Why Sequoia backed Embark to commercialize autonomous trucking
Pat Grady is a partner at Sequoia Capital
At Sequoia, our mission is to help the daring build legendary companies. When Embark co-founders Alex Rodrigues and Brandon Moak moved to San Francisco in 2016, the self-driving industry was filled with a constellation of startups joining the race to build a “self-driving car.” The technology had captured the hearts and minds of some truly brilliant technologists but — at the time — there was less focus on how to turn tantalizing technology into an enduring business.
While Alex and Brandon’s technical accomplishments winning robotics world championships and building Canada’s first self-driving vehicle landed them offers to work on existing self-driving car efforts, they decided on a more daring path. Back then, their choice to focus Embark exclusively on building self-driving trucks stood out; most industry and investor attention was focused on passenger vehicle automation. Alex and Brandon saw then what many now recognize: trucking is the “killer app” for vehicle automation, creating a clear value proposition that will transform a nearly $800 billion industry.
When Sequoia decided to partner with Embark in 2018, we saw the strength of the founders and team, their passion for building technology, and their clear vision for turning that technology into a legendary company.
Today, Embark is at another inflection point. The last three years of focused work have delivered industry-leading self-driving technology and an approach that has been validated by carriers and shippers. Now — in just the last few months — Embark has announced key steps to begin commercializing self-driving truck technology at scale. Three years in, we at Sequoia are more excited today than on the day we initially partnered.
What you read in the press only scratches the surface. So at this critical juncture, we wanted to dig deeper and share the backstory of why we believed in Embark’s unique approach to self-driving — and how, over years of hard work, that approach has brought the company to the precipice of creating a new industry.
Built to Last
Embark was built to be an enduring company from day one. At a very early stage, even before raising significant capital, the team had the confidence to make decisions that prioritized long-term progress over short-term buzz. They believed from the beginning they would succeed, and planned accordingly.
An example of this is how they approached engaging with government. Embark understood the popular “move fast and break things” philosophy for technology startups wouldn’t work for a serious self-driving truck company, where safety is paramount, trucking is highly regulated, and social acceptance is important to deploying on public roads. In what was at the time an unconventional move in the self-driving industry, Embark made building out its policy team an early priority. Over the years, this early investment in proactively engaging truck drivers, federal and state regulators, elected officials, and others has helped Embark build the regulatory foundation for commercialization.
Simultaneously, it has helped shape Embark’s efforts to refine its technology to fit the realities of long-haul interstate trucking. Case in point — last month, Embark debuted industry-first work zone navigation capabilities, and announced a first-of-its-kind agreement with the Arizona Department of Transportation to support that effort. By pairing cutting-edge technical achievement with government stakeholder relationships developed over many years, Embark removed a key barrier to deployment, built trust, and moved closer to realizing its vision.
The Right Technical Strategy
A startup has to make countless decisions every day with limited information, any one of which can be critically important to future success. The only way to navigate such uncertainty is to have a culture and a vision that constantly remind you who you are as a company.
Embark is, at its core, a technology company building world-class autonomous driving software for trucks — and the team focuses as much time and energy as it can on that goal. They understand the trucking industry, where carrier demand has led manufacturers to offer their trucks with a menu of engine, transmission, and braking system choices from multiple suppliers. Embark also understands what makes them special in the trucking value chain — where their competitive advantage lies — which is why they aren’t building engines, transmissions, and braking systems, or assembling vehicles themselves.
Given all this, Embark recognized early on that standardizing their autonomous driving system to work across different truck brands would open up a much larger market opportunity and make scaling easier. While much of the self-driving truck industry sought single-OEM partnerships at an early stage of development, Embark consulted with multiple OEMs and thought deeply about how to find the best and most scalable path to commercialize their technology.
The result is the Embark Universal Interface (EUI). EUI allows Embark’s autonomous driving system to integrate into trucks from all four major U.S. truck manufacturers. By investing in EUI upfront, Embark will be able to bring a turnkey autonomous driving solution to each OEM partner.
The team has a clear-eyed understanding of what makes them valuable; to them, this move just makes sense. If you are going to be an autonomous driving service provider, then you don’t want to be artificially constrained to one platform. At Sequoia, we’ve seen how establishing an open platform is critical to driving growth and rapidly expanding customer base in a range of industries, and we know that the same is true for autonomous trucking.
Fundamentally, EUI puts Embark’s customers first. Most large carriers maintain fleets of more than one truck brand, and have spent significant resources building out maintenance capacity for those trucks. They demand open platforms for telematics and fleet management solutions. Instead of forcing carriers to choose one specific OEM in order to leverage self-driving technology, EUI will allow carriers to run Embark-powered trucks while preserving their valuable OEM relationships and fleet management investments. For Embark, this means happier customers, a broader and more easily accessible market opportunity, and faster scaling.
EUI is the result of Embark believing in its vision, focusing on its strengths, and refusing opportunities that would distract from its core work or limit its total addressable market.
Going to Market
The value proposition of the safety and efficiency benefits of autonomous trucking is clear, but the path to commercialization hasn’t always been. Some self-driving truck developers have sought to build their own fleets from scratch, while others have considered selling their technology as aftermarket equipment. And while Embark’s team has been steadfast in its commitment to its vision, that doesn’t mean they had all the answers from the very beginning. Being agile about specifics is just as important as relentlessly pursuing the broader goal.
That’s why we at Sequoia were excited when, earlier this month, Embark announced its Partner Development Program (PDP). In PDP, we see Embark making a concerted effort to listen to carriers and shippers, understand the complex logistics ecosystem, and apply those learnings to pinpoint a commercialization strategy that integrates their vision with the facts on the ground.
Through the PDP program, the team is preparing carrier partners to purchase, operate, and maintain Embark-equipped OEM trucks, while Embark focuses on providing the self-driving software necessary to navigate those trucks. This partnership-based model is a win-win for Embark and the freight industry because it leverages existing shipper-carrier relationships to scale, utilizes the complimentary logistical expertise of carriers to deliver a better service, and enables Embark to focus on delivering a safe and reliable autonomous truck.
Major fleets such as Werner Enterprises, Bison Transport, and Mesilla Valley Transportation have already joined Embark’s PDP, along with major shippers such as Anheuser-Busch InBev. These partners will help Embark continue to refine its operating model and provide input on how autonomous trucks can be most efficiently integrated into existing supply chains.
Putting it all together
When Sequoia partnered with Embark in 2018, we saw the ambition, grit, and pragmatism that has characterized some of the best teams we’ve been in business with over the last five decades. Since then, the team has executed on its vision, producing groundbreaking technology and a savvy business strategy. Embark’s ambition to lead and willingness to learn have been integral to the team’s success, and will continue to serve them well as they enter a new phase of accelerated growth and progress, fundamentally changing how we move goods around the world.
Disclosures
The information in this article is an opinion and does not purport to be a complete overview of Embark Trucks. Past performance is not indicative of future results. All forward-looking statements are based upon assumptions that may not prove to be correct, and actual future operations, opportunities, or financial performance may differ materially from these forward-looking statements. There is no obligation for Sequoia to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. This is not a solicitation or offer to purchase securities.
