Infrastructure begets innovation
In his recent interview at the Code Conference, Jeff Bezos made the point that innovation on the internet, and especially ecommerce, was enabled by the infrastructure that was already in place when Amazon launched. For example, the plumbing for cable allowed more consumers to get online. USPS, UPS and FedEx already delivered the last mile. Credit cards allowed people to make secure payments online. None of this infrastructure was developed for online ecommerce, but it enabled innovation because it made the cost of entry for new businesses like Amazon relatively cheap.
That trend has only continued with cloud hosting through services such as AWS making it easier to launch new applications and further reducing the cost of entry.
So, does innovation always follow infrastructure?
We’re in a massive shift in the automobile/transportation industry, with innovation in ride sharing, electric and self-driving vehicles.
However — with the exception of ride sharing — it’s an area where infrastructure appears to lag behind, or at the very least is being built in parallel with product innovation.
Ride sharing has clearly been enabled by infrastructure. The US boasts roughly 80% car ownership and 70% of adults own a smartphone — the two components required to support the ride sharing economy. This has made it relatively cheap for Uber and Lyft to grow their businesses.
The same cannot be said for electric cars.
To make electric cars truly go mainstream, you need to solve the range problem. One component of that is creating an accessible network of recharging stations, which is just starting to take shape.
There are now more than 13,000 charging stations and 33,000 charging outlets for electric vehicles in the U.S. Tesla itself has built out ~1,400 of these stations, to the point where you can drive a Tesla cross-country the same way you would a gasoline vehicle.
Those numbers are still dwarfed by the estimated 130,000 gas stations, but it’s an impressive development in a short period of time.
As the charging infrastructure further develops, barriers to adoption will fall making it cheaper and more lucrative for more companies to produce electric vehicles. Presumably, this will feed more and more innovation.
In other words… it’s early days in electric.
Self-driving is even earlier in the life-cycle. Obviously, you need a bunch of technology — sensors and computing power — to make the cars work. That technology is beyond me but we know it will get cheaper over time.
However, the tech may not be the biggest infrastructure constraint for adoption. The biggest hurdle in my opinion will be regulation. Will cities allow self-driving cars to operate on the same roads as human-driven cars? And if so, will they require special lanes?
Until the regulatory infrastructure is in place, adoption of the technology, no matter how innovative, will be slowed. And investing in development of regulations is expensive, meaning big players with deep pockets, like Google, will drive the ship.