Cao Xudong turned up on the side of the road in jeans and a black T-shirt printed with the word “Momenta,” the name of his startup.
Before founding the company — which last year topped $1 billion in valuation to become China’s first autonomous driving “unicorn” — he’d already led an enviable life, but he was convinced that autonomous driving would be the real big thing.
Cao isn’t just going for the moonshot of fully autonomous vehicles, which he says could be 20 years away. Instead, he’s taking a two-legged approach of selling semi-automated software while investing in research for next-gen self-driving tech.
Cao, pronounced ‘tsao’, was pursuing his Ph.D. in engineering mechanics when an opportunity came up to work at Microsoft’s fundamental research arm in Asia, putatively the “West Point” for China’s first generation of artificial intelligence experts. He held out there for more than four years before quitting to put his hands on something more practical: a startup.
“Academic research for AI was getting quite mature at the time,” said now 33-year-old Cao in an interview with TechCrunch, reflecting on his decision to quit Microsoft. “But the industry that puts AI into application had just begun. I believed the industrial wave would be even more extensive and intense than the academic wave that lasted from 2012 to 2015.”
In 2015, Cao joined SenseTime, now the world’s highest-valued AI startup, thanks in part to the lucrative face-recognition technology it sells to the government. During his 17-month stint, Cao built the company’s research division from zero staff into a 100-people strong team.
Before long, Cao found himself craving for a new adventure again. The founder said he doesn’t care about the result as much as the chance to “do something.” That tendency was already evident during his time at the prestigious Tsinghua University, where he was a member of the outdoors club. He wasn’t particularly drawn to hiking, he said, but the opportunity to embrace challenges and be with similarly resilient, daring people was enticing enough.
And if making driverless vehicles would allow him to leave a mark in the world, he’s all in for that.
Make the computer, not the car
Cao walked me up to a car outfitted with the cameras and radars you might spot on an autonomous vehicle, with unseen computer codes installed in the trunk. We hopped in. Our driver picked a route from the high-definition map that Momenta had built, and as soon as we approached the highway, the autonomous mode switched on by itself. The sensors then started feeding real-time data about the surroundings into the map, with which the computer could make decisions on the road.
Momenta won’t make cars or hardware, Cao assured. Rather, it gives cars autonomous features by making their brains, or deep-learning capacities. It’s in effect a so-called Tier 2 supplier, akin to Intel’s Mobileye, that sells to Tier 1 suppliers who actually produce the automotive parts. It also sells directly to original equipment manufacturers (OMEs) that design cars, order parts from suppliers and assemble the final product. Under both circumstances, Momenta works with clients to specify the final piece of software.
Momenta believes this asset-light approach would allow it to develop state-of-the-art driving tech. By selling software to car and parts makers, it not only brings in income but also sources mountains of data, including how and when humans intervene, to train its codes at relatively low costs.
The company declined to share who its clients are but said they include top carmakers and Tier 1 suppliers in China and overseas. There won’t be many of them because a “partnership” in the auto sector demands deep, resource-intensive collaboration, so less is believed to be more. What we do know is Momenta counts Daimler AG as a backer. It’s also the first Chinese startup that the Mercedes-Benz parent had ever invested in, though Cao would not disclose whether Daimler is a client.
“Say you operate 10,000 autonomous cars to reap data. That could easily cost you $1 billion a year. 100,000 cars would cost $10 billion, which is a terrifying number for any tech giant,” Cao said. “If you want to acquire seas of data that have a meaningful reach, you have to build a product for the mass market.”
Highway Pilot, the semi-autonomous solution that was controlling our car, is Momenta’s first mass-produced software. More will launch in the coming seasons, including a fully autonomous parking solution and a self-driving robotaxi package for urban use.
In the long run, the startup said it aims to tackle inefficiencies in China’s $44 billion logistics market. People hear about warehousing robots built by Alibaba and JD.com, but overall, China is still on the lower end of logistics efficiency. In 2018, logistics costs accounted for nearly 15 percent of national gross domestic product. In the same year, the World Bank ranked China 26th in its logistics performance index, a global benchmark for efficiency in the industry.
Cao, an unassuming CEO, raised his voice as explained the company’s two-legged strategy. The twin approach forms a “closed loop,” a term that Cao repeatedly summoned to talk about the company’s competitive edge. Instead of picking between the presence and future, as Waymo does with Level 4 — a designation given to cars that can operate under basic situations without human intervention — and Tesla with half-autonomous driving, Momenta works on both. It uses revenue-generating businesses like Highway Pilot to fund research in robotaxis, and the sensor data collected from real-life scenarios to feed models in the lab. Results from the lab, in turn, could soup up what gets deployed on public roads.
Human or machine
During the 40-minute ride in midday traffic, our car was able to change lanes, merge into traffic, create distance from reckless drivers by itself except for one brief moment. Toward the end of the trip, our driver pushed the lever to trigger a lane change as we approached a car dangerously parked in the middle of the exit ramp. Momenta names this an “interactive lane change,” which it claims is designed to be part of its automated system and by its strict definition is not a human “intervention”.
“Human-car interaction will continue to dominate for a long time, perhaps for another 20 years,” Cao noted, adding the setup brings safety to the next level because the car knows exactly what the driver is doing through its inner-cabin cameras.
“For example, if the driver is looking down at their cellphone, the [Momenta] system will alert them to pay attention,” he said.
I wasn’t allowed to film during the ride, so here’s some footage from Momenta to give a sneak peek of its highway solution.
Human beings are already further along the autonomous spectrum than many of us think. Cao, like a lot of other AI scientists, believes robots will eventually take over the wheel. Alphabet-owned Waymo has been running robotaxis in Arizona for several months now, and smaller startups like Drive.ai are also offering a similar service in Texas.
Despite all the hype and boom in the industry, there remains thorny questions around passenger safety, regulatory schema and a host of other issues for the fast-moving tech. Uber’s fatal self-driving crash last year delayed the company’s future projects and prompted a public backlash. As a Shanghai-based venture capitalist recently suggested to me: “I don’t think humanity is ready for self-driving.”
The biggest problem of the industry, he argued, is not tech-related but social. “Self-driving poses challenges to society’s legal system, culture, ethics and justice.”
Cao is well aware of the contention. He acknowledged that as a company with the power to steer future cars, Momenta has to “bear a lot of responsibility for safety.” As such, he required all executives in the company to ride a certain number of autonomous miles so if there’s any loophole in the system, the managers will likely stumble across it before the customers do.
“With this policy in place, the management will pay serious attention to system safety,” Cao asserted.
In terms of actually designing the software to be reliable and to trace accountability, Momenta appoints an “architect of system research and development,” who essentially is in charge of analyzing the black box of autonomous driving algorithms. A deep learning model has to be “explainable,” said Cao, which is key to finding out what went wrong: Is it the sensor, the computer, or the navigation app that’s not working?
Going forward, Cao said the company is in no rush to make a profit as it is still spending heavily on R&D, but he assured that margins of the software it sells “are high.” The startup is also blessed with sizable fundings, which Cao’s resume certainly helped attract, and so did his other co-founders Ren Shaoqing and Xia Yan, who were also alumni of Microsoft Research Asia.
As of last October, Momenta had raised at least $200 million from big-name investors including Daimler, Cathy Capital, GGV Capital, Kai-Fu Lee’s Sinovation Ventures, Lei Jun’s Shunwei Capital, Bluelake Capital, electric vehicle maker NIO’s investment arm, WeChat operator Tencent and the government of Suzhou, which will house Momenta’s new 4,000 sq-meter headquarters right next to the city’s high-speed trail station.
When a bullet train speeds past Suzhou, passengers are able to see from their windows Momenta’s recognizable M-shape building, which, in the years to come, might become a new landmark of the historic city in eastern China.
Update (June 14, 2019): The article was updated to correct investors’ names and clarify that the driver made a turn by pushing the lever, not steering the wheel.
Boeing 737 MAX packed with journalists completes first flight
Boeing was hit very hard when the US government banned its 737 MAX passenger airliner for 20 months. On Wednesday, the aircraft staged its first flight with media onboard since the fleet was grounded by the government. Boeing is desperate to show passengers and airliners that the 737 MAX is safe and ready for operation.
The test flight was conducted by American Airlines and spent 45 minutes traveling from Dallas, Texas to Tulsa, Oklahoma. The test flight was conducted weeks before the first commercial passenger flight will happen on December 29. Boeing and American Airlines held the flight to help eliminate any concerns about aircraft safety.
The massive aircraft was grounded in March 2019 after two crashes happened within five months, killing 346 people. The media flight was the first time anyone other than regulators and industry personnel flew on the 737 MAX since it was grounded. The flight had roughly 90 people aboard, who all wore masks due to the coronavirus pandemic.
Boeing’s aircraft was cleared by the FAA last month after the aircraft received design changes and new training for pilots. Boeing needs the aircraft’s return to service to go very smoothly as the aircraft is critical for the company’s reputation and finances. Hundreds of billions of dollars are on the line, with airlines worldwide having spent hundreds of billions of dollars purchasing aircraft.
Reports indicate that the aircraft has been discounted significantly to help lure carriers who may be wary of the aircraft to purchase. Boeing has a 24-hour situation room that monitors every 737 MAX flight globally. The company says it will continue to work closely with global regulators and customers to return the fleet to service safely.
Facebook might finally be sued by the US government next week
The political landscape in the US hasn’t yet stabilized almost a month after one of the most important elections in its recent history. It is perhaps because of that state of flux that government officials under the current administration are moving quickly to wrap things up while they can. Last month saw Google formally sued for monopolistic business practices and TikTok’s fate could very well be decided this Friday. Next week will see yet another high-profile legal drama when the US government slaps Facebook with an antitrust lawsuit of its own.
It seems almost ironic that Facebook would be the last Big Tech company this year to get formally sued considering it was one of the first to get into legal trouble with the US government. Although the Trump administration formally started inquiries and investigations into Google, Facebook, Apple, and Amazon only last year, Facebook’s name has already been dragged into the spotlight right after the previous presidential election. But while those previous issues centered around election interference and privacy, this lawsuit will instead focus on anti-competitive practices.
Reuters sources aren’t yet certain on what points the lawsuit will include but it is almost certain that it will involve its acquisition of Instagram and WhatsApp. The social media giant has been accused of buying up smaller rivals in order to gain monopoly of the market. Facebook argued that it actually helped those become market leaders instead.
Given its already negative reputation in the public’s and the government’s eyes, Facebook might face an uphill battle to make judges see things from its point of view. It doesn’t help its case that, despite the numerous scandals it has been involved in, Facebook remains a powerhouse and influential company, even with the competitors that the social media giant says disproves allegations of monopoly.
According to one source, as many as 40 states will sign the lawsuit that will be filed next week. The FTC is also reportedly considering filing a separate but related complaint with a district or administrative law judge. No date for the FTC’s lawsuit has been shared.
Google News Showcase tries to address the paywall elephant in the room
While many praise and thank Google for making information and news available to the masses on the Internet, others, especially publishers, hate it for almost the same reason. Some have even sued Google for putting directly in Search results content that should otherwise be viewed on the content owner’s website. And then there’s paywalled content that effectively blocks users from accessing those without paying a fee. In order to better promote its News platform, Google is negotiating with publishers in order to provide some locked content to readers for absolutely no charge at all.
To be clear, Google isn’t just making available paywalled content for free at the expense of publishers that own them. It will be the one publishing partners that are taking part in this relatively new Google News Showcase program. Even then, only select articles will be made available for free, pretty much like a trial or appetizer.
There are, however, more caveats to this seemingly generous offer. The biggest one for people will be the requirement to still register for each and every publisher they want to view paywalled content from. This, Google says, is so that publishing partners can build relationships with readers, which is to say that they will send you regular communications (read: spam) to convince you to sign up and pay for a subscription.
Another limit of this paywall program is that Google News Showcase itself isn’t available in all regions of the world. Google only names Germany, Brazil, Argentina, France, the UK, and Australia as some of the few but it is working to expand its reach to more countries. Courting US publishers might be trickier than in other countries.
Google is also working to expand Showcase beyond Android and iOS to Google News on the Web and its Discover feature. Together with a new panel for curating important local and national news from users’ favorite publishers, Google is more aggressively pushing its platform as the new way people could get their daily news fix and not from Facebook or Twitter.
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