Episode 4: Marchetti’s constant and the power-network-intelligence matrix of micromobility

Link to the show: http://5by5.tv/micromobility

Welcome to Micromobility, a podcast exploring the disruption that comes from new lightweight utility vehicles. Using the history of computing as a framework, we unpack what business models and impacts we’re likely to see in transport in cities. The host of the show is Horace Dediu, founder of Asymco, and his cohost is Oliver Bruce.

This podcast is for software and computing professionals who want to understand how the transportation industries will be affected by their work.

In this episode, we look at Marchetti’s constant and why commute times tend to aggregate at under 1 hour per day. In this episode we also cover:

• how the 1 hour daily commute has been a constant across time, and how that affects how our cities form.
• what the Marchetti’s constant is, and how it has driven the explosion in shared scooters and bikes.
• the Segway, why it failed and what it can teach us about the emergent micromobility phenomena.
• The problems with traditional bikeshare systems, and why new layers of technology have helped this.
• The power-network-intelligence matrix for thinking about emergent trends in micromobility.
• How networks can creatively use incentives to solve for the limitations of the vehicles

Plus, a bonus gem at the end about what Horace and Oliver jamming on what they think the future looks like!

Hope you enjoy, and feel free to leave comments here or hit us up on Twitter at @asymco or @oliverbruce. Thanks to Josh Daniell for his help with the transcription.

Apologies that the timestamps below are a little off. Not sure what happened, but they’re close enough.

Quick ask of our listener community: If anyone want’s to get early access to podcast episodes in return for helping clean up automated transcripts, hit me up on Twitter. Normally takes about two hours/episode. We’ve got some great content coming down the pipe, and it’ll help us focus on getting more guests on!

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[00:00:00] Welcome to Micromobility, a podcast exploring the disruptive potential of lightweight utility vehicles. Using the history of computing as a framework we examine how these technologies will upend everything we thought we knew about the future of transport. The host of the show is Horace Dediu, founder of Asymco.com and I’m his co-host Oliver Bruce.

[00:01:00] Horace: Welcome back. We are once again ready to talk about modern mobility. Joining me again as always is Oliver Bruce. How you doing Oliver?

Oliver: Very well thanks. How you doing?

Horace: You know, it’s funny. We always start by saying where we’re often in different parts of the world and today. I’m actually in Germany. I’m actually crossing the European continent. When I was thinking about our last conversation, I was in Spain and we touched on this question of how far do we travel? I’m on a 2,000 mile journey. It’s very rare. In fact, it used to be more common that people in the 20th century would take long distance trips in their cars. The idea of a cross-continental trip was becoming popular in the 50s. It began in the 20th century with the availability of good roads, the ability to make sure that [00:02:00] your vehicle is not going to get stuck, which was a problem for motor vehicles. The Romans had a road network that spanned the entirety of their empire which meant all the way from Scotland to Jerusalem and the road network of the Romans is famous because it allowed their armies to quickly deploy. In fact, the military was one of the early reasons for building good road networks. But um, what I wanted to touch on, in a show about modern mobility is that we’re actually really talking a lot about ancient mobility.

Oliver: Yeah, certainly. I always like to think about how our cities are built and how cities that were built during the time when the predominant mode of transport was walking versus the the predominant mode of transport being the automobile like a lot of American cities or Australian cities. I love that’s the way that a lot of the [00:03:00] old cities were built. That’s the thing that all the hipsters love nowadays, you know.

Horace: Yeah. Walkability, you know. I’m trying to struggle with how to begin this bit because it’s such an interesting story. The automobile is only a century or so of our history and we’ve had thousands of centuries of history before that. Initially, we predominantly travelled on foot. Some people used animals for assistance, but it was very rare that we would actually use a horse to ride on. It was typically used to pull the wagon if that if you were lucky and you were able to do that, but mostly ancient man just traveled on foot.

Walking is the same speed today as it always was. We haven’t really started walking faster. So the speed is about 3 miles an hour. And it’s been consistent [00:04:00] forever. What’s interesting about that is how far can you go within a certain time? So as I was saying traveling long distance across country, it’s a new phenomenon because it was so difficult. It was difficult because of roads, because it took a long time, because also you may have all kinds of dangers along the way. It used to be that it was a far easier to travel on the sea. So once we had ships and navigation it opened up all kinds of possibilities for trade and commerce. Overland routes were very very challenging.

Now one observation that a researcher named Marchetti made by looking at ancient mobility is that it seemed that people in the ancient world traveled the same amount of time as they do today. Meaning that there was a budget in terms of time and that we tended not to spend our lives in transit. We [00:05:00] prefer to spend our lives in one place and transit between places only a couple of times a day. The budget of travel time was therefore fixed.

This budget he estimated to be about one hour a day. So one out of twenty four hours a day we’re happy or tolerant to spend in transit. This is something that he observed that was true historically. He observed people across the world when he was doing it in the 70s, looked at surveys done in the 50s and 60s and also looked at other countries in the world, including areas which were not necessarily wealthy. The key point is that they were all spending one hour per day in transit. It didn’t matter if you were poor or rich. It didn’t matter if you were in a city or in the country. It didn’t matter if you lived today or 100 years ago or even a thousand years ago.

So this is the invariance of [00:06:00] travel time. It was a remarkable discovery.

I think actually it’s still debated to this day, but Marchetti’s constant, which is how it came to be known, is this one hour budget of time in travel. It’s so powerful.

A couple of implications. One, if you are giving someone a new mode of transport, new vehicle type let’s say, or you build the infrastructure that permits existing vehicles to go faster. What is important is that it doesn’t change the amount of time spent. If you had a flying car, you’re still going to spend an hour in it versus if you had only walking or a horse.

So that determines the radius of travel. You’re going to spend a certain distance in terms of a daily budget and that means that ancient cities because they only had walking that [00:07:00] meant that the ancient city had a radius of a half an hour’s walk right? Because if you have an hour budget you go out for half an hour and back another half hour. And so if you look at maps of ancient cities and measure the diameter, it’s about half an hour’s walking time, certainly not much larger. People didn’t traverse the whole city every single day.

Oliver: Yeah. I was going to say you wouldn’t traverse the whole city at a given period. Is that at one hour of travel time where attention is required because the thing that I think about is would I be willing to sit in a vehicle if I was going to be able to be productive? So whether or not trains for example would factor into this?

Horace: I suspect it would because I think the reason there’s a budget is because we we don’t want to tolerate loss of productivity. We’ve got to get [00:08:00] something done, and that doing is done in a fixed location. We’re also not tolerant of the energy required. Walking was tiring and consumed a lot of our energy, and there are many factors which you could imply in this constant as to why we have a limit.

That is a critical question. Today you might see many communities in the world like in Tokyo, Japan where people commute far longer than half an hour on average and they make it more palatable by doing something during that commute. So if you are on transit you are able to read, you’re able to listen to music, you’re able to perhaps do some work, the whole question of whether we can offset some of the costs and pain associated with travel by making it more productive time. I think it’s the one solution that autonomy [00:09:00] is offering that we can make that time in the car more productive. But again, if you were to look at transit, it doesn’t really change that much. They’ll tolerate a slightly longer journey because it’s less taxing on the mind, but it’s still not something people are keen to prolong.

This is why I think Marchetti’s constant may have some margin of error. The convenience of the transport can take the edge off, but it’s still an interesting observation that we have this invariance over so many millennia. When you give people speed they don’t tend to do shorter trips. if you say I can give you a car that travels 200 miles an hour, then you’ll choose to live 100 miles from your destination because you have a budget of a half hour and you don’t want to go over it. But you also don’t want to go under it.

This is such a fascinating idea [00:10:00]. That when we got the car, we didn’t just shorten our journey times. In many cases, we actually lengthened our journey times again because the pain of transport was a little bit less on our physical labour and so we instead moved further away. The implication of this budget is not that it’s a maximum, but it’s also that it’s a minimum.

If you give someone, like I said, a flying car then they’ll just choose to live 200 miles away from work. And why would you do that? And this is one of the paradoxes of induced traffic and other forms of behavior that we’ve seen since the advent of more powerful transportation methods. We actually want to spread further apart as opposed to come closer.

So what’s the benefit of being far away from everyone else? Well, obviously, you know, one of the jokes I have is that the car has two jobs to be done. The first job is to bring people closer together, which is why you use it to get to [00:11:00] work and come close to others.

The second job is to put people further apart. And it does both jobs really really well. So we want to be living in a sort of isolation on a you know, this sort of idyllic castle in a mountain and then we want to also be together with others and we will do that instantaneously.

We want to flip between these two modes as quickly as possible and that’s what a vehicle lets you do and why it’s so beloved as an object of freedom. It allows you to switch between two modes which are diametrically opposed. That’s one of the ways to think about cars as a kind of this magical device that gives you the ability to be both close to someone else and far away from anyone else.

When you use Marchetti’s constant theory and throw modes at the problem you say okay, we’re going to give people faster [00:12:00] vehicles. What you end up with is having to consume more land because you end up with with sprawl, and then the converse of that is let’s take away a mode and what’s the implication? If you take away a mode that allows you to go fast, people will come come to live closer together and use less land. But actually it’s a fascinating powerful tool right? Just dial this in and out.

Of course these things may lag and you may take decades to make changes to the way people live, but believe me they will change. If you took away the car people will have to and certainly cities will change to accommodate a higher density. Real estate pricing, infrastructure and energy use will all be impacted. You know, the car is is a miracle but the car is a fairly new thing and may not be around forever, and so as a result we expect the cities to also change.

Oliver: Yeah, with the idea [00:13:00] that you’re talking about, there’s a parallel for this energy efficiency, and it’s called the Jevons paradox. When technology increases the energy efficiency of a technology you’d think ‘oh great, but we’re going to have a reduction in the amount of energy that’s used for something’, but actually, what ends up happening is that you just end up with just as much as we had before. We just end up maximizing the new efficiency, but actually resulting in us using the same amount of energy for more capability.

Horace: Yeah, there’s a similar phenomenon observed in traffic. If you create wider roads and you expand the road network, it fills up with more traffic. That’s the notion of induced traffic. It’s one of the most fundamental laws of road design. That the development of infrastructure induces its own demand.

One of the most famous cases is the Long Island [00:14:00] Expressway in New York which connects Manhattan to the rest of Long Island. In the early years, traffic was a constraint on Long Island and they developed the Expressway. On the first day of its opening it was jammed and it’s stayed congested ever since.

I’m sure if you doubled it, it would still be congested. More people would choose to move out of the city into the countryside. I don’t know how to frame it better than that because this behavior of humans around resources is very very consistent. Whether its energy, speed or capacity for transport.

This is so important for our discussion because the project of creating mobility options, creating new vehicles, creating new modes, if you take into account Marchetti’s [00:15:00] constant, you have to see it as either enabling a distance or enabling time, or taking it away and then as a result changing the the way we live. I think the implications of it are so profound.

Oliver: Can you unpack that part about enabling distance in time? What do you mean by what do you mean by that as it relates to Micromobility here?

Horace: Yeah. So we have phenomenon underway right now in the US where the proliferation of scooters in urban areas of the United States has kicked off as of about six months ago, and now just causing overwhelming, adoption and disruption. So if we someone listening doesn’t know what these are it is a two-wheeled vehicle with one wheel in front of the other similar to a bicycle but the wheels are quite small so, you know, 10 to 15 centimeters or 6 to 8 inches in diameter [00:16:00] and there’s a board in between the wheels and there’s a handlebar so something like the old razor scooter which was a fad in the early 2000s, but these are slightly bigger.

They’re electrified meaning they have an electric motor and battery and they have a thumb throttle. Now these scooters. What’s the impact? It seems almost trivial — sure why not have some scooters that people can hop on and hop off.

But as a result the implication isn’t that they’ll substitute something else because right now the only thing they could substitute is walking. And people didn’t walk all that much and this started in Santa Monica, California.

So there wasn’t a lot of walking going on in Los Angeles, but then you have people driving to a town like Santa Monica and doing a few things by walking around and then get back in their cars and go elsewhere. So the radius of walking was only about half a mile.

You know, you’d have to get in the car and move to a different destination. So you [00:17:00] eat lunch and then you go somewhere else for for dessert by getting in your car. So what happens when you introduce the scooter into Santa Monica? People start doing things with it that no one was doing before. People with scooters take trips that they wouldn’t have taken otherwise and that’s the induction of trip demand. So what you’ve created is the opportunity for someone to bring their car into Santa Monica and then do three different things that they wouldn’t have done before they’ll run errands. They’ll visit people. They’ll go on dates. They’ll do things on this vehicle that they wouldn’t have ever dreamed of doing so that’s you know, the creation of new demand and therefore the creation of new trips.However the caveat is that maybe it cannot span all the distances that people would like to travel, and if you introduced the vehicle with even more power and more range, they will be able to go even further, and so at that point they might bring their car to Santa Monica and then use this new vehicle. Let’s call it a you know like a Segway. And then travel down the coast and you know, go to work, or visit something further North,or go up into the hills — all kinds of things that normally we’d do with a car but the car being stuck in traffic would have never been hired to do the job anyway, so the scooter is enabling a certain number of things, but perhaps other modes as yet untested, wouldenable even more distances and at some point the car itself becomes less and less relevant. It’s like the other analogy I can throw out there is like when you got your iPhone you [00:19:00] didn’t think that, you know early on in 2007, that we would be doing the things with it that we ended up doing so it induced snapchat, it induced a lot of Facebook usage, it induced a lot of Twitter and social media, and hundreds of other behaviors and certain types of games and genres and so on.

Oliver: Yeah, I’d add Uber to that. Being able to match a rider to a driver. Previously it was a tricky coordination problem — to call up somebody and have them send a taxi around, and you you never quite knew when it was going to be there, or they might turn up. So all of a sudden, there’s a whole bunch of stuff it’s enabled there.

I want to just go back to something that you said before. So this idea of distance and the idea that maybe you’d be able to unlock a whole new set of behaviors. I get it, but it’s not only the [00:20:00] scooter it’s the business model that sits around it. So if I think about it scooters have existed for a long time, and I remember probably about five years ago watching someone driving to near a city in New Zealand, and they parked up on the side of the road where the parking was cheap, and then they pulled a scooter out of the car and then they scooted, you know, the last 15 minutes to work.

But what I see as an innovation here isn’t the scooter. I mean the scooter is important, yes. But it’s actually the idea that you don’t need to hold on to the scooter because that’s one of the things that I thought about a lot when the Segway came out was oh, this is really cool, but it’s a real pain in the butt. if you end up having to go and take it on the subway, you know, it’s not actually a function.

Horace: Actually that’s a great story the Segway, because it came out, what year was it 2002 or something like that? And it seems to have completely failed, and the point about scooters isn’t the invention of the scooters, the invention [00:21:00] of a scooter system, and sort of the way that the scooters deployed and the way it’s that it’s possible now to to use it as a shared vehicle, and that it’s indeed enabled by phones and indeed enabled by networks of cell phones and the software and everything else. It’s sitting on piles and piles of enabling technologies. And so when the Segway came out it was not possible to do any of those things like sharing and creating networks of Segways.

But had those been possible we may have seen a different outcome. The thing about the Segway — I remember this very well because I was super excited when I saw that product. And I love the argument at the time that was made by its founder and and inventor — that this is going to rebuild cities because cities are built and shaped by transport modes and that’s absolutely true.That was true back then and it’s true today. So why wouldn’t it [00:22:00] work? I mean, this is a kind of a great case study. Well first, the Segway was, as you said, bulky in terms of being able to take it with you. It’s too heavy to lift. It’s hard to park. When you’re done you got to secure it somehow. It’s sort of suffered from the same issues that cycling had., It’s not really a small and tidy package. B

But the second thing was that because it was motorized it had no natural path or road or infrastructure for it. It had to exist within the sidewalk or had to exist on the roads. And you know, the sidewalk was walking speed, cities were reluctant to permit that vehicle on sidewalks. It found a niche in malls interestingly enough. Mall cops. That became kind of a punch line on a joke, but you see how it struggled to find a particular place of the infrastructure. So we needed to have its own built and that was not going to happen quickly. Also on the roads — it was it was difficult to approve that for road use. And safety — you have to wear a helmet, and it sort of became a competitor with motorcycles and things like that.

So what’s changed? Actually curiously the company Segway was acquired by the same company that today supplies most of the scooters that we see on the road. The self-balancing aspect and the fact that the wheels were in parallel to one another wasn’t that big of a draw. Having the wheels in tandem in front of each other as scooters have seems to be good enough — most people know how to balance on that vehicle.

The Segway offered this [00:24:00] remarkable ability to self balance and and it was very intuitive. The analogy was standing and then moving while standing, well scooters do pretty much the same thing and they were good enough. And that’s the thing — that scooters are good enough. Whereas the Segway seem to over serve on that dimension. But fundamentally, I think the thing that hurt the Segway was timing the idea of having a small electric motor injected into a small wheeled vehicle was sound but it was engineered to such a degree that it became the wrong configuration at the wrong time, and today it might not even make that much sense because we do know how to do micro mobility with different form factors. But the electric motor was a sound idea and the electric motor and battery pack in a small vehicle are still today the enablers for micro mobility.

So this is why the devil’s in the details. I think [00:25:00] the difference between yesterday and today, you know, 15 years have passed or so, is that we have sharing, we have the ability to do on-demand transport, and the vehicle itself is not the object of the business model. It’s the network that’s the business model. And secondly, costs have come down. These vehicles are super super cheap, batteries have become so much better, weights have come down as well because we’ve gone to lithium technology. And so these enablers are all starting to come together right — networks, batteries, motors, and business model tying is all together and suddenly boom — it actually seems to make sense in a lot of contexts. So this is what we try to do here — explore the implications. Overarching again, understanding human behavior, understanding demand and supply of transportation, is going to allow us to think through [00:26:00] how this is going to play out.

Oliver: I found it fascinating watching, as you say, Ninebot which bought Segway. Because the latest stuff that they’ve been doing with the Segways — so they still make a Segway style version of of the transporter, but it’s way way smaller, and they’re selling at the moment a kind of beta version of a really small Segway that doesn’t have the stem. It just has the kind of foot platform. But the interesting thing that they’ve developed now, they’ve just released it for sale, is is a self-driving version of the Segway and I was thinking through the implications of that and thinking okay if you’ve got scooters, which,until now, there’s a problem around tragedy of the commons, especially if they’re not permitted. Some cities will be able to solve for that. But also just the kind of coordination problem of being able to get a scooter right where you need it for a consumer[00:27:00].

Horace: That’s right, the balancing problem. So this is the next question in terms of breakthrough we need is that vehicles that are in the shared mode sometimes need to move themselves or need to be moved. oday they are moved by someone but they need to sort of reconfigure themselves as a robot would — being where it needs to be.

That lets us get back into the question of bike-sharing. Bike-sharing is a phenomenon from the 90s that began in Europe as kind of like how do you enable sharing of bikes, and then it was done in very crude ways early on with coins or tokens and locked stations and this and that, and a lot of early attempts failed. But one area that researchers have been looking at over time is if you have this resource of shared bikes, what [00:28:00] happens to them over time, how do they reallocate themselves.

Of course travel patterns are diurnal, which means that they’re moving throughout the day, and you have flux in and out of cities, and so as a result the worries are that the bikes would end up in the wrong place. And so balancing a bike network became a problem that needed solving, and various algorithms have been proposed. And people have been making them both the subject of research and proprietary knowledge.

And this was because systems were based on docks. The bike could only be parked at a dock and the docks would fill up. So you have an issue with too many bikes if tried to park in one spot, and then you had problems with docks being empty.

When we would to dockless, which only started about two, three years ago. And dockless meant that bikes wouldn’t have to be parked in fixed locations. And people thought that this problem will actually get even [00:29:00] worse because now bikes could really, you know, go crazy, you know, go anywhere.

Oliver: Yeah I’ll just park it outside my house.

Horace: Yeah or inside my house. So the problem then was felt to be even more intractable when dealing with the allocation of free-floating bikes, and the way the Chinese solved this problem is they just made more and more bikes. They actually oversaturated a market with bikes.

So we went from from hundreds to literally millions of bikes. So a city like Shanghai would have something close to 1.4 million bikes or something ridiculous like that. New York for example has 15,000 bikes as part of its city bike system. City bike in New York is 15, was a 10 for many years, and and just expanded now to 15. So there’s like three more zeros to see [00:30:00] what the number in China would be.

I calculated actually, what New York look like at Chinese bike densities. And I came up to about half a million bikes would be needed in New York alone to get the same density that most Chinese cities have. So imagine from that fifteen thousand bikes in Manhattan, to 500,000 shared bikes in Manhattan.

Oliver: And is that is that actually being absorbed? So when you say that they’re there and they exist on the street — I know that there was a huge explosion but is that being sustained over time?

Horace: We should spend an hour on the Chinese system.Its marvels and its pitfalls. hort answer though is yes, there might have been some oversupply but according to data released by both the companies [00:31:00] themselves and the Chinese government (which again may be subject to some inflation here), but supposedly the utilization is very strong. The utilization is how many times does a bike get used per day? And so a very good, balanced system is going to see five to seven. New York peaked at 7. I think it may still be there. And you have peak days where a bike is used eight times a day. So if you have five you’re doing really well. And actually I think China is between 4 and 5 right now. So it is a very healthy number. It’s a very healthy number but again, we might be looking at a little bit of fudging going on there.

And certainly a lot of bikes were taken off the street. So they over deployed, there was a correction, you see these bike mountains and so on. But again, given that 23 million bikes were deployed what you’re seeing in any picture of bike mountains is insignificant compared to what’s in actual use.

So yeah the point I was making about the [00:32:00] question of balancing is that there’s one approach which is sort of oversupply the market, and the Chinese operators say we want to make the bike like water — these are essential to life and they are always available. And so that’s how they want to think about it — as a utility.

And the cities encourage that in China, and of course there are there are some downsides involving a clutter and using public land for a private company, which is a little bit problematic. But we’ll get into that, we’ll sort of dive deeply into China — what works and what doesn’t, what might work in other places and what won’t.

But the point about self-balancing networks. I think this was the great debate if you were in the bike sharing world for the last ten years. People were really anguishing over the question of balancing this network. So the solution China came up with — [00:33:00] like let’s make bikes free essentially — we think that bikes are precious and expensive, but what if we made them sort of disposable and recyclable, and so that’s what they’ve been trying to do.

And the alternative, which is perhaps I think what you were alluding to, is we make them electric. We can’t quite think of them as disposable anymore, but maybe we can make them intelligent and that’s the other approach. One is kind of bike spam. The other is kind of a smart bike. I think these are the two models that are debated.

By bike I could mean of course other modes as well. But the smart vehicle would be the one that knows where it is is able to move by itself, is able to communicate back to headquarters, and is able to therefore allow itself to be managed better.

I think a lot of the experimental business models outthere are about vehicle architecture and design, network architecture and design. [00:34:00] I think of segmentation in one way of micro mobility along three three main axes. One is is the availability of power in the vehicle. Imagine that as the y-axis, which goes from 0 which is justa human powered vehicle. Cars are all the way at the top which is hundreds of horsepower per person. The other axis on the x axis is the network. So are these vehicles shared or are these vehicles standalone and owned by an individual? So at 0, at the origin, you have essentially a human-powered, unshared vehicle. Or a human-poweredowned vehicle. Which would be your bike at home. Further out on the x-axis would be again a very broadly distributed network of bikes, which are not owned by the individuals and furthermore that are intelligently managed. And there’s [00:35:00] more intelligence in the networkthe further out you go on the x axis.

So again x axis is network. Y axis is power. So you can say that a very powerful vehicle that is in a very widely distributed network would be the equivalent of cars, or powerful vehicles, that are literally everywhere and you hop in and out of them.

It’s kind of maybe the utopian view of a car sharing model. But there’s a huge range in between from low-powered and owned vehicles to very high power and highly shared vehicles.

Now, there’s a third axis. Which is how smart the vehicle itself is, and that that is the z axis coming at you. And that would be from no onboard intelligence all the way to the thing being essentially self-aware.

So as you go up this axis, you have the network intelligence, the power axis, and then you [00:36:00] have the z axis coming at you which is the the amount of intelligence in the vehicle, which could be many things by the way, it’s not just awareness and speaking to you and interacting with you, but also things like is it a platform for developers, can developers actually enhance the product with apps, can the vehicle act as an iPhone class product which creates an ecosystem.

So the idea is that the ecosystem is built through software development on top of the vehicle itself. And it has some essential ability to become smarter over time. That’s the essential value of a platform and this is something people have been talking about in computing circles now for decades. If anyone’s listen to me before, what happened to phones is they just became smarter along that dimension. But in mobility, we have the other two dimensions, which is [00:37:00] can these vehicles be harnessed as a group and that’s a network dimension, and then the vertical which is how much power can we inject in this?

So you inject power, you inject communications, and there’s networks. And then you inject compute right? You can think of these in terms of the components in the vehicle — battery on the y-axis, communications on the x-axis, and CPU on the z axis. This is stuff that’s on the shelf today.We’ve got batteries. We’ve got CPUs. We’ve got communication chips. All these things came into phones and computers and now what happens when you bring them into vehicles.

It’s not all that radical but the thing that happens when you segment this way and ask, okay, so someone proposes a scooter witha QR code unlock, and it’s got a throttle but basically nothing else. Well, you could position that on this network versus someone like Lime is suggesting they’re going to make their own pods, which is a [00:38:00] four-wheeled vehicle that is sort of self-driving that, you know, the next evolution of bike-shareis going to be sort of pod shared.

Okay, where’s that on this matrix? And then finally, someone says we’re going to have a self-balancing robotic scooter / Segway. What does that fit? Where does that fit on this dimension? And this allows you to see how much overlap there is and where competition is going.

You could say well we want to maximize on all three dimensions. We have super smart networks, super smart vehicles, super powerful vehicle. Well, maybe this works, maybe you’re over-serving, and this is fundamentally the debate and the argument, and the timing question is how fast do we get to the market product fit, how fast do we actually create something disruptive which means it really applies to everyone and it’s not just a niche.

So that’s one way to think about it. But when I hear about new companies, new technologies, new products, new vehicles, I try to [00:39:00] also think about how they fit in this matrix and then see how they might evolve and what direction are they’re pushing. Like what’s interesting with with bikes is that when bike-sharing began, the bike sharing in China, it was very low intelligence on the vehicle, zero power on the vehicle itself, there’s no electric power typically. But they go a little bit out on the network dimension with super high numbers of vehicles there. Alternatively, I think in the US we’re seeing more of an emphasis on the powered vehicles, but intelligence hasn’t yet crept into much of that.

I’m coming from where I come from.I’m thinking about the z axis more, that an intelligent vehicle is going to be really powerful, that it creates platform effects. It creates software and network effects. And then it creates all kinds of opportunities for developers. I think we’ll see something happening there.

Oliver: Unpack that a little bit more. Because certainly when I [00:40:00] first saw the the Ninebot example of itself driving around, and I thought I’d love to have an Uber version of this where you effectively say boom, I want a self-driving scooter to come and find me, and then you kind of think about the implications. That would be, one, it goes and charges itself.And then you have two, you don’t need to have as many of them deployed in order to serve that number because you can provide liquidity and your liquidity becomes not limited to how far people will be willing to walk to the scooter. But actually how far that scooter can drive to the person.And all of a sudden it’s like, oh that that seems like a really viable model in my head.

Horace: Yeah, I’m not here to sort of predict very well this stuff. I mean I certainly can argue but I think the self-balancing robot. It’s attractive intellectual, and I think technologically what I’m struggling with is practicality and the ability to cope [00:41:00] with chaos that often occurs in real life transportation systems. One of the things that I believe the

people who who are optimistic about technology, and this includes Google and people who are dreaming up uses for AI and so on, and their optimism is valuable, but the edge cases are often the things which determine success in markets. The problem would be for example game theory, where you think about how can this system bedisrupted by bad actors, how would it handle sabotage? You know these things sound like, oh well, that’s just bad behavior, but that behavior turns out to be very common. And so I worry a little bit about the leaps necessary to get to that world. And the path to get to that world will go through strange [00:42:00] intermediaries.

Meaning that we get to a point where the scooter becomes more intelligent, the scooter revolves, or the bicycle evolves with some intelligence on board, and then it actuallyhas a system where it entices users to do the bidding for it. meaning since it sounds a little bit. I’m afraid I’m not very clear but the idea of hybrid system where you have intelligence on board, but then you also have incentives for users.

So for example the Birds [scooters] don’t charge themselves, but they have an incentive or they pay $5 for a user to take the scooter home and charge it overnight. And so how did we get from, a balancing problem, which is an algorithmic one, to sort of oh, why don’t we just bribe users to do it for us?

You see?

Oliver: Yeah yeah, interestingly enough, there’s an excellent podcast with Jason Calacanis. he’s a VC and he was one of the early investors in Uber but he interviewed the founder of [00:43:00] Jump, and they were talking about how to ensure that the bikes are recharged by providing a $2 user credit to people to go and park them at some parts of the infrastructure around San Francisco.

And people who don’t need the money, but they do it because it’s sort of a gamification part of the platform.

Horace: Absolutely. And so what I found out, and I’m very familiar with the operations of the bike sharing system in Zurich called smide. They have an electric bike sharing system very similar to Jump. They’ve been operating longer than Jump has actually. And the electric bikes are very powerful. They’re so-called speed pedal X, so they go up to 45 kilometres an hour and they have very big batteries on board, from 800 to 900 watt hours.

So almost 1 kilowatt hour per bike. The question for them has been also how to charge the bikes. And the solution has been first, we have swappable batteries so you [00:44:00] can unlock the battery compartment and the service person can go in and drive by where it’s parked and then just swap the battery out very quickly, it takes 30 seconds, then go on to the next one and so on so. It seemed like a nice way of minimizing the charging time and penalty. However, it turns out that there was a clever way of doing it which is to put up charging stations in particular locations and attract users to go there and plug the bikes in. The infrastructure is a lot easier than the car parked car charging stations. These is much less power required.

But what they discovered is that the businesses where those stations were located — the businesses around there would benefit from the additional traffic of people coming to park the bikes there, and actually the businesses can be encouraged to pay for the location of a charge point.

So imagine turning a disadvantage of saying well, how do we deal with charging, and going from a [00:45:00] cost problem because we gotta send people out there to maintain the state of charge and the bikes, so we got to put that into our cost structure. To sayingoh no, that’s actually a revenue source.

So, you know that is phenomenal, that is a sort of dream of entrepreneurs, that you take a disability — having to charge a vehicle, to making it a revenue source.and I have a similar thought about other disabilities that are associated with micro mobility. For example helmets, if you think about helmets and everybody’s saying oh, that’s a real drag. How do we deal with helmets? How do we get users to share them? We can’t do that. They’re too personal. How do we get users to carry them with them. Well, that would be painful.Can we get the city to stop requiring them? Well, that’s not always a good idea. You should wear a helmet. And you just dance around the problem. And how about making the helmets so cool that everybody wants one. Then you start to think about it. Then you start to say wait a [00:46:00] minute, that space in the helmet is really valuable space, isn’t it?

Isn’t that what AR and VR is all about. Isn’t that what wearable technology is all about. Isn’t that what Beats did. They took something which was, like who wants a headphone, you’re gonna have to carry with you everywhere, it’s a pain — the cord gets all tangled up. Everybody hated headphones. And suddenly they made them into a fashion item and something you wear around your neck and you’re proud of, and everybody wants to have Beats headphones.

And so you took the disadvantage of headphones and made them into a huge huge hit and billions of dollars were created as a result. And so you can imagine doing the same thing for helmets and there’s a helmet out there now available through the outlet’s stores where you use your watch, it detects the position of your hand, then it creates turn signals for the helmet.

So so if you stick your hand out as you would on a bike, to signal your intentions of turning, it starts to create [00:47:00] left, right, and even stop signals so that the safety is enhanced for the rider. So you can see how this is not going to be easy to forecast because when you discover difficulties, they say well, let’s just throw technology the problem. It’s both technology and understanding of human behavior that you can harness, and also understanding of the environment around the vehicle. So like I said you can start to leverage the notions of well, we can drive traffic to certain locations. We can encourage businesses to actually participate because it benefits them. We can encourage the sense of pride of individuals.

So digging into the human psychology to turn a problem into a benefit. And that is what entrepreneurship is all about. It’s not just breaking new ground and technology, but also understanding human nature and understanding systems and putting it all together [00:48:00] into a package that suddenly resonates. And afterwards you look back and say of course, that’s a natural thing, it looks easy.