BOOK by Cadillac: An Early Sign of Car Non-Ownership?

GM, of all companies, announced an innovative car subscription service for its Cadillac brand this week. For $1,500 a month, you can get any car in the lineup delivered to you, and you can switch cars up to 18 times a year. Insurance, registration, and maintenance are all included, and there is no long-term commitment.

Fancy a drive in a CTS-V, but also need an Escalade to haul the kids around? If you live in the NYC metropolitan area, you’ll be able to take advantage of BOOK soon.

Gizmodo quickly criticized the offering as a toy for the rich, but hang on a second. There are a number of situations where such a service could make sense. Let’s ignore the cost for now, but we’ll get back into that.

Car subscriptions could fill an important niche for city dwellers

In the U.S. as of 2012, 92% of households own a car. But the dynamic is different in cities. Take the borough of Manhattan: only 23% of residents own a car [1]. That’s an extreme example, but in New York City overall, 54% of households do not own a car [2]. Other cities aren’t too far off from that.

There are a number of reasons for this. Many city residents commute by walking, biking, taxi/Uber, or public transportation. Parking can be difficult and expensive. Driving in the city sucks. Insurance rates are higher. Owning a car could be an unnecessary expense if not used regularly.

A lot of people want to be able to take a road trip to the beach, the mountain, or wherever else. Maybe they need a car for an occasional business meeting outside the city. Perhaps they visit their parents in the suburbs every so often. I’m willing to bet a significant portion of city residents hold on to a car just for these purposes, despite the disadvantages, because of the kind of access car ownership enables.

The thing about owning a car is you’re stuck with what you’ve got. Which is more fun to drive: a giant SUV or a sports car? Which one is easier to park? Which one hauls more stuff or passengers? Which one is better in inclement weather? The type of car you choose to own defines the type of use and enjoyment you can get out of it.

And what if you’re not going to use the car for a while? You still have to pay for insurance and parking. If you’re on a lease or financing the car, you’re married to it. There’s no cheap or easy way out.

For the somewhat-frequent business traveler, renting a car can add up, especially if the car is needed for a number of days. A BOOK subscriber could land in a new city, have the car delivered, and drive as much as needed without worrying about mileage limitations.

I’m not saying BOOK solves every problem for every person. It doesn’t. You still have to pay for parking while you have the car. But when you know you don’t need the car, there’s a savings. Owning or leasing might be cheaper in the long run, but BOOK gives you the freedom to not even pay in the months you don’t need the car. It’s probably cheaper to rent a car if you only need it sparingly, but some people would need to rent often, which is currently a pain.

The service is for a specific audience, but that niche is probably bigger than you think.

Yeah but fifteen-hundred dollars!

BOOK in this iteration is clearly geared toward wealthy city residents. But it’s highly likely GM is using Lean Startup techniques in validating a larger concept. A small market limits the number of cars Cadillac has to supply to the experiment. Wealth is correlated with education. Both of those attributes are correlated with a lot fewer problems, like accidents, failure to pay, and abuse of the vehicles [3]. With those risks out of the way, GM can study use patterns and demand before scaling up.

Think about Tesla, which started out selling a Ferrari-competitive sports car, then made a cheaper-but-still-expensive luxury car, and is now about to come out with a commodity-priced car. If GM can prove demand and work out the kinks with BOOK, you might see a similar Chevy On Demand offering in the future at a lower price. And surely, countless entrepreneurs are watching BOOK to see what happens.

Let’s not stop there though.

Car subscriptions in the autonomous age

It’s inevitable: cars are going to drive themselves completely in a matter of years. We can argue about the pros (safety, convenience, freed-up time, speed) and cons (short-term job loss, driving can be fun), but the long-term effect is a net positive for society. The transition has already begun with partial autonomy.

There are a few different scenarios for car usage in the future:

In the first scenario, a self-driving version of Uber will be the best option for intra-city trips. UberPOOL, the service that lets riders pay for a single seat in a shared Uber trip, will probably continue to be the lowest-priced option. Those in need of a quicker ride, or those desiring something bigger or more luxurious, will pay more for the various options. In this scenario, the user is paying for the time occupied between points A and B.

A second scenario: longer-distance Uber-style trips are likely to become more common. The rider pays for a seat, or perhaps a whole vehicle, to travel between two cities. He pays for the time in the car. When he gets out, the car disappears to pick up someone else. Or if the user travels to a remote destination, where it is unlikely someone else will request a ride before the return trip, she pays extra.

These first two pay-as-you-go scenarios address multiple inefficiencies, but there are two I want to highlight: the vehicle has a much higher rate of use, and parking is not a concern for the rider. Because of these, savings can be passed on to the end user, and it only makes sense that car ownership will be disincentivized for those who only take short trips and the occasional longer trip.

But what about those who need a car every day to travel long distances, like commuting from the suburbs? No doubt, they are going to be the last group to own cars en masse. But car ownership will be disincentivized for these people too. Constant upgrades that are required by law to enhance overall safety will be coupled with diminished demand for out-of-date used cars. Cars of the future are transportation appliances.

The frequent car user who takes longer trips is ripe for an autonomous car subscription service. This will be a lot like leasing a private car today, albeit with more control by the fleet owner than the lessee. Whenever an upgrade or maintenance is required, the subscriber just gets a new car. And the user will be able to change the vehicle type at will.

The target market for BOOK by Cadillac today (wealthy city dwellers) is not the same as a future subscription market (people needing consistent long-distance car service). But it is GM’s chance to get its foot in the door in a world in transition from products to services. This move only helps prove that GM is committed to staying relevant in the long term.

Sources

[1] New Yorkers and Cars

[2] The Cities Where No One Wants to Drive

[3] The Hidden Inequality of Who Dies in Car Crashes

Notes #6: Head Start

  • Amazon Alexa killed it at CES 2017. Expect it to take over your car, fridge, and life soon. There were a few Google Assistant announcements, but it’s clear Amazon’s lead in the voice game is paying off. Read this article if you don’t believe me.
  • Singularity Hub put together a great quick read: 10 Tech Trends That Made the World Better in 2016
  • Norway is starting to switch off analog FM radio. Premature much?
  • Chinese drone maker DJI just acquired a majority stake in the famous but struggling camera company Hasselblad. Clearly we’re going to get better cameras on drones, but perhaps DJI will also give Fuji and Sony a run for their money in the mirrorless game.
  • Indiegogo to launch equity crowdfunding this year.
  • I added book notes for Elon Musk’s biography.

Notes #5: Accident Avoided

Cuba’s Internet is More Powerful Than You’d Think

Officially, the internet in Cuba is useless. But a team of data traffickers use USB sticks and hard drives to transport music, movies, and software between Miami and Havana. They get access to content just a few days after it is released in the US. It’s all quite an impressive workaround.

Tesla Autopilot Predicts Crash Seconds Before It Happens

If you’re not convinced of a driverless future yet, watch this Tesla avoid a multicar collision in the Netherlands.

Redesigning the Traffic Light

Speaking of safer traffic, what if traffic lights in the US included countdown timers? These are already present in some other places in the world.

Voice Recognition in an Elevator in Scotland

Voice recognition is improving by leaps and bounds, but maybe an elevator in Scotland isn’t the best place for it yet.

Casio DG-20: It Came From the Future

My friend Max Goldberg (of Five Five Collective) made this stunning video about a synth-guitar from the 80s.

Echo Dot was Amazon’s 2016 Best-Seller

Amazon Echo Dot and Google Home
Amazon Echo Dot and Google Home

The Echo and Echo Dot were the best-selling products on Amazon this year, and the Dot was the top-selling item during the holiday season. The demand was so high that the company had trouble keeping stock. With millions of Alexa-powered devices now in people’s homes, it’s inevitable that this technology will shape our lives in a big way very soon.

83% of US Primary Household Shoppers Used Amazon This Year

A WSJ article pointed out that 17% of US primary households never shop on Amazon, but I think the big news is that 83% did use the site this year.

Notes #4: World Domination

Not Your Average Russian Hacker

Elon and Mark, meet Vlad and Dmitry. I this Bloomberg documentary, we visit the practically desolate Silicon Valley of Siberia and then head to Moscow to meet the CEOs of Prisma and mail.ru. We ponder the implications of an app that can find anyone’s social media profile based on a photo and learn how one company is fighting cybercrime with its own breed of hackers.

Amazon Go Will Dominate Physical Retail

AWS powers a significant portion of the internet. As one of Amazon’s most profitable divisions, it has become the platform for nearly anything online. In a way, Amazon has put a tax the internet. It’s early, but Amazon Go is positioned to become the platform for physical stores of the future. Find out how in this brief video.

Mark Zuckerberg has AI

Mark Zuckerberg built his own smart home powered by natural language processing and image recognition. A bit I found insightful: “In general, I’ve found we use these more open-ended requests more frequently than more specific asks. No commercial products I know of do this today, and this seems like a big opportunity.” How natural will your conversation with Alexa be in the future?

Simian Mobile Disco & Bicep – Sacrifice

This upbeat electronic track has been the background music to some serious heads-down sessions this week.

Site Update

Added The Intelligent Investor to my Book Notes.

Notes #3: China

Inside the World’s Craziest Gadget Market

The electronics industry is centering itself around one city in China: Shenzhen. In just about 30 years, it transformed from small fishing villages to a city of 7 million. It could turn a megacity even more quickly. A great documentary on the subject is Shenzhen: The Silicon Valley of Hardware.

How China is Changing Your Internet

Despite a user base less than half of Facebook, WeChat is the true Swiss Army Knife of mobile apps. Will it win us over in the West, or will concerns over data privacy halt its expansion?

Amazon Completes First Drone Delivery

It seems like a small first step, but the sky is no longer the limit. Commenter Jerrod P asks “So basically this works if you live on a farm and not like apt 13b?” I don’t think this is meant to be an urban delivery solution in the near term, but rather enhance fast shipping outside city centers. Who knows, though? Amazon has a habit of surprising.

Good Reads

“Artificial intelligence is not about building a mind; it’s about the improvement of tools to solve problems.” Google Translate recently improved by leaps and bounds thanks to a tiny AI skunkworks. Other technologies are poised to get the same treatment in the near future.

Audi releases a car with vehicle-to-infrastructure communication. Right now will tell you how many seconds until a light changes and the speed limit. It’s a step toward autonomous driving, but given the ubiquity of Google Maps and smartphones, could this information also be generated with aggregate data and predictions?

Notes #2: We are in the Future

Legal Shoplifting

Amazon’s newest AI offering is a grocery store with no lines. Just grab and go, and you’ll be charged automatically. The question becomes: just how smart does one need to be to shoplift in the future?

The Ta’u of Solar

Tesla and SolarCity have installed a solar microgrid on the island of Ta’u in American Samoa. Solar arrays and battery storage replace not-so-green diesel generators to supply nearly 100% of the island’s electricity. It would have been nice if they didn’t clear-cut the area, but still, this is undoubtedly a net positive.

Google Speaks Your Language

Amazon Echo Dot and Google Home
Amazon Echo Dot and Google Home

Now developers can write their own apps for Google Assistant. It’s currently limited to just a few devices like Google Home, but this will no doubt expand. It looks like the voice intents are more free-form than Alexa, although I haven’t dug into the API yet.

In the Spirit

One of my favorite light shows is Mike Ziemkowski’s Lights on Display. This year is no exception.

Notes #1: Walking and Talking

Inspiration

Tokyo Reverse

Shanghai Forever

Voice AI: It’s on

Amazon Echo Dot and Google Home
Amazon Echo Dot and Google Home

Move over, Siri. Amazon and Google are killing it with developments around voice and AI. Your digital assistant is about to get much more powerful.

Cool Stuff

Spinzall

The first centrifuge for the kitchen and bar. Clarify juices, make herb oils, concentrate purees, and more. By Dave Arnold, host of the excellent podcast Cooking Issues, founder of the Museum of Food and Drink, and author of Liquid Intelligence.

AWS Snowmobile

AWS Snowmobile
AWS Snowmobile. Image: Amazon

Have billions of gigabytes you need to move to the cloud? Can’t wait decades (literally) to upload it all? Amazon’s got your back. They’ll bring a truck to your datacenter, copy your exabytes, and dump the data on their own servers.

What Autopilot Sees

Don’t believe self-driving cars are the future? Watch this video of Tesla’s Autopilot in action. The panes on the right side highlight objects identified by the vehicle’s sensors.

Statistically Significant

Lighting Energy Use in 2035. Source: DOE
Lighting Energy Use in 2035. Source: DOE

According to the Department of Energy, U.S. lighting energy use will be 75% lower in 2035 than it would have been if LEDs were not popularized.

Blog Updates

35mm in Hong Kong

Fall in Fairmount Park, Philadelphia

Alexa, Repeat This

Hong Kong Guide

Alexa, Repeat This

I wrote a simple Skill for Amazon Alexa. You can use it on devices like the Echo Dot.

When you ask Alexa to repeat a phrase, she will read it back to you in her own voice.

User: “Alexa, ask Repeat This to say ‘you get nothing, you lose, good day sir'”
Alexa: “you get nothing, you lose, good day sir”

Because of the way the Skill is written, you cannot publish or access it on the Skills Store. You need to run your own instance on AWS Lambda. I have provided code on GitHub.

Perhaps you can fork this code to develop something more useful. I know I am.

Fall in Fairmount Park, Philadelphia

I was lucky enough to receive a DJI Mavic Pro drone soon after the release. The timing was perfect because my friends and I were able to capture fiery fall colors against the Philadelphia skyline.

DJI only shipped one battery even though I ordered three (the other two came later), so the flight time was capped at 20 minutes. Dan Leung, Max Goldberg (both of Five Five Collective), and I got a few minutes each at the controls. Thanks to Max for the editing.