Recently, Adler sat down for a conversation with Deputy Mobility Editor Pete Bigelow on his investing philosophy, the state of Silicon Valley and the headwinds hitting certain areas of mobility. Here are edited excerpts.
Q: Toyota AI Ventures started this second fund not too long ago. What sort of investments have you made so far, and what trends do you see?
A: Well, hardware-as-a-service, we think, is a really interesting business model. Where you don't ask a customer to buy a robot, you let them use it on an operational basis. One of our companies is Cobalt Robotics, which makes a security-guard robot that rolls around corporate campuses. And the robot can ask for your ID, or you can dispatch it. A lot of these places see millions of false fire door-openings a year, and you can have the robot check it out and save a lot of money.
Sounds kind of like RoboCop.
It kind of is. But this robot doesn't have arms, and it doesn't shoot. It's more eyes and ears than guns and fists. But it's priced like a security guard. And that's the way they're thinking about it. Instead of buying the hardware or buying it, you just buy it by the month.
Are you looking at businesses like that because there have been more headwinds this year for some transportation startups— Or not? You invested in scooter company Skip this year.
There's some really thoughtful approaches to that modality. You're going to see these experiments play out, and with some, it's going to be two steps forward and one step back. It's just the nature of any new set of modalities. But mobility is getting unbundled. The personal vehicle is not necessarily the only way you can purchase automotive mobility anymore. And that's a good thing.
On the far other end of the spectrum, you've invested in Joby Aviation, one of the flying- taxi companies. Does air mobility really have legs?
Everyone thinks they're going to sell you a flying car, right? I don't think that's necessarily going to work. I don't know if cities are just going to let you fly your car into your garage. That's going to be difficult. But I do feel like urban mobility is a huge pain point. It takes an hour and a half for us to get from our office in Los Altos to San Francisco. You can do it in 10 minutes with Joby. There's real value there.
Why does that make sense for a company like Toyota?
They're trying to price it so that everybody could have access. And that's why it makes long-term strategic sense for Toyota. If it's going to be for a big chunk of the populace, they're going to need a lot of vehicles. Aviation companies, on a great year, make 2,000 vehicles a year. So this is a manufacturing play.
There are a lot of people who think the whole flying-taxi future is pure fantasy. Obviously you don't. Why does that work?
It's the opportunity. You can't go down and build a lot of tunnels. It's too hard. Hyperloop, Big Dig, it doesn't work. You can't build more roads, at least in most cities you can't. So where are you going to go? You've got to go up, right? Not exclusively, of course.
Terrestrial ride-hailing hasn't gone so well for Uber and Lyft. If they can't make it work financially, should we believe in this?
They've changed the way we think about mobility, which is good. Now they have to figure out how to dial up the price so they can be profitable. If they try something like this, it takes some courage. You can argue, and I think it's a good argument, they should have capitulated while they were private, when their private investors could take the pain.
Everyone got caught up in the hype.
You know, hype is generally good. And the reason it's good is because it draws in a lot of talent and resources to go and figure something out. Like any business cycle, it's going to correct, and then it will come into, "What is the right product and delivery to the market?" So with autonomy, we're starting to see a few others go sideways. And you'd expect that. And that's one reason we didn't do any straight autonomy deals.
May Mobility was an early investment. Why does it stand out, or why don't you count that as a straight autonomy deal?
Their ambition is not to sell their stuff to Toyota or GM or Volkswagen. They're a microshuttle company. Their job is to move people, and they happen to use really cool tech and do it at a good price point. I think we're past the point of big full-stack companies. Maybe there's room for two of those, but definitely not 20.