How startups can grow in the mobility and transportation sector

With electric cars, ridesharing, and self-driving technology, the automotive industry is on the verge of disruption. People won’t need to own vehicles anymore — it’ll become a luxury, like when mass-produced cars first hit the streets and now only rich people own horses and ride them for sport.

Uncertainty for OEMs and suppliers

Car manufacturers fear the rapid pace of technological development, new business models, and changes in consumer behavior. That’s why most large and established manufacturers of transportation equipment are wildly investing in and buying up mobility startups. I know of one that owns around 20 used car platforms and perhaps even more parking apps.

Consider autonomous drive. Although most large tech companies (Apple, Waymo, Uber, etc) and OEMs (like Ford, GM, Tesla) are treating this technological development with the ‘early bird gets the worm’ mentality, recent trends suggest that partnerships and sharing of data is the best approach to get self-driving cars on the streets. Investment in data analytics startups is on the uptick, but still, car makers are hesitant to give up the reigns.

This cautionary tale of corporate innovation serves as a great example of what happens when an automotive OEM wants to maintain control of everything from sensors, to software, to suspension systems for autonomous drive. Honda realized that with the rapid pace of technological advancement, they had no hope of keeping up with the developments in this space. Not to mention the exorbitant costs of keeping everything in-house. Unlike many companies of their size, they learned that in order to stay competitive on the innovation front, you have to let go of total control and outsource wherever possible.

Opportunities for startups

Transportation is becoming cheaper, faster, and sustainable. There’s more investment in future mobility than ever before. Right now there’s a huge opportunity for startups in:

• Autonomous drive
• Artificial intelligence
• Blockchain use cases
• Data collection and analysis
• Predictive analytics
• Connected car
• Logistics
• Smart manufacturing
• Industry 4.0
• Smart materials
• Cybersecurity
• AR&VR
• Sensors
• Mapping technologies
• IoT
• Etc

While corporates struggle with the technology, startups lack the infrastructure and funding to rapidly grow on their own. Tesla is far from being considered a startup, but even with a ton of capital, they consistently fail at meeting production requirements.

So how can startups get a chance in this industry? One important lesson: stay away from hardware. It’s common knowledge that startups doing hardware are much more likely to fail than those who don’t, and probably more so in the automotive industry. But what many startups can do better than established companies is technological development.

This is a great opportunity for startups in this space, but that doesn’t mean that there isn’t a ton of competition and OEMs will just give you free money. Or even if an OEM takes interest in your startup, that it will guarantee its longevity.

Corporates favor acqui-hires, where they basically buy your company and turn you into an employee with no control over the direction of your product. This kills innovation.

If you’re an entrepreneur with a great product/technology and a long-term vision for your company, be very careful of when and how you approach a corporate. Partnerships with corporates are almost always doomed to fail, and in most cases even kill the startups. Do your research, and choose your potential partners carefully. See what their history is with startup collaboration. Read the fine print and get two or three legal opinions before you sign anything.

Great tech doesn’t exist in a vacuum. There will be others doing the same thing you do — that’s unavoidable. You have to learn everything you can about them and figure out what makes your idea unique. To grow and sustain a company in this space, you really have to do your research and leverage your network. Get advice and be coachable. Network. Go to tons of investors and collect feedback — it’s like free consulting.

Don’t take the first offer without getting multiple opinions. Think about what you want your company to look like in 5, 10, 20 years, and make sure potential investors are in line with that vision.

Did I mention do your research?