Episode 165 | The World’s Best Product is a Very Profitable Product

Sterling Anderson, Co-Founder & Chief Product Officer, Aurora joined Grayson Brulte on The Road to Autonomy podcast to discuss the founding of Aurora, the economics of the Aurora business model why the world’s best product is a very profitable product. 

The conversation begins with Sterling discussing why Chris Urmson, Drew Bagnel and himself came together to form Aurora in 2016. 

We saw a lot of players in the ecosystem at the time struggling to figure out the right path. A credible independent player in our view could change the game for them and unlock the potential of a powerful ecosystem from OEMs to carriers to private fleets to even Tier 1’s and companies who provide some of the backend service. 

We felt like a credible autonomy player who played our position and enabled or unlocked the rest of the industry could deliver tremendous value here, and we did not see much of that at the time. – Sterling Anderson 

Being an independent company is one of the keys to Aurora’s success as it has allowed them to build an industry wide solution that unlocks potential for both cars and trucks. The original product roadmap for the company which is still intact today was to look at trucking, ride-hailing and local goods delivery.

Trucking was top of the list in terms of the first product that we wanted to go to market with. – Sterling Anderson 

In 2018, Aurora began laying the foundation for their autonomous trucking product when they integrated their autonomous driving stack into a Volvo truck and began testing on a track in partnership with Volvo. 

Trucking is the first product, ride-hailing will follow. – Sterling Anderson 

The Aurora business model for trucking today is transportation-as-a-service, as the business and technology matures, the model will evolve into a driver-as-a-service model. 

This is a model where we are licensing the self-driving system, inclusive of the hardware, the software and the data services required to operate it to our customers who are in turn purchasing either the truck from the OEM who provides it or purchasing a set of solutions. – Sterling Anderson 

Customers who sign up for the driver-as-a-service model will pay a utilization service fee (per mile fee). To keep the trucks up and running at optimal performance, Aurora trucks are designed for reliability and serviceability. This design approach allows Aurora to optimize the economics of their operations. 

In my view the world’s best product is also a very profitable product. – Sterling Anderson 

As Aurora prepares for driver-out commercial operations in late 2024 with 20 trucks on the Dallas to Houston lanes, the autonomous trucks will be operated under the transportation-as-a-service model. In 2025/2026, the customers operating under the transportation-as-a-service model will begin to transition to a driver-as-a-service model where they will own and operate the assets. 

Wrapping up the conversation, Sterling shares his vision for the future of Aurora. 

Recorded on Friday, October 27, 2023

Chapters:

0:00 The Road to Autonomy Index

0:56 Introduction

1:18 Why Chris Urmson, Drew Bagnel and Sterling Anderson founded Aurora

3:38 The Vision for Aurora

8:07 Going Public with Volvo and PACCAR

10:57 Local Goods Delivery and the Middle Mile

12:34 Aurora Trucking Business Model

24:52 Preparing for Commercial Driver-Out Operations

27:48 A Focus on Profitability

34:45 Terminal Operations

40:43 Autonomous Trucking Grocery Store Day

46:00 Aviation History

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