Eighty percent of urban trips are less than two miles long. So why do so many of us make them in big, inefficient, and expensive vehicles? Tech analyst Horace Dediu, who coined the term “micromobility,” joins Azeem Azhar to discuss why the future of cities lies in “looking up,” rather than “looking down,” and what that tells us about a new era of consumer behavior both on- and offline.
They also discuss how the micromobility industry has grown so fast, how an urbanizing population will further boost the market, and how big tech firms like Apple and Alphabet might claim a piece of the pie.
‘The Impermanence of Modes,’ Horace Dediu,
‘The 10 Micromobility Commandments,’ Micromobility Industries/Horace Dediu
Free EV briefing today: Micromobility with Horace Dediu
AZEEM AZHAR: Welcome to the Exponential View Podcast with me Azeem Azhar. As an entrepreneur, investor, analyst, I’ve been an insider in the technology industry for over 20 years. During that time I’ve watched exponentially developing technologies change our economies, and there is plenty more change to come. Now, a lot of the innovation that gets airtimes in intangible areas like artificial intelligence or crypto. But today’s episode is squarely focused on the real world. My guest this week is, Horace Dediu. The world’s leading analysts on micromobility, personal transport that takes place in smaller vehicles like electric bikes and scooters. Many of you will be seeing these vehicles on the streets of your city, but as demand for personal transport increases, and people continue to flock to urban centers, micromobility will become popular the world over. Roughly 80% of all urban trips are less than two miles long, and people are starting to realize that it doesn’t make sense to take those trips in a car. The market for these vehicles is huge, growing, and has plenty of room to run. In time, it could prove fertile ground for big tech companies like Apple and Alphabet, as Horace and I discuss. Now, before we get started, there is a term I should define. Horace talks about automobility – by that he means a car in its current and future autonomous and electrified state, as well as the external consequences of the cars place in our lives, in everything from urban planning to human behavior. Horace’s vision of the micromobility future is captivating, drawing on his career as a successful mobile analyst. Horace explains why micromobility is growing so quickly, and the positive impact it could have on our lives. Horace Dediu, welcome to Exponential View.
HORACE DEDIU: Thank you, Azeem. It’s always a pleasure.
AZEEM AZHAR: Well, I’m so happy to have the OG of micromobility on the show. It’s something that probably many of us have experienced. We’ve hoped a Lime bike, or a scooter somewhere in the world. But that’s part of what you think is a much more fundamental shift in the nature of our cities. How do you define micromobility?
HORACE DEDIU: Well, micromobility, when I started out, I defined it by the size of the vehicle. I simply said that micromobility is transportation by vehicles which weigh less than 500 kilograms, which is about 1100 pounds. Now, over the years that has been pulled, and pushed into different directions. Because obviously some people felt excluded. Some people felt it was too much, too little and so on. And I’m more inclined now to define micromobility as very efficient mobility in terms of the energy consumed. So I’m actually working on introducing a new measure of efficiency called the MOT. I know in the UK, that’s already taken as an acronym. But it’s meant to stand for a Modicum of Transport, which is the minimum amount of transportation needed to move one person, one kilometer.
AZEEM AZHAR: The idea of the MOT, the Modicum of Transport, the nominal energy cost of transporting one person one kilometer, actually, gets to the heart of understanding why there’s even an opportunity here. Because obviously billions of us around the world move around cities every day. And a large portion of us do that in cars. And I guess the data has shown, and your argument has been, that we take these highly performant vehicles, they may weigh two tons, thousands of pounds. They can accommodate five passengers, and hundreds of kilograms or pounds of luggage, and they can drive 400 miles from desert to snow. And yet, we use these every day for one mile journeys perhaps, on our own. And I guess the idea of the MOT, the Modicum of Transport is a way of breaking apart that monolithic approach to transportation.
HORACE DEDIU: Well, what we’ve built in the last century and a half is a way of transporting people that’s very archaic. It’s based on packaging the person with the vehicle. And that is in fact far too heavy as a construct to really, really get to the bottom of what it needs to move people around.
AZEEM AZHAR: Actually, a lot of the things that we need to do are much smaller. They are smaller packets. Like you wouldn’t send an SMS message printed out in an Audi Q7 SUV, 140 characters down the road. But that’s what we’ve been doing.
HORACE DEDIU: Exactly. We are stuck in a 19th century construct for transport, which is that a very large vehicle, which is capable of very high speeds, and very much cargo, it needs to transport small packets, which are people. All I’m saying is that we are in an historical accident. This phase will disappear at some point. This error will change, and we’re going to go back to a more logical way of transporting people. And we have the means to do so, in terms of electric battery motor, and communications, and all of these other components that are necessary. Those enabling technologies have been around for quite a few years already.
AZEEM AZHAR: If we then come back to what that opportunity looks like, the problem with the car is that most journeys in most cities don’t require a five seater with a 3 liter engine, and a 400 mile range. But can you help us with the data? Because you know this data intimately.
HORACE DEDIU: Let me give you an analogy. The little brick that sits at the bottom of a portable hand drill today, that’s commonplace and these power packs are swappable between multiple tools. That little thing can move a person, probably 10 kilometers easily. Not to mention that the motor in inside the drill can actually operate a bicycle. People have actually taken these hand drills and made electric bicycles with them. So the technology’s been around, it’s available. And so I ask myself, what is the minimum amount of energy, and money and everything else to move people. And it’s actually minimal. The point is that we have the ability to do this. So the question really ought to be is why aren’t we doing this? And the logic there is actually very interesting. We have a sunk cost in transportation and that’s the road networks we have. All arguments being made against micromobility is that, “Well, have the infrastructure for automobility. We’re going to carry on doing this.” As everyone knows, who knows sunk cost fallacy, you’re just pointing to the fact that it was done wrong. And so agreeing to carry on with the wrong infrastructure, and people are saying, “Well, but it’s really expensive to change it.” Well actually, new infrastructure if made for this new mode is much cheaper. It’s like an order of magnitude cheaper. But you’d have to tear up the old. Because we can’t build a parallel infrastructure for automobility.
AZEEM AZHAR: So there are a couple of themes that we’ve identified here. One is around some of the technologies that have been available, and increasingly getting cheaper and cheaper. I mean, lithium-ion batteries have declined in price 90% in the last 10 years. You’ve also identified that there’s going to be some issues that relate to urban architecture, and sort of physically pouring concrete, and regulation. And then the third dynamic, is also about consumer behavior. So for people who don’t know what percentage of journeys in a city are less than a mile?
HORACE DEDIU: The epiphany for me was looking at a probability graph of trip probability by distance. And it was a shock because it’s so skewed towards zero. In other words, it’s not like someone told you the average trip let’s say is five miles. Well, your brain thinks that it’s a bell curve. So half are below and half are above. No, transportation is log normal.
AZEEM AZHAR: Well, it’s a power law, right?
HORACE DEDIU: Yeah.
AZEEM AZHAR: It’s a power law. Yeah.
HORACE DEDIU: It’s a bell curve, but the X axis is logarithmic, meaning that you’re squishing the curve towards zero. So it’s peaking very early, and then it’s got a long tail. Now what this means in practical terms is basically you probably can do 80% of all urban trips under two miles.
AZEEM AZHAR: So 80% of trips roughly are under two miles. What are the differences between the regions?
HORACE DEDIU: Well, infrastructure primarily in the density of destinations. Now, the US having been architected more in the 20th century, it ends up sprawl, ends up being low density. And so you have further distances to travel. Still, quite a vast majority are still within micromobility distance. But it’s slightly different than Europe. Take Paris for example, so the Mayor of Paris Anne Hidalgo, has proclaimed that within the periphery boulevard, is going to be pedestrianized, and cycling friendly. But that’s because it’s not that big. But still there are architectures like Hong Kong and Singapore are highly dense, but also highly populated, not all small distances. But they tend to bridge these gaps with public transit. We need that and micromobility in order to really displace the automobile from the city.
AZEEM AZHAR: One side of the consumer dynamic is the length of trips. And we know now increasingly that the vast majority of trips across the world are less than two miles, and many are less than a mile, which means that they’re walkable. A mile is 1.6 kilometers for our European listeners. The other dynamic is how many people are in a trip? Now, what is the occupancy of the vehicle? So do we have data about that and how that market breaks down?
HORACE DEDIU: Yes. That’s very easy. This is a standard rule of thumb, automobile occupancy is 1.2 passengers. It doesn’t change very much across countries. It turns out that that’s pretty consistent. We tend to think of the trip to work as the most common trip, but it’s only about a third of trips taken. There’s a huge number of trips where there’s a passenger, and again, those might be the ones that we cannot address early with micromobility. Although, I do think there is a solution there. But yes. But 1.2 is the figure.
AZEEM AZHAR: So if I think about where we sit today, we’re a little bit like a family that only has their one high end presentation dinner set with the beautiful sterling silver knives and forks. And we’re having to use it for breakfast, and lunch, and tea and making a snack for the kids. And also for when the in-laws come over for dinner. And it’s a bit of a problem. Because we have to roll this out the whole time, and it’s not really appropriate. And what we need to do, is we need kind of micro dinner sets. We need some kind of cheaper, more everyday things. Things that the kids can use, and so on. So if we think about this in urban transport ecosystem at the moment, essentially, we have a load of cars. What does that micromobility future actually look like? What does it mean? Can you paint a picture for what it feels like when we’re living in that city where when micromobility is more common?
HORACE DEDIU: So I used the analogy of actually, computers, where we used to have a desktop. Then we went to laptop and desktops. Then we went to smartphones, and laptops, and desktops. Then we went to tablets, and smartphones, and laptops, and desktops. And then when we went to wearables, and smartphones and et cetera. So you see, when we came up with a new form factor, we didn’t discard the old. Maybe we reduced its usage. Maybe we focused its usage to the jobs that it was best suited for. So yes. We are moving towards a bespoke solution for all the micro problems we may have. Now, again, the problem with cars, and the automobility concept is that it one size fits all. We intend to use short trips, long trips. We intend to use it for one passenger and seven. We tend to use it for cargo and empty. The idea of micromobility is that; let’s fit the right tool for their job.
AZEEM AZHAR: One of the things that strikes me about your analysis here is that it reminds me a lot of a framework called ‘Jobs to Be Done” by Clayton Christensen, which you are very familiar with because you worked with him. But our listeners may not be so familiar with that framework. So there’s a point of logic that you make, which is, “Well, people have got different jobs they need to do so they should use different types of vehicles.” Could you just explain how that thinking fits into this micromobility question?
HORACE DEDIU: Now, the “Jobs to Be Done” framework says that you shouldn’t think about competition in terms of the tools that you’re using in the same category. So the classic catchphrase is that people don’t buy a drill, they buy a hole in the wall. So they’re buying an outcome. Now, if you deliver the hole in the wall with a contraption, which happens not to be a drill, maybe it’s a punch. Maybe it’s actually calling someone to do it for you. So it’s a service. All of these tricks that might be employed to deliver the outcome that the customer desires, they should be considered as a competitive set. Therefore, your local handyman is competing with Black and Decker, or Bosch as far as what the customer needs to do to get their job done. So when we got to the phone business, this was a very tough thing to convince people of that handheld device could be hired to do news reading, which was a job of a newspaper, or handheld device could be used to create connections with people, which is what social media has done. And initially there was no such tool. So the job to be done is focused on the outcomes, understand the circumstances that people make decisions on, realizing they’re highly constrained. And then offering a solution that might be completely opposite to what is considered to be the right answer at the time.
AZEEM AZHAR: So when we apply that to the mobility question, that’s where we get to this point, that while a big SUV can do all of these different jobs, it’s not necessarily the most appropriate. But that in a sense begs a question which is, what does that mean for the homeowner in a micromobility world? Because I sit in my home and I have a desktop, I have a laptop, I have a smartphone, I have a watch, I have a tablet. I have all those things that you describe. But they were manageable by purchases of them evolved over time, they don’t take up all my space. So do we expect homes to have a big car for the once-a-year 500-mile round trip, a medium sized car, a bunch of electric bikes, a bunch of scooters, and a bunch of buggies in order to accommodate this different set of tasks they need to get done.
HORACE DEDIU: That’s a very good question, because what you’re getting at is how do you transition a world in general? How do behaviors change when you do have the sunk costs in place. And consumers have to deal with switching things around? So again, you should ask yourself about your communication consumption, and your computing consumption, and how that has changed and what you’ve done to accommodate it? So the way you anticipate this and plan this process, is by looking at what could be the early adopter in this equation that you mentioned. So you might switch some of your trips. And so you’d have to first look at what am I measuring? And I’m measuring trips here. So I have a certain number of trips. Typically, by the way, there are three trips per day that most people need to take. We also spend about one hour a day in transportation. So we have one hour, a day, three trips. Most of them are short. Now, you start to ask yourself as consumer, “Okay, yeah. I have a car to do all of those things, but I’m being tempted. I’m being tempted by an offer, a service either. Because a vehicle is available near me or someone is going to sell me one, or someone’s going to give me a subscription to one. And this will allow me to make a type of journey very quickly. So the one to the grocery, the one to the school, and I’m going to substitute that.” Again, that’s what happened with phones, and the substitution early on. And now we substituted our cameras with phones. Okay. But that’s exactly the question, and you can see it maybe at the end zone. But in the meantime, you’ve got to make progress one meter at a time.
AZEEM AZHAR: But if I come back to what we can tell, what can we tell about the interim steps? Am I going to go and buy an electric bike? Is that what we should expect? Is that what we are seeing people do around the world?
HORACE DEDIU: So we have been seeing since about 2018, when China, went crazy for shared bikes. We have seen tens of millions of vehicles manufactured for what are effectively micromobility journeys. Now, this is a new category of product. Not the old bicycles. But either powered bicycles, or shared bicycles or scooters. Now, the numbers are staggering. And they’re not well known because most people are counting cars. They’re not counting scooters, mopeds, electric bikes on a global scale, when you do start to pile up all these data points, that market for electric micromobility, is far larger than the LEV market today. The numbers in China alone are about 400 million people use micromobility every day.
AZEEM AZHAR: If you go to Germany, there’s a similar story.
HORACE DEDIU: Absolutely.
AZEEM AZHAR: So I think in between 2019 and 2020, the number of electric bikes in Germany… Electric pedal bikes sold was two million. It was a 43% rise over the previous year. And two million is what, 2,5% of the total population?
HORACE DEDIU: Well, in fact, as of last year, 10% of all German households had an electric bike. So it’s already crossed over the 10%. Which I consider to be where the S-curve really takes off.
AZEEM AZHAR: How does household behavior change when you own an e-bike? What do we see in terms of the actual impact of a micro mobilificaton of the German home?
HORACE DEDIU: I haven’t got the data. But from personal experience, I’m just going to tell you, because I have several of these vehicles. Maybe one in 10 trips now I will switch over. I live in Finland, which is not always great weather. I don’t commute for work. So for that reason, if I did, I would use it more often actually. But if I have to make a shopping trip that isn’t too big, I’ll take an e-bike. By the way, the subcategory of e-bike that’s really exciting is the cargo e-bike, which allows people to do the cargo trips. And that means shopping. And also carrying small children. And that’s really burgeoning right now. So again, the way to think about it is what is the thin end of the wedge. And the easy jobs to take on first. And that’s how you gain traction. And that’s again, happened over and over again in history of technology.
AZEEM AZHAR: The easiest job is you tackle the adult parent, the mother, or the father with an electric bike, that may or may not be able to take a kid, but they can use it for their quick shopping trip or running into work and coming back. And that is the sort of softest end of the market. And then what you hope is that there is investment in new e-bike companies like VanMoof and others, which comes in with new form factors, perhaps for longer trips, you get cargo bikes and you get this, is it a slow evolution of new categories that let you tackle many more of the jobs that need to be done?
HORACE DEDIU: So we’re seeing the fuel for this adoption coming from customer adoption, customer spending, as well as venture capital. But it’s actually more sustainable if there is cash flowing in from customers. And it is happening. It’s also on the shared side, we’re talking about ownership, but on the shared side, although there’s been a wobble during the pandemic, but we’ve seen even now probably higher than pre pandemic levels of shared micromobility. And this is just hopping on a scooter or bike you see on your trips and then finishing your journey that way. And that it’s very popular.
AZEEM AZHAR: So you have consumers with their behaviors. You then have manufacturers who are building different types of vehicles as you call them. You’ve got business models. So you either own them or they’re operated. And then you also have the intersection with the regulations, and the city in the urban architecture. And each of these sort of plays with each other. They’re going to push, and pull, and create new opportunities slowly over time. It’s kind of an interesting ecosystem to play around with. What are the interesting things that we are seeing in the vehicle? What are the technologies that are making a difference? What are the interesting form factors, and what surprises you with particular manufacturers, and what they come up with?
HORACE DEDIU: Well, firstly, even the electric scooter was a huge surprise to many people, myself included. Because I was really a fan of e-bikes. And to see that takeoff as rapidly as it did, it’s a testament to the innovation that’s happening. The electric scooter, to me, from an engineering point of view, it’s a worse vehicle for handling longer distances, rough roads.
AZEEM AZHAR: I’ve got to confess, Horace, I’m with you. My personal experience of electric scooters. They frighten me a little bit as a rider, and I’m always nervous when I see one approaching me.
HORACE DEDIU: Exactly. And it’s something initially you’re not familiar with. There is an onboarding process. Younger people are more likely to favor it versus older, et cetera, et cetera. But you’re seeing an evolution there. You’re seeing a proliferation of form factors. And so the scooter market, by the way, evolves rapidly with suspensions with more power, more stability, more ABS and other forms of traction control or other stability controls. E-bikes likewise are just zooming into all new directions of performance as well. I was at a EUROBIKE, which is the biggest bike show in Europe. And it’s mind boggling. There’re over 700 exhibitors with e-bikes there. But that’s just the beginning. I want to really, really push you on this. Because I think that a lot of what we’ve been talking about has been utility improvements. Yes, it’s cheaper. Yes, it’s more efficient. Yes, it’s going to save the planet, and make people happy, and wealthy and fit in the process. Okay. If this was a pill, this would be considered a miracle pill. But there’s more – a lot more. And that has to do with software sensing, and intelligence. Because transport, as I was saying, we’ve kind of are stuck in a century year old metaphor. When we invented the Internet, and we then developed techniques for improving the Internet, and it up with a much more efficient communication network. However, the fuel for the Internet, pretty much since 2000 has not been efficiency gains. What I’m paying for is access to data, and services, and all these other things. In fact, what feeds those services is increasingly or has been advertising.
AZEEM AZHAR: So the point you’re making really is that in the early years of the Internet, it was the telecoms companies, the infrastructure guys who built it and invested in it. And then it was the device manufacturers making the rooters, and the modems, and the acoustic couplers that were making the investments. And since 2000 and the origin of advertising, it’s really been commerce that has driven the engine that has driven innovation and investment across the Internet.
HORACE DEDIU: Exactly. So think of it as a stack. We’ve been building on the higher levels of the stack in terms of creating new services. And many times at the top there you’re actually inventing new things – like, social media’s more or less like a creation without a stated demand beforehand. Now, what I would say is that when it comes to transportation, all the conversations today are about efficiency, climate equity, and so on. There’s a lot of good points to be made there. But you’re going to run out of if you packetize it the way I’m envisioning, we’re going to very quickly run to the optimum point. So what moves beyond that are going to be services. And the trigger of the change of the Internet was surfing as a concept. And if you think about that for a minute. When you are surfing, and you’re starting down your trip, do you know where you’ll end up? The whole point of surfing is that you don’t go into the Internet in order to seek out a destination, which is what we did initially. Initially, was FTP. You’d had to know your destination and what commerce for the Internet quickly became is how do I direct this person to a place where they had no intention of going? That’s what advertising, that’s what click bait. That’s what everything to do with the internet has been, is redirection. The intention of the user is unknown, but the intention needs to be changed if it is known. That is what people are paid for.
AZEEM AZHAR: So when we come to micromobility, is that what you think the end state is? That it becomes an advertising platform that directs us places?
HORACE DEDIU: This is the most controversial aspect of micromobility, is that it enables people to go where they didn’t want to go. It enables the same thing we enabled with the Internet, which is like, “Well, communication is super expensive. I’m not going to go around popping in and out of service, because I’m paying for a huge T1 line, and it’s costing me thousands a month.” Why would you want to do that? Surf nonsense. It’s only possible because the cost came down so fast. My assumption is, yes, we’ll drive the costs down. We’ll drive emissions down. What happens then is that, “Well, as I’m going home, I might go somewhere else on the way there. I might not go the most directly home. Because I’m going to be incentivized to go elsewhere.” That is a very radical thought. And no one believes me yet, actually, they still think it’s too expensive to do this.
AZEEM AZHAR: But I think it’s radical in another way. It’s radical because a lot of people who are supporters of micromobility — they’re supporters of the shift away from cars — also make the point that this is about sort of authentic experience. It’s about living in your neighborhood. It is about the fact that you generate the positive externality of additional health, of stopping in your neighborhood, and spending more money in your local stores rather than into the out of town supermarket. And that in some sense, it’s a countervailing force to the idea of being a consumerized human who’s driving out to the Westfield mega mall every weekend. This is quite a sort of counterintuitive idea. And probably one that may make people who are thinking about micromobility, and cycling, and walkable cities, and 15 minute life quite uncomfortable.
HORACE DEDIU: So again, the question is what comes beyond efficiency. Because you can’t get beyond 100% efficiency. I want to grow the opportunity. I want to grow the connectivity. I want to grow the accessibility of transportation. I want actually people to go do more with their time. So the premise is automobility. And in particular, a future of autonomous automobility is a cocooning of the person in the vehicle so that the journey is forgotten. So that the journey is invisible. And so ideally you want to have that person looking down, and ignoring everything outside. That is an ideal situation for automobility. That is a utopia for automobility.
AZEEM AZHAR: So the autonomous vehicle is I could be anywhere. I could be in Bangalore. I could be in Bangkok. I could be in Bangor, Maine, but I’m in my vehicle, not looking outside the window, watching an advertised supporting short film.
HORACE DEDIU: Take that one hour a day. And let’s redirect your attention from through the window, through the wind screen, down to something else. That is the only monetization strategy that exists for automobility. Let me repeat that. It is the only monetization strategy that is for automobility. Look down, not up. Micromobility is look up, not down, that’s it. What does it mean though? You are going to be on a vehicle, possibly even wheezing a wearable device, possibly some sort of a glass device that might give you some ideas of other places to go. Because that’s a key thing. Automobility encourages you to look up. It encourages you to look around. Automobility completely eliminates the outside world. It focuses you on an alternate world. Micromobility emphasizes, amplifies and creates a translucence to the physical world itself, and that simple analogy look up or look down has been very, very useful. What it also implies, however, is that it’s going to take advantage of wearable technologies and mapping technologies that everyone’s building.
AZEEM AZHAR: Let’s talk about those technology relationships. We know about certain technologies that are helping micromobility. So we know that lithium-ion batteries are being helpful. We know that a low power GPS receivers are very, very useful. We obviously know that smart phones and cloud-based computing is important for tracking inventories, and figuring out rides, and billing and so on. But what other technologies do you think are going to be important in shaping this micromobility landscape?
HORACE DEDIU: Obviously motor technologies, battery technologies, sensor technologies, as well as communication technologies that allow you to share a vehicle. And that’s also coming into automobility. But the one thing that we haven’t talked to because it hasn’t come out yet very much, is wearable technologies. Now, what wearables allow a pedestrian, or a writer to experience, especially in augmented reality is a new perspective on the world around them. And although many applications are considered to be valuable in the home, the idea of wearable technologies outside the home means that you will be given an opportunity to experience a new world. So again, my emphasis here is that wearable technologies is sustaining to micromobility. In other words, it makes it better. Wearable technologies don’t have an impact in automobility, and automobility therefore needs to evolve at its own pace with its own legacies and its own cycle times, which are super slow micromobility but will be able to take advantage of this rapid iteration in wearables.
AZEEM AZHAR: So let’s talk a little bit about cities as well. A lot of concrete has been poured over the last 100 years across cities. How hard is it going to be for countries to wean themselves off cars and that infrastructure? I mean, how do we make Atlanta or Houston, more micromobility friendly?
HORACE DEDIU: There’s going to be early adopters and there’s going to be late adopters, as far as cities are concerned. Just as we have that with consumers, we’re going to see policy, and we’re going to see governments choosing to lead, or follow. My hypothesis is that it will happen globally and everywhere. And it’ll be 100% penetration. But it won’t be all at once. So the future is unevenly distributed.
AZEEM AZHAR: Wait, you just said 100% penetration for the micromobility future, which is as high as it gets?
HORACE DEDIU: Well, 100% of people will have that option, and probably will use that option. Yes. Now, not all trips will be micromobility. But my point is this though, that the question is one of sequencing. So what’s first, second and third. And my observation has been again, that Europe is leading. And one of the reasons is that those are old cities. Built before the automobile. And as a result, the automobile have to get grafted on their great expense, both the economic and social expense, and obviously also many other externalities. But now those changes are being undone. Even in my hometown of Helsinki, large highways in the city, multi-lane divided highways as few as there, are being torn up. They’re being replaced with boulevards, and it’s become normative behavior across Europe to eliminate what we call large roads from cities and pedestrianize more. That trend is happening rapidly in Europe, and it’s going to accelerate. You asked about the most difficult markets would be Houston or Atlanta. Late 20th century phenomena, they have these sunk cost fallacies under our brains. And so those are going to be more laggards. Which is again, an interesting story. By the way, India, unlike China is still largely infrastructure underdeveloped. They have a huge opportunity to embrace and extend micromobility. And it is happening there quite a bit.
AZEEM AZHAR: I mean, when I used to go to Pakistan in the ’80s, it was essentially micromobility. I mean, everyone was on a bike. I mean, admittedly, a petrol moped, but there were no cars around.
HORACE DEDIU: But we’re seeing, for example, Indonesia, we’re seeing Malaysia, we’re seeing Vietnam, which are still predominantly two wheels and they’re easily electrified. And by the way, Africa is largely unmotorized, that’s a billion people there. So you have these spots around the world, which by the way, they’re all also urbanizing rapidly. They’re also becoming wealthier rapidly. And these mega cities in developing countries are going to have to decide whether they want to build the infrastructure. By the way, you talked about roads. But I want to point out one more Achilles’ heel here in the story, which is parking. Every car that exists needs three to eight parking spots. That means it needs a certain amount of land, or infrastructure just to be stored. And it becomes the primary cost a car today in the United States in terms of parking costs about $122,000 per parking spot.
AZEEM AZHAR: Wow.
HORACE DEDIU: And so governments have effectively subsidized all the parking in the world. And as a result, the area equivalent roughly to West Virginia has allocated parking in the United States. It gets worse and worse when you talk about parking. Because what you’re saying is I want to allocate the most valuable real estate in my city, which can be, as you know, in London, there are parking spots that go for millions of pounds-
AZEEM AZHAR: Sure.
HORACE DEDIU: In terms of price. But to do so on a global basis, on developing countries, which haven’t got the money, and the resources to spend on car storage. And to do so because every car sits 96% of its life. It needs that spot no matter where it is.
AZEEM AZHAR: But if we think about this evolution, I mean, there are a number of different players, and the not all standing still. Are we going to see the car companies be the key participants? Are we going to see the big tech firms realize that this is a place where they can reach their consumer? Are we going to see new players? What does that industry landscape look like? And how might we predict it?
HORACE DEDIU: It’s a great question. Because this is part and parcel of the disruption theory and the orthodox theory of disruption, if you will, is that entrance always beat incumbents in this game. But entrance might be lateral in the sense that they could be actually disrupted by their own supplier base. Which isn’t quite an outsider. So, you could have component companies getting interested in this space. Because they’re suddenly feeling like they have no future in an electric automobility. So they’ll pivot to micromobility. You could have, again, lateral entry from the technology companies that are actually trying to figure out what to do in transport today. Many of them have still the car on the brain. So I’m looking at you, Google, Apple, Amazon, et cetera. Those companies might say, “Hang on a second. Actually, I could make a lot more money, and a lot more quickly if I turn my attention to these spaces, especially as I look at the value of maps, the value of wearables, the value of last mile transport through micro, which is Amazon.” I’ve sketched out scenarios where all the top tech companies could make huge impact, and profit greatly for micromobility. They don’t see it yet, but they will.
AZEEM AZHAR: Well, they will, because they’re listening to this podcast. And it’s refreshing also to have an expert guest who says, “You know what? We don’t know. We don’t know just yet.” A large part of why we have the car is not actually driven by its utility. Of course there has been a very sophisticated, long running process of making car ownership desirable. It’s a type of status. And the kind of car you own confers some sort of social advantage. It’s some kind of social signaling. And it’s kind of one reason, I think why we see in countries as they get richer and richer car ownership increase. How should we be thinking about the way in which the attitude towards the car starts to change? What happens around the sort of cultural connection that people have with that vehicle as this plays out?
HORACE DEDIU: I think there’s something fundamental there. But people’s attitudes change gradually over time. We’ve changed our attitudes on a number of social matters, of course. And I sometimes wonder, what will prosper and what will start to collapse? I think cars were far cooler than they are today. Certainly younger generations don’t value them the way my generation did when we were young. But here’s what in encourages me, is that marketers are starting to turn to positioning the micro vehicle. I have an example, I saw a how-to video, Welcome to your New Car, it’s a German sports car showing a video of a successful man driving home, showing it off to his father. But when he pulled into the garage on this drive, there were two e-bikes prominently in shot. The marketers know that they can’t get away with this anymore. They have to put these vehicles in shot – it’s sort of like it’s washing their brand with something a little bit cleaner.
AZEEM AZHAR: I want to go back to the big tech question. People who are running these companies are listening to this show. So what should Apple do today given the opportunities that are emerging in micromobility?
HORACE DEDIU: This is a close to my heart. I know Apple very well. I go to their events regularly, and I read almost everything there is to know about the company. I’ve been an analyst on Apple for years and years. And I tend to think I know what their interests are. But here’s what I think that Apple’s dilemma is, on one hand, they want to have a premium product positioning in general. So that I think they’re nervous about putting anything on two wheels now. Because it isn’t seen yet as a premium. Secondly, do they have a design surface on the product itself where they can make a contribution? And this is the phrasing they use, “We will only enter market when we can make a significant contribution.” And I think if you look at the product as it is today, there isn’t a big surface to work with. However, as I said, wearables are going to change that. So I believe the most exciting thing Apple could do, would be to think about how their future wearables attack the mobility space, not just with potentially the vehicle. But rather with these information systems that they’re building. And a lot of people’s been asking me, “Well, don’t you see an Apple e-bike in the future. Don’t you see something in micro for Apple?” In a way, yes. But I find it difficult to see how they would do it yet. But I think the real yield value add for Apple would be to make the wearable that becomes the helmet that everybody wants to wear, and it switches the category of helmet from something you have to wear to something you want to wear. If they do that, and again, they could end up being the world’s biggest helmet maker, which could be tens of millions of units a year.
AZEEM AZHAR: They’ve done that before. So Apple, Tim Cook, helmets for micromobility. Beautiful. Now Mark Zuckerberg, has obviously made a commitment to another technology platform, the metaverse and Facebook does need some new arena to play in. What do you think Meta should do when it comes to the taking advantage of the micromobility trend?
HORACE DEDIU: The challenge is because I think Facebook is an exactly overlapping now with Apple, with respect to their strategic goals. And that’s a big problem for both arguably. But I think Meta’s interest in metaverse is really about augmented reality, which is about wearables. And as I said, wearables are going to play a big part in your experience with the physical world outside your home. And so if you are serious about that, they should also be evaluating what does it look like for someone to experience the world on a vehicle as a rider, not as a driver, not in the cocoon, but out with their heads looking up. So they should target the same space Apple’s doing there, and duke it out, figure out who’s going to win. Because I think who wins that platform, which is the wearable space outside, is then going to drive commerce. Because every shop in the world is going to advertise through that. It’s a fight for the outside world. It that’s what it is. The frontier is moving into the physical world that gets digitized, that gets connected, that gets re-imaged, and re synthesized through our visors, which are going to be worn on our helmets. Because we’re going to be outside on our micro vehicles.
AZEEM AZHAR: Andy Jassy, running Amazon, what should he do?
HORACE DEDIU: Amazon, has made a huge investment in Rivian, as you know they just cashed out of it. They’re smart. But I think that the last mile problem, and European cities are doing urban centers with micro now delivery companies like DHL. And so they should be investing in cargo buys. So very specifically electric cargo bikes and the electric cargo bike services for delivery are absolutely going to be a bottom line driver. And Amazon’s very pragmatic. I think they’re going to see returns on this, even beyond what they’re seeing from electric trucks. And it’s a no brainer. I think Amazon’s going to be on board.
AZEEM AZHAR: Brilliant. So Andy Jassy, Amazon, it’s going to be electric cargo bikes. Any message for the boss of Alphabet?
HORACE DEDIU: Yes. And this is also for Apple as well, but it’s maps. Maps are the browser of micromobility. Why maps? Because whenever you begin a journey, the first thing you do is you either summon a vehicle, if you do use a car sharing service, or even if you drive yourself, you’re going to go to maps first, and you’re going to find the best way to get there. So whether you are using your own vehicle, whether you are using the shared service, or whether you’re going to hire some other solution to get you to A to B, everybody begins with maps. And this is interest, because already through its investment in lime, Alphabet has surfaced, shared micromobility on its maps. What they need to do is open it up so that every micro company effectively is in an auction bidding for your journey so that they make a search engine for rides. The same way they made the search engine, and the ranking, and as a result a auction for your keywords.
AZEEM AZHAR: But the challenge there, if you’re a micromobility operator, is that ultimately you’ll end up being commoditized. Because having built the search engine for the rides, Google will then offer the consumer the single payment platform. I mean, Google wants to do that. Google wants to be the discovery engine for all trips. And that includes micro and actually micro is going to skyrocket much faster than automobility’s growth. So I think that’s where they should play maps and discovery. I think that’s the main thing Google could do right now. So then let’s go to Satya Nadella, at Microsoft, is there a kind of PowerPoint, micromobility clone, or is there something more interesting they can do?
HORACE DEDIU: I respect Satya very much and I love Microsoft these days. But they’ve found a nice on, is cloud in services in general. And I think that’s a huge, huge thing. And in many ways, even in automobility or micromobility, I think Microsoft is looking at the space as being where they provide foundations. I think they won’t necessarily provide a siloed solution. But rather that they’ll be plumbing. It doesn’t sound sexy, but it’s actually super important in the infrastructure that’s needed out there for every player that is building solution. So I don’t see them playing a customer facing mobility solution at this point. But I don’t think they do either.
AZEEM AZHAR: So none of the companies that we’ve discussed so far actually make any vehicles at all. There is one big tech company that makes vehicles, of course, which is Tesla. So what would your advice be to Tesla and Elon Musk on looking at micromobility? Is it just that actually, you what EVs their vehicles, their businesses growing, so well, stick to that.
HORACE DEDIU: One of my chief complaints with Tesla is that, they’ve been running after automobility, assuming that that’s the solution, and it isn’t. Obviously, if you want to be in the vehicle business, there’s no question you should be in the micro vehicle business. And they’ve made some forays in that direction. But here’s a challenge for them, which is the innovators dilemma. They see much more gold up than they see looking down. They see much more gold in going to pickup truck, high speed hyper cars into semi trucks, into rockets, and who knows what else? But the idea is that the up is better than the down. But broadly speaking, look at micro it’s serious. It’s a dilemma for Tesla to do so.
AZEEM AZHAR: One of the things that strikes me of course, with micromobility is that it paints this really interesting, beautiful picture that you speak about so passionately. Yet, it also feels like it’s an evolutionary incremental ecosystem that takes a little bit of time with every cycle. And yet, a lot of attention goes on sort of moonshot solutions like Hyperloop or flying taxis, even when things bike lanes are just very, very effective. Is that frustrating for you? How do we change that narrative?
HORACE DEDIU: Yeah, I had a talk where I put up all these headlines from 2016, I think. So they were four years old at the time, and they were all like, “Okay, we’re going to be on these moonshots, and we’re going to have autonomy. We’re going to have tunnels. And all these hyper everything.” And it was presented in 2020, oh, 2021, and I said, “They promised us flying cars and we ended up with bike lanes.” And I said, “Do you know what? That’s a hell of a lot better. Bike lanes, I’ll take them any day over any of those other things.” It turns out that’s really powerful technology. And this is what I learned from Clay Christensen: humility is the best business model. It’s not only just a nice to have. It’s not just a virtue. It’s not just the queen of all virtues. It is the driving force of all great change. You have to understand this. Do not assume that bigger’s always better. The real change comes from the bottom. Real change comes from below. And that’s the ethos of disruption theory. It’s always about the low end. But here it’s so, so obvious that it just makes me smile. Because it is so ironic. If you look at the world and how it is actually changing, how it has always changed, it’s always been this way. And once it’s established, by the way, once it moves nicely under its own momentum and fuel, it will look up. It will absolutely look up. And so doing, it’ll overtake all the other dreams. As we have with phones, we ended up overtaking even the dreams of the principal computer revolution with our phones.
AZEEM AZHAR: Well, Horace Dediu, thank you so much for sharing your dreams of micromobility with us.
HORACE DEDIU: You bet.
AZEEM AZHAR: If you enjoyed today’s episode, try listening to my conversation with Hau Thai-Tang, Ford’s Chief Product Platform and Operations Officer. We talked about how a major auto player like Ford is planning for an electric future. What multimodal journeys of the future might look like and why Ford is betting big on connectivity. To become a premium subscriber of my weekly newsletter, go to exponentialview.co/listener where you’ll get a 20% discount. To stay in touch, you can follow me on Twitter in the US, I’m @azeem, A-Z-E-E-M, and elsewhere. I’m @azeem, A-Z-E-E-M. This podcast was produced by Mischa Frankl-Duval, Fred Casella, and Marija Gavrilov. Bojan Sabioncello is our sound editor.
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