Ever heard of Zoox? Here at Motoring Weekly, we hadn’t, mainly because they have been flying under the autonomous vehicle radar for the last four years. Despite having Australian co-founders, like several other ex-pats, they relocated to San Francisco to follow their dream. Their web site is a typical technology one: it tells you very little about what they are up to!
If you have lived or worked in San Francisco recently, you might have seen their test cars rolling around the streets. However they are now in an interesting position and it seems like we are back in the late 1990s in a bubble with lots of cash and no product.
Zoox is apparently valued at $3B despite not having any product or service to sell and that valuation is based on a dream of what the future could be like. They have raised $800M already and have a burn rate that analysts suggest would need another $1B just to keep them going. Several big Australian investors have dumped money in, including a founder of Atlassian, an IT company that like Zoox, relocated from Australia to the US – and like Zoox is wildly overvalued with quarterly losses of over $300M!
Atlassian’s Mike Cannon-Brookes dropped $100M of the wealth he also created out of nothing and took a seat on the Zoox board. Then suddenly, the Zoox CEO, Tim Kentley-Klay was fired. As an aside, Australia has more double-barrelled surnames than the UK which is surprising for a country that believes they have no class system!
Kentley-Klay appeared to be another Elon Musk, a man who is a perfectionist and expected things to be done properly first time. A comment was made at an investor meeting that he was great at running a small technology focused business, however as the business grew, it became harder for him to manage and bottlenecks were creeping in to the smooth running of the business. He also wanted the company to remain independent whilst the board and others expected to hand over slices of the stock for more investment.
The problem is a little more complicated: Kentley-Klay is the biggest shareholder and also holds a seat on the board and is not happy about his removal as CEO. The company was his vision and his baby – and now he has to either sell out and watch from a distance or keep his nose in and fingers out of the business. I think either option will be difficult for him.
Zoox management believe that they are further down the road than Waymo, who have a parent with very deep pockets. If they cannot keep raising capital and start delivering something, then they could be part of a bigger AV market crash. There is a huge amount of cash being spent on autonomous vehicles with little to show for it and the manufacturers like Tesla who claim they can do it, are bluffing the common man.
Zoox have to sell something to show that they have a revenue stream starting – and that means possibly licensing some of their kit to a Waymo competitor. There is only so much cash that can be absorbed before the whole business is sold off to recover the investment. Perhaps the ousting of Kentley-Klay is the best thing for him, provided he sells out now.