The CEO of Argo AI, a self-driving startup backed by Ford, reveals the one thing that is absolutely necessary for an autonomous driving company to survive

Ford

Argo AI CEO Bryan Salesky.

• The CEO of Argo AI Bryan Salesky said he thinks that self-driving companies must partner with major automakers.
• Salesky said it's too hard to go it alone without an automaker's expertise and scale.
• In 2017, Ford invested $1 billion in Argo AI.

The past few years have been good for entrepreneurs who were early to the self-driving car game.

In the aftermath of the financial crisis, markets were focused on the overall health of the auto industry after the bankruptcies of General Motors and Chrysler. As far as new technology was concerned, electric cars were considered the future.

But under the radar, entrepreneurs were tackling the problem of getting vehicles to drive themselves. Google set up an autonomous skunkworks, but it was just the most prominent player. In the Bay Area, Cruise Automation was experimenting with a bolt-on, self-driving system. And in Pittsburgh, home to Carnegie Mellon University, a tiny startup called Argo AI was tinkering away.

Read more: Ford CEO Jim Hackett talks about his plans for reinventing the 115-year-old car company

By 2016, with the arrival of Uber, Lyft, and other app-based ride-hailing services, it became clear that putting smartphone and self-driving cars together could be a lucrative new business. The Google Car project, later renamed Waymo, was already well-funded. But it was a tech firm with little knowledge of how to manufacture automobiles.

Enter the Detroit dinosaurs, fresh off their near-death experience in 2009, but now flush with cash after several years of record-setting sales in the US, rapid and profitable growth in China, and a resurgence of high-margin pickups and SUV amid low gas prices.

GM bought Cruise for an all-in price, including future hiring plans, of $1 billion. Fiat Chrysler Automobiles partnered with Waymo. And in 2017, Ford invested its own $1 billion in Argo AI and CEO Bryan Salesky's team.

"We looked at venture investment, but Ford was able to put up enough of a commitment," Salesky said in an interview with Business Insider.

So why would experts in software and robotic look to a 115-year-old car company in Ford?

Simple: money and scale.

"It's very capital intensive," Salesky said. "It's not just the self-driving car tech. We're talking about funding and deploying tens of thousands of vehicles. Going it alone without a carmaker would be too hard. Ford has scale and a strong brand."

Salesky isn't alone in pointing this out. Cruise founder Kyle Vogt and Waymo CEO John Krafcik, the latter an auto-industry veteran, have also stressed the pluses of having big automaker on board.

Who's going to pay for all this?

Ford

An Argo AI-equipped Ford vehicle.

Working at Google with Chris Urmson, another Carnegie Mellon/DARPA veteran, Salesky knew that the entire self-driving proposition was making impressive process.

"We shocked ourselves," he said of their result in 2006 and 2007. But they were also asking a critical question: Who's going to pay for all this?

"We would bang our heads against the wall trying to come up with a business model," he said. Google was happy to invest heavily in the undertaking, but that was the only significantly funded self-driving project around. But then Uber happened, and suddenly a commercial prospect took shape. An expensive autonomous technology could be monetized on a per-mile basis, defraying the cost.

Argo AI formed in 2016, and according to Salesky, planned to join with a major automaker from the beginning.

"Bill Ford saw a lot of this before others did," Salesky said of the automaker's chairman, a longtime advocate of new-mobility ideas. "He knew it would be a gamechanger."

A critical piece of Ford's approach to autonomous vehicles is to think carefully about how they'll be deployed. The company has cultivated a relationship with cities to ensure that unintended consequences don't hamper the rollouts of innovative transportation solutions.

Making the magic happen

CES

Ford CEO Jim Hackett is an advocate of design thinking.

"We don't want to create tech that doesn't solve problems," Salesky said. "Communities don't want more cars on pavement, so we have to come up with ways to ensure that they're happy and excited."

In this sense, Salesky and Argo aren't just taking advantage of Ford's ability to manufacture millions of cars every year, with the goal of launching safe, fully autonomous vehicles in 2021. They're also leveraging Ford CEO Jim Hackett's commitment to "design thinking" - looking at opportunities through the complex lenses of how they can best be pursued.

A good example is some of the pilot, autonomous delivery services that Ford has been exploring with partners such as Domino's. For these applications, gas-electric hybrids might be better platforms than all-electric vehicles, given the demands of the business model.

"Ford has whole city team," Salesky said of the company's City Solutions group.

It's all part of an ecosystem, and that's where the magic happens."

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