Understanding EV Startups & Industry Dynamics with Larry Burns

[Transcript]

[: 00:00:08

This episode is brought to you by Lockton. Lockton redefines business insurance and people solutions with a personal touch. Their global team of 11,000 is driven by independence, not quarters, to tailor success for your business. Discover the Lockton difference where your goals become their mission. Independence it's not just how you think but how you act.

f R&D for General Motors from: 1998

Google self-driving cars from: 2010

[: 00:03:05

[: 00:03:07

And that is, why is it the traditional OEMs struggle so much with EV design and innovation? Let me give you an example of that in action. I recently interviewed Alisyn Malek. Alisyn started her career back in 2008, working on an EV for General Motors, and we still can't get the thing launched and making money properly. So why is it, Larry? With your background and the work that you've been doing with your clients, you are in a unique position to answer this question. Tell us.

[: 00:03:52

[: 00:06:35

[: 00:06:55

[: 00:09:46

[: 00:10:12

I think much of what we're talking about here today, Jan, is inevitable. Yes, battery electric vehicles are hitting the wall a little bit, but it's the fastest-growing segment in the US industry. The media tends to run or report it as negative. I see that as an encouraging sign. And I also see hydrogen and fuel cells coming in to play along with the batteries. That will get us there. So, I think electrically driven vehicles are inevitable because Einstein taught us that the best design is the simplest one that works. And these are very simple products once you get the supply chain and everything right. So, if that's an inevitability, you got to get in front of it, but you don't do that by betting the farm. You've got to do that by learning. And stick, stay the course with those learning cycles. Where you really become vulnerable in the industry is when you get behind. I'll give the example of hybrids when I was at General Motors; Toyota launched the Prius, that Prius that they brought to market had a couple learning cycles in Japan already. So, I think it was a Gen 3 Prius that they brought to California. And then, they had a couple of learning cycles before GM, Ford, and others said, "Maybe we should do something with hybrids." Jan, we were so far behind at that point in time that no matter how good the hybrid was that General Motors brought from market. We couldn't penetrate the Prius brand equity and the Prius leadership position. So, if the auto companies believe electrically driven vehicles are inevitable, they've got to get in front of that with learning. If they believe, like I do, that autonomous vehicles are inevitable, you've got to get in front of it by learning, and you can learn from your Advanced Driver Assistance Systems (ADAS); you can learn your way in that direction. But to stand there and say, "I don't think all autonomous vehicles are ever going to happen," and manage your company accordingly is just too risky if something appears inevitable. I haven't been told by any of the cutting-edge experts that I've worked with on autonomous vehicles, the real leaders on the edge of knowledge creation, I haven't been told by any of them that 'I don't think they can get this job done.' So, it's inevitable, Jan. I can't predict when. You've got to focus on 'do unto yourself before others do unto you.' And I think the US auto industry leadership has had a bit of a challenge with that. Either they're making too big of a bet. 'I'm going to turn my entire portfolio onto electric vehicles before I've learned what I needed to learn about my battery manufacturer.' Or they've been in denial too long and they can't get back in the game and catch up.

[: 00:14:53

[: 00:15:24

[: 00:17:53

And that, to me, Larry, I think that seems to me, that's what's happening. We can't let the past go, right?

[: 00:18:36

But you have to have the commitment to the future and be prepared for that. So, Rick and I sat down for lunch one day, and soon after, he named me head of R&D., And we got talking about, gosh, if we were going to invent the automobile in 1998, instead of the late 1800s, early 1900s, what would we do different? And he said, 'Larry, that's what I want you to answer. Because I just felt like we needed this new design DNA.' I said, 'Rick, we would probably base it on an electrical architecture, not mechanical, but we certainly would do something about the human driving behaviors that lead to so many fatalities.' And all of that grew a concept vehicle called Autonomy. It was shown at the 2002 North American International Auto Show. It was a skateboard. It was the first skateboard that was shown at an auto show. And it was a remarkable opportunity for a small team of people within a huge company, General Motors to express themselves on what they would do if they had a clean sheet of paper. I had a boss that let me do that, Jan. And I think that's really important for all of the leaders in this industry to carve out enough resource and give enough empowerment to let people develop these ideas.

[: 00:21:12

[: 00:22:05

[: 00:24:59

[: 00:25:28

[: 00:28:48

[: 00:29:26

[: 00:33:24

[: 00:34:23

I lived in Franklin, Michigan, so the drive was 75 minutes. And the agreement I have with my wife she would drop the kids off at the daycare in the morning when she was heading to the hair salon. Well, I had to pick them up at night, and the daycare closed at six. And so, every evening after putting in a very long day—many times starting up in Lansing at four or five in the morning to look at the product that had been built the night before—I'm screaming down I-96 with this image of my kids sitting on the curb because I didn't get there by six o'clock. Yeah, but you make that kind of a thing work, Jan. I mean, you have to. With all of that said, I would not trade my jam career at all. Yes, we went bankrupt and all of that. But man, and I learned this from Mark Rice. This was a long time ago when we had a discussion, but we were talking about what's so passionate. And he said, 'Larry, Prince has this song, Little Red Corvette. He didn't sing Little Red Laptop Computer.' And Mark was saying to me that what makes this industry great is the passion around the product that you get to make. And he was absolutely right. It's a remarkable industry in terms of its global scale and scope, in terms of the technologies that you get to work with, in terms of what the cars do, enabling the freedom of people to go where they want to when they want to. To be able to be part of that at the highest level of the largest company at the time is something I would never give up. Going bankrupt wasn't a great experience. But there was life after bankruptcy as well. You just have to bounce back and go after it.

[: 00:36:21

[: 00:36:35

I think the big, most strategically important question for communications, information, transportation, and entertainment companies is: how is all this going to come together and shape the way people live in the future? Where are the value creation sweet spots in that future? And how do I need to prepare my company to go after those opportunities?

[: 00:38:56

[: 00:39:11

[: 00:39:12

[: 00:39:15

[: 00:39:17