Quickly Dissecting GM’s Acquisition Of Cruise Automation
I haven’t written here in a while (for my usual pace). Lots going on. So, I need to get back into it. The world isn’t quite right when I’m not able to collect and organize my thoughts here. And, luckily, I woke up before everyone today and, from yesterday’s news about the surprise acquisition of Cruise Automation by General Motors, I now have something timely to write about. Here we go, and please do excuse me if this one is a little rusty — I need to get back into the swing.
Here are my quick take-aways from yesterday’s GM-Cruise deal:
1/ GM Making Moves: In the first week of 2016, ridesharing startup announced a $500M investment from General Motors. The implication here, of course, is that as ridesharing networks proliferate and engulf traditional car ownership and consumer behavior, just manufacturing cars may not be good enough, especially when new companies like Tesla (and allegedly Apple?) are in the space. Now with Cruise, GM adds to its “hardware” and “network” a team and technology focused on the next pillar of what will drive these networks: automation. (This itself is a longer subject that I will try to write on this spring. Too much for here right now.)
2/ A Bite At The Apple: Like many other local investors who attend Demo Day, I probably could’ve invested in Cruise. It was part of YC. Heck, even my friend Bilal sat me next to the CEO at a dinner he hosted in the summer of 2014. To the company’s credit, they didn’t over-raise venture capital and were able to drive an outlier outcome that made everyone involve happy, to put things mildly. Every now and then I’ll see a deeper tech company that’s raised a ton of capital, and then when the subject of potentially cutting burn comes up, these companies act surprised. Now we can point them to Cruise, who should be applauded for many things, including its capital efficiency.
3/ More “Chatter” About Deep Tech: Since this happens to be a subject with a bit of sensitivity and nuance, I won’t try to dissect here and, instead, point to this blog post yesterday titled “Hard Tech Is Back,” written by the President of Y Combinator. Please read the post here.
4/ The Justin.TV Mafia: This has been discussed earlier, but it is quite a band of founders that have spawned from that initial company. It is pretty cool to see a small group of the same people keep launching products which create real value, over and over again.
5/ Points On The Board: A big congrats is due to all the early, small, and institutional investors who were inspired by Cruise. Having raised my own funds, built up a network of LPs on my own, I can tell you it is really hard to earn the trust of LPs, especially when there are so many firms to choose from. Probably too many. Often, these LPs look at pitches from VCs that, years in, don’t have any real results. It’s all paper. This one was quick, and it is very real. A number of LPs pinged me yesterday. The results matter more than most can appreciate who haven’t spent time with LPs, and they’re rare events.
6/ Quiet entrepreneurship: Just a quick personal story. I had to check my email for the CEO’s name. I was seated next to him at a small dinner by Bilal back in the summer of 2014. That week, Twitch was being sold to Amazon, and the CEO had his newco, Cruise. During that evening, the CEO was very gracious, we chatted about YC, going to school in Boston, but he never once discussed himself, the looming acquisition, or his new company. With Cruise, aside from a few pieces like this by Kim-Mai (of course, she covers the real stuff), the company never really sought to play the PR game or seek attention. It was, instead, the quiet pursuit of entrepreneurship, like a whale in the open ocean, after spending hours in the deep dark blue, coming up to breach for a moment and revealing its brilliance and might.
Thanks, Cruise, for the inspiration to get back to writing.