 Welcome back for the final episode of our three-part TechCrunch Disrupt series about the latest trends out of Silicon Valley. I'm your host, Paul Matzko, and today I want to talk to you about the way that venture capitalists and startup engineers at TechCrunch Disrupt talked about the state and regulation. The shortest possible summary is less than you might think, but in interesting ways. Let me start by saying how refreshing it was to be surrounded by folks who are fixated on what they can do rather than what they should do. Now, there is a conversation to be had about how blinkered tech culture can be, how they can inadvertently, more inadvertently, cause harm because they don't think through the social ramifications of the tech they are developing. For example, when social media engineers invented the quote-unquote infinite scroll, you know how you can keep flicking up indefinitely on Twitter, Facebook, or Insta, they didn't think about how addictive it would be. Indeed, now the big social media companies are scrambling to undo some of that damage by building in time use monitors and controls. But even Silicon Valley types have to take heed of what regulators are doing. The difference between a successful startup and a failure is as likely to be bureaucracy as a flawed monetization plan. So there was a panel at TechCrunch, for instance, discussing the difference between how car share companies like Uber and Lyft were received by regulators and scooter rental companies like Lyme and Bird more recently have been received. Despite having essentially the same it's better to ask forgiveness than permission approach to municipal regulation. They've had very different outcomes. Now, in this case, you know, transportation regulators are coming down hard on scooters because they kind of got pantsed by the ride-hailing corporations. But while that's kind of a libertarian friendly way of thinking about regulation, like let's let's break things and if we break enough things we'll show how we can improve society, none of the people I interviewed or met while at the conference was formally libertarian. There is a general ethos of annoyance there at regulators who won't let them do cool-tech stuff. But it's too in co-eight to really be considered proto-libertarian in any kind of systematic way. But one thing is very clear from spending time at TechCrunch, and that's that the U.S. is being bypassed by other countries in part because of the difficulty and the increasing difficulty of doing innovative work without falling afoul of local, state, and federal regulators. One of the exhibitors on Startup Alley was a company named Wingley, which is essentially applying the Airbnb business model to private planes. So let's say you own a half a million dollar private plane, should we all be so lucky, and regularly hop over the English Channel with it. You know, it might be faster than taking the train or flying commercial, or maybe you just like flying. You love seeing the, you know, cliffs of Dover. But it's expensive to own and operate a plane, and jet fuel ain't cheap. So rather than flying alone, the idea of Wingley is that you would use their app to offer one or two of your seats in your plane for passengers, who would then help you defray the cost of fuel. It's a win-win. Your maintenance cost, your operating cost is lower, and the passenger gets the convenience and luxury of a private plane ride. That sounds great, right? So what does regulation have to do with this story? Wingley is a French company. Aviation, despite the reputation of regulation on the continent versus the U.S., aviation is actually significantly less regulated in much of Europe than in the U.S. By contrast, a U.S. company called FlightNow, that essentially wanted to do the same thing, was just shut down this year by the FAA, which ruled that the fraying fuel costs made FlightNow pilots commercial rather than private pilots. And thus, they'd be subject to all the training requirements, all the labor organization rules that applied commercial piloting. Why did they do that? Well, part of it's lobbying from pilot unions. They don't like the competition. But also, because if there's one thing that bureaucracies abhor, it's risk, risk of any kind. They don't want passengers taking the risks involved in flying on a private plane, which are real. You are more likely to die in a crash on a private plane than you are on a commercial flight. At the same time, that risk, while it's larger, is not as large as dying in a car crash one mile from your home. So risk is always relative. But the FAA has essentially a zero tolerance policy towards risk when it comes to new innovative business models. Now, at the end of the day, flight sharing is a relatively niche consumer audience. We're essentially making access to private plane rides accessible to the upper middle class and not just the upper class. And that's an incremental upgrade. But on the other hand, there is a developing niche that falls under transportation regulation that has the potential to transform the lives of everyone, regardless of income or ownership. I'm talking here of autonomous vehicles. And they're coming very, very soon. I mean, in fact, depending on what you count, they're already here in the sense that most of us, if we buy a new car or buying a car that parks itself, it does its own cruise control. It has emergency braking if we can't stop quickly enough on our own. And features like that are becoming the new standard for vehicles. That's what's called level two automation on a level five scale. They're all techs that assist a human driver who's still responsible to keep their hands on the wheel and their eyes looking out the windows at all time, but levels three to five all involve increasing levels of driver free automation with level five being a car that has no steering wheel at all. Our next interview is with a car, autonomous car company called Byton, which is developing a level three car with hopes for a level four car in the near future. Listen in. I'm here with Florian Bauer, who's the head of product management for a car manufacturer called Byton. They do some autonomous vehicles. It's an electric vehicle. It's designed to be shared. We're going to talk a little bit about more of that together. But thanks for coming on with me, Florian. I appreciate it. Sure. Thanks for having me. So to kick us off, I should mention that Byton is literally around the neck of every attendee of TechCrunch Disrupt. They, they're on our lanyards for our, for our name tags. I hadn't heard of Byton until this conference. So tell me a little bit about the company. When our, our listeners here, Byton, they're thinking probably, or think of car company sponsoring major tech conference. They're probably not at this point thinking about Byton. So tell me why they should be aware of Byton. All right. So Byton is a company that was founded about a little bit more than two years ago. It was founded in Hong Kong and one investor had an idea and started recruiting people for about one or two years until he found the perfect team from different spaces to actually pull this off, right? So we're a bunch of ex-BMW people who worked on the BMW i sub-brand. We have a lot of people from who used to work at Tesla before. We combined this knowledge with the tech knowledge from other companies from Apple or Google and you name the company and we probably have an ex employee in our company now. So we started off very small with just an idea on a blank sheet of paper. We understood that the future is going to be electric. So it had to be an electric car, right? That was no question. The future is going to be connected. That's what we knew. So we had to do something to leverage technology, to actually connect things to things, right? And also develop a car as a device. So as one additional smart device in your ecosystems of devices that you just add to your other devices. And then, of course, we had to tackle the question of autonomous cars. We all know the future is going to be somewhat autonomous. So, of course, we want to play in that field as well. And we need to consider the changing customer habits of maybe not even owning a car in the future anymore, but using it on demand in a shared vehicle. So we also tackle that space a little bit. And the idea was from a blank sheet of paper to keep all these things in mind and design a vehicle architecture that is scalable to multiple products and future proof for the next 10 years. So you don't necessarily need to be at the kind of maximum future capability in any of those regards. You just have to be, but you need to build in the capacity to get there in the future. So like with the self-driving bit, my understanding is the prototype that's out on display here on the floor in the exhibition hall is like level three autonomous. Yeah. So basically these things come step by step. The first car will be super focused on the user experience, on the new way to interact with the car. We have a 49 inch screen built into the dashboard. It's quite impressive. I'll say that as someone who sat in the car, it's all surrounds you in the front. It's probably going to be the biggest screen you see on the market. And the differences we're not just talking about it, we're actually doing and developing it. And we're adding a driver display that we call driver tablet that is a touchscreen right in the middle of the steering wheel to sort of prepare for use cases that will be eventually enabled by autonomous driving or by more and more situations in which you can give control to the vehicle. So the goal is to to develop everything with the future in mind. So we're not dependent on autonomous driving. You can still drive the car yourself. It still has a steering wheel because the risk would just be too high that at some point it's a legal issue and you can't offer the car because it doesn't have a steering wheel. The screen offers you endless opportunities for services based on your personal profile that you bring to the car. It recognizes you with a facial recognition camera. It knows exactly what seat you're taking to bring your content onto your screen or your area of the screen that is most convenient to you, which as both of us as parents of young children will appreciate. Exactly. You can just send something to the back and make sure they are. They're happy. Number one priority for every parent quiet or one of the two, ideally both. And yeah, so advanced levels of autonomous driving will enable more and more use cases for these for the content on these screens. And the goal is that the user interface will just grow with these use cases and not have to be rethought after after level four and level five will come. So the first guy, as you mentioned, will have level three capabilities. So which highway pilot and other individual situations in which the car will be able to take over. So remote parking and all of these features that that add convenience to your daily life, but it's not like this on and off switch that level four is, let's say it's either completely autonomous or not. It's more situation adequate, right? Also in line with the legal requirements that you have to fulfill in all the markets. Then the second car we're developing on the same platform, by the way, is equipped with level four technology. We're partnering with a company called Aurora in this space. So Aurora was founded by, let's say, the head of Google's activities in the self driving space, teaming up with the person at Tesla and the person at Uber, who developed autonomous driving technology there. And they created their own company and they provide the hardware and the algorithm and we act as the vehicle integration company for them to be able to hand in hand. Be quick to market because one thing is the system and another thing is application on each car that is different because every car has different geometries and just different is engineered differently. So the same system might work differently or needs to be adjusted for every car and we need to bring some of that integration knowledge to this partnership to get some traction and speed to the development. No, that makes sense. So that there we have the user display. We have the software of the car, which I imagine, again, you can push updates remotely wirelessly or which is something that other companies are doing as well. Now, is there any concern with having a big dashboard display like that? I know this again, isn't unique to Biden, but is there concern about, you know, viewer attention that folks looking at their screens rather than how is there a system for discouraging that? So the first thing I can say there is that the screen is not impacting your field of vision. That was the number one importance for us in the design of the car. So we move the dashboard as low as possible to move the screen down as low as possible. So the top of the screen is actually at the same height as your windshield wipers. So it's not impacting your field of vision. And then when it comes to driver distraction, of course, we will not be able to allow moving images in a driving situation at first. We're looking at different opportunities to sort of to put additional coding on the screen, for example, to enable the passenger to enjoy some of the video content while a driver is still driving. But again, the hardware setup is ready for autonomous driving. Autonomous driving might not keep up the pace, right? But when it's there, the car is already perfectly designed for that. And the you still have a lot of content that you can display on on that 49 inch screen without being too distracting. The main goal should be to reduce the number of inputs you have to give to the system. So the more you share with the vehicle, the more data the more knows about you and the more can anticipate what you want to do next. So we can prompt you messages and you just have to say yes or no. All right, either using a hand gesture with the gesture control cameras or in your driver tablet, just have a touch button, say yes or no. Right. Yeah. And the more you you use the car and the more the car learns about you, the better these suggestions will get. So actually in terms of the usage of the car, we're already let's say we're already quite certain that it will be more intuitive and less distracting than finding a button somewhere hidden in some some menu or so. But then when it comes to content, of course, we're very careful as to which functions and features and services and products we actually enable in a driving situation and which ones do we actually disable when the car is driving and only allow in a heavy traffic situation or when you're when you're having a quick charging stop. Right. And you can charge the car up to 80 percent in about 30 minutes. That's enough time to watch an episode of your favorite Netflix show, for example. Right. Yeah. And it's much more convenient than using your tiny little iPhone screen or smartphone screen, not to mention any brands that smart enough to know that it's your your part. So you're not it's no it's no danger to the. Yeah, right. Right. Yeah. Is there I mean, if there's facial recognition software and driver cameras, can it can it tell if you're going to fall in the sleep? Yes, track eye movement. I like so that's called a driver monitoring system. We need that for certain functions and autonomous driving that still require the driver's attention legally. Yeah. Right. So we we have to track your attention and we're further developing new functions and features around that topic to also contextually be able to display some information on the screen or even get around today's legislation in the future potentially. Right. Yeah. For example, imagine you could have the passenger watch a movie and keep track of the driver's attention. And if the driver looks at the movie content, you just warn him to not do it anymore or you just turn it off. Right. Yeah. So so we're playing a lot. We're playing around a lot with these, let's say use cases that might enable more features without being dangerous. Right. Safety is the number one concern. And of course, we want to comply with all the legal requirements and all markets. But we also want to help shape legislation in the future to make sure that legislation will keep up with all the technology development in this highly regulated autonomous automotive space that slows down innovation a lot. Yeah, this we'll get to the kind of regulatory angle here, I think in a minute. But first, so we've talked we've talked electric. We've talked AV. We've talked about the screens. We've talked about the cargo bit. How are you looking to build car sharing into, you know, into into biting now? Yeah, so the car is potentially a preferred solution for an for an Uber driver or a Diddy driver in China or a Lyft driver, right? Because you can make every bite and you could turn every bite into your bite and by just bringing your face. Right. So so it doesn't matter if it's my car or your car, you sit in your seat, whatever it is, the driver seat or the rear right seat, right? And you bring all your content there. So yeah, so it could potentially be a preferred choice for a user to take me as an Uber driver with a bite and car because you can be more productive. You can be entertained. You can you can continue whatever you are doing outside of the car in the car knows that you're in season two of whatever exactly the third episode kicks on for you while you're while your drivers tearing around or we have, you know, we have this selfie camera there so you could you could record your important presentation that you're about to have and play it back to you. And, you know, like there's so many different use cases that make you be more productive or whatever you require in that certain situation. And we treat every passenger as relevant as the driver. Okay. So so the experience on every seat is the same. And this is also one aspect that prepares us for the, you know, shared bit of mobility is even in a car with three strangers, you would still have your own zone and your own seat with your content and basically make it your car. And you're not sort of you're sharing it but you still have your own space, right? Yeah. And we're already thinking about the second and the third car. And we have a lot more to share in the next 12 months. Oh, what's the so what's the timeframe for like, I see the prototype out here from the website. I can, there's another model, another variant for like 2022. This one on the floor out here. When are you expecting that to be in production? So we're kicking off production end of next year for the China market first. And then six months later, we'll bring it to the US. So by mid 2020, you'll be able to get it here. And another three, four months later, we'll bring it to Europe as well. And then 18 months after the start of production of the first car, we'll release our second car, which is a sedan concept. We call it K-Bite and the SUV is M-Bite. Also priced very similarly and derived from the same platform. Now when you say price similarly, where is the slotting in? Yeah, so it's still early stage. We can't really share the details for the second car but our aim is to be an approachable brand to not start high end and then slowly move down the ladder. We want to go where the volume is. Also to have an interesting business case for our investors because it's such a heavy upfront investment to develop a car. You would like it to be scalable and applicable to multiple different products and not just one. And that's what we're doing. And then another about one and a half, two years later we'll bring the third car out on the same platform again. And we're already thinking about a second platform, which is very early stage right now. But as you can see the stuff that we're showing here is already old for us, right? There are very long development cycles in the automotive industry so you have to think ahead. And you have to match it with the shorter and faster developing cycles and tech companies. So we have the unique challenge to synchronize the mindset between the people with a tech background and the people with an automotive background. Both have their pros and cons. And we're only successful if we listen to all of them and take the best out of each and every one's experience. Well it's a reminder like with a bite and competitor with a Tesla they ran into some of that with their production line where there was the Elon Musk brought that tech sector mindset which is why can't we have a quick product cycle and we just disrupt new things, new ideas, layer them on. Whereas the traditional car production line is whoa, you need precision, you need a level of, everything has to be carefully fought through in advance because if anything in the product supply chain or on the production line goes just a little bit off, everything can just fall apart really quickly. And so they had issues putting those two pieces together. Exactly, you have to find the right balance and this is key. And I mean what other players in the industry have done is remarkable in this short time and it opened up a lot of opportunities for the new players. But I think there's, I mean a strong debate about strong leaders who are very influential as opposed to maybe listening to the experts to make the best possible product, right? And we're trying to really set a freeze date to a certain hardware component that needs a freeze date and then we don't talk about it anymore, right? We don't go, we don't walk in a week later and say oh I changed my mind, right? And this is one thing and the second thing is we don't do innovation for the innovation sake. We don't do crazy door concepts or anything that might potentially give you problems with water leakage and things like that. We use all of that knowledge from the more boring automotive world and then we focus our attention on where the faster cycles actually allow us to be innovative and to keep the product fresh. And this is connectivity and this is the user experience that is much more valued by the consumer than an incremental 10th of a second acceleration improvement or a unique door concept that only you have invented or. So we're taking a lot of off the shelf components that have proven to be safe and also accepted in the market. There's a supply chain for it, it's all there and it's all optimized in terms of cost so that we can position the car at an accessible price point too. So we can't go too crazy, but we want to go crazy where the customer expects us to. And I think you can see a lot of this here in our first MBA concept. Yeah, no, it's an impressive prototype. So I mean, I look forward to seeing it on the roads or on the lots come 2020. One more thing I was gonna ask about during a panel yesterday, I think it was a robotics panel on the main stage, they ended the session by asking make sure I get the criteria right here. At what point do you think level five vehicles, so level five automation like full, no hands on, no steering wheel, nothing, will be at least 10% of the vehicles, consumer vehicles on the road. And the panelists range anywhere from 10 years at the lower limit to 30 years at the upper limit, but notably two of them mentioned 10 to 15 years, but in China first. And now Biden has some China roots, you're coming out with the first car in China first. From your perspective, why does coming out in China first make a lot of sense? What role does China play in the AV space more generally? And then do you think that those are, what would your estimate be or answers that question? Okay, there's a lot of. Yeah, lots going on there. Different elements in this question. So first of all, the electric vehicle market in China is twice the size of the electric vehicle market in the US and Europe combined. So this is where we have to absolutely be quick to market there, to capture some of that market share before it takes off without us, right? Yeah, sure. Of course the US is a very important market too, so we don't want to have too much time in between. But then shifting to autonomous driving, I think when China and the Chinese government is committed to something, they actually do everything to achieve that target. They did it with electric vehicles, they took it very seriously. They started subsidizing a lot of companies and in the beginning they were only very cheap players popping out but now we have more and more technology focused companies as our competitors out of China already that will first hit the Chinese market and some of them are also planning to go global. I think China has understood that you can only survive as a global company. So you have to go where the talent is. We're going to Germany for vehicle design because the design infrastructure is best in central Europe. We're going for tech development and serial development of our first car to the Bay Area because that's where you find the best people for that space. And we're going to China for manufacturing because that's where you get the best opportunities and the talent to actually get the best quality in production. My previous company, BMW, has the most advanced factory in China. And not in Germany. And so you have to go where the talent is. And China is very open to the collaboration and appreciative of the global talent that comes in. And I think this is a major difference to my home country Germany but also to what I see here in the US is that other areas in the world are getting more and more protective of what they have while China is opening up more and at the same time gaining speed. And I think if you have that mentality of not being able to do the stuff alone, you have to partner with the best. And it doesn't matter whether they're in Scandinavia, whether they're in Antarctica or in the Bay Area or in China, right? You just have to go there and convince the best people to work with you and collaborate on the best possible solution for the consumer. So with consumer relevance, right? Not just for the technology sake. And I think that's best understood in China right now. And of course you have 1.3, 1.4 billion customers potentially, so it's a huge market in itself. So there's a lot of money for subsidizing and incentivizing companies to build up their R&D or production facilities in cities that have been super small in the past 100 years and now are growing at a rapid pace, overtaking major European cities already in two, three years time. And they already start building cities with full connectivity of everything is connected, like internet of things and stuff. So- They're building cities from scratch. They're building the infrastructure ready for autonomous driving. And this is why you'll see that autonomous driving space will grow in these areas with these cities. And I think that's the unique bit about China. China is still very hungry. You walk around in the Bay Area, everyone has already collected enough stock options. I mean, I'm exaggerating a little bit, but it's the general vibe that you feel in the Bay Area. There's contentment. Exactly. And people are more focused on their work life balance here. And then you go to China and people might not have the skill in every discipline yet, but they're hungry. And they're hardworking and they're committed and they're listening. And they're appreciative of, as I said, the expert knowledge that you bring. They're no longer here to copy. They're now here to really think about solving real problems and how to bring an existing product or an existing service to the next level. And I think it's super enjoyable to work in this global setup with the best people from anywhere in the world. And yeah, I hope I answered some of the questions. No, yeah, I think all three of them, I threw a bunch of you all at the same time. Well, I think one of your fellow Biden representatives mentioned that there were some 400 plus AV companies or AV adjacent companies operating in China right now. I mean, it's the single biggest locus of AV development. I mean, so it's truly remarkable what's going on over there. There was actually a really good, we did an episode four building tomorrow for this podcast about the transformation of China and the ways in which the country is leapfrogging the US. I mean, the tech adoption rates on everything from digital payment systems to, you know, it's just drone deliveries. Exactly, they didn't have PCs for a long time, but now they do mobile payments in, you know, every, let's say, segment of the society, right? Yeah, yeah, it's truly remarkable. Well, Florian, thank you so much for taking the time to talk to me, and I think our listeners will understand a lot more about what Biden's doing and a little more about the AV space, so thanks for your time. And please tell your user or listeners to download the Biden app, it's free, and they can bring our Mbyte concept into their living room if they have a dual camera phone because we have an augmented reality feature on our app. And if you want, you can already sign up and get more information, get invitations for our upcoming events in your area. And stay tuned. Great, thank you so much. As you listen to this interview, you might've been thinking of episode nine of Building Tomorrow, is China beating the U.S. innovation? We recorded that episode prior to TechCrunch, but everything I saw at this conference confirmed that yes, indeed, China is in pole position to be the site of the next autonomous vehicle-style Silicon Valley. Now, even though there's always the chance that the authoritarian central government could shoot itself in its economic foot, tech startups that do have the favor of the Communist Party on their side can innovate mostly free from regulation. They don't have to deal with the welter of regulatory bodies that a startup has to in the United States, from the San Francisco City Council deciding they don't like scooters or the federal aeronautics administration deciding they don't like flight sharing. And that's it for this week. And in fact, that's it for our TechCrunch Disrupt series of episodes. Thank you for listening. And until next week, be well. Building Tomorrow is produced by Tess Terrible. If you enjoy our show, please rate, review and subscribe to us on iTunes or wherever you get your podcasts. To learn about Building Tomorrow or to discover other great podcasts, visit us on the web at libertarianism.org.