Agile VC: 

My idle thoughts on tech startups

The Future of Internet & Cars

Lee Hower
June 24, 2013 · 5  min.

Ferdinand Porsche's electric car, circa early 1900s.

Ferdinand Porsche’s electric car, circa early 1900s.

I’ve been doing some thinking about the future of cars and the impact of the internet.  A large part of this is just some idle thoughts, a small part is driven by my love of cars, and a small part is thinking about what potential opportunities for innovation & investment might stem from this.  I started jotting this down about a month ago but Google’s acquisition of Waze was a good prompt to finish off this post.

When people talk about “internet” and “cars” people usually think of internet-connected automobiles for the purposes of infotainment.  Connected cars arguably started with GM’s launch of the OnStar telematics service in the mid-late ’90s, though in essence this remains a private network which was originally run over analog cellular and satellites rather than open internet.  Today you can buy an Audi or a Dodge Ram pickup with a wifi hotspot (connected via mobile broadband) and you’ll see similar capabilities from other manufacturers in the next 1-2 years.  Internet & software giants like Google (Google Maps now powers Audi nav systems) and Microsoft (Sync infotainment created in conjunction with Ford) have been hard at work to remain at the leading edge of innovation here.

But to me infotainment is really just a small part of the internet connected car story.  We’ve had internet in our cars since the rise of smartphones, and arguably it’s been as much a safety hazard (distracted driving while texting, emailing, etc) as a positive transformation (navigation, music, etc).  And outside the confines of the chassis, the internet has had more of an impact on the car industry from the basic (internet research is the most influential component of car buying today) to the transformative (ZipCar, Uber, etc).

So what will ubiquitous connected computing mean for the 100+ year old automobile?  My thoughts here are still at the 60,000ft, macro-economic level and not at the micro startup opportunity level but here are a few.

Diagnostics & Maintenance – The computerization of cars is several decades old at this point and was driven by a multitude of factors, mainly safety and environmental concerns (reduced emissions from electronic control of combustion).  With chips running large parts of cars came basic diagnostic tools like the “check engine” light to OBD ports.  This has led to a broad transition away from many consumers doing their own maintenance and repair work to few doing it.  With internet connectivity integrated by the OEMs, you’re going to see real-time monitoring and diagnostics which should favor franchise dealers or factory-owned service centers (e.g. Tesla) even more for repair work.  The independent shop won’t go away just as do-it-yourself repair didn’t disappear with electronic fuel injection, but franchise dealers & factory service centers will take an increasing share of the maintenance market.  

Driverless Cars Change Definition of Car “Owners” – We’ve all heard of or seen Google’s driverless cars and forward-thinking manufacturers are already planning for this day whether it’s 5 or 20 years in the future.  And to be fair ubiquitous connected computing is but one of the enabling technologies for driverless cars (computer vision, AI, etc).  But in a world of driverless cars, the notion of who “owns” or can “drive” an automobile can change dramatically.  I don’t just mean that people are going to share cars, though that will undoubtedly be true in densely populated areas.

Driverless cars could actually increase the number of cars on the road, both because the safe density of cars on the road can be increased, but also because of expanding the universe of drivers and societal preferences.  In a world where a human isn’t the primary operator, you will have more visually impaired or physically handicapped persons driving themselves or more elderly persons or even children.  A 9 year old could hop in a driverless car and drive themselves to school for example.  Also if driving wasn’t time-consuming or stressful (e.g. you could read, work, play, etc in your car w/o needing to pay attention to the road), some people might choose to live further away from their work even if there weren’t good mass transit options available to them.  The average American’s daily commute is just under an hour (round trip), so in aggregate that’s potentially a lot of incremental time when they might be doing email, web surfing, playing games, or communicating with friends.  And commuting 2+hrs daily is less of a big deal if you can use that time for work or leisure.

Cars as a Utility – As someone who’s passionate about driving and cars, this is a potential trend that saddens me a little but seems inevitable nonetheless.  The more connected our automobiles become and the more detached we are from the physical act of operating them, the more cars will become a utility for most people.  People will still race cars (just as they still race horses), and a small number of people will dedicate time and resources to owning and caring for cars (just as they still do for horses).

But when internet connected computers control much of the operation and maintenance of vehicles, my hunch is that people in general and younger generations in particular will view cars as a utility rather than as a pursuit in and of themselves.  The thrill engendered by aesthetics, performance, or luxury will probably be muted except for a hardcore passionate few.  People will seek these in other consumer goods and cars may become less differentiated.  In the 50’s and 60’s, a drivers license and car ownership were the central focus of most teenagers.  Teenagers today, and certainly the ones coming of age in decades to come, probably won’t place similar emphasis.

Cars as a Media Platform – Again I think infotainment is only the tip of the spear but cars have been a media platform for many decades, since the advent of AM radios.  Internet connectivity is turning them into a more individualized and more comprehensive kind of media platform.  Radio as we know it won’t die, but audio services that are personalized and on-demand will proliferate in the near term (like Spotify now working with Ford Sync) which will mean targeting more like web/mobile ads.  And longer term streaming video, games, and other media will become a bigger part of the auto platform both near term for traditional “passengers” and longer-term with autonomous cars.  People will of course still whip out their smartphones and tablets in the car, but I anticipate manufacturers will find better ways to integrate connected media like cached storage via your work/home wifi connection or Slingbox type functionality with your home DVR.

The car is over a century old and how it’s propelled, who drives it, and other key aspects will change here in the 21st century.  As a result younger generations’ attitudes about cars and personal identity are already changing.  But autos will remain incredibly important in the internet age which is something you can only say about a handful of other transformative technologies from centuries past.

Lee Hower
Lee is a co-founder and Partner at NextView Ventures. He has spent his entire career as an entrepreneur and investor in early-stage software and internet startups.