp fries. That's it. You've got to put deep fat friars into the trunk of a Ford Mustang. And you pop open the trunk. It's a convertible with just a bunch of cooking oil in the back seat. That's my kind of Mustang. It makes a fried chicken.

Also does not travel well. Anything that's crispy does not. So maybe we should have been Zoom fries or Zoom, Zoom fried chicken, not Zoom pizza. You're right, actually. Yeah. There's nothing wrong with pizza. Pizza's working.

If you pick something to disrupt, it's, you know, it's very hard to disrupt something that's working really well. You better have a pretty good story. All right, Sonny, I could talk to you forever, and I have. It's been an hour. I took a ton of out your time. Continued success. Thank you so much for sharing your insights.

And if you work at Ford, well, you know the guy now. you know the guy who could get you out of your grind whatever you're grinding on at Ford and if you want to be an entrepreneur inside of Ford you know where to go go great great with Sunny thanks for coming on the pot and we'll see you all next time on this week of service bye bye