Jon McNeill on VC 2.0 and creating startups in house

What’s the common thread between Tesla, building startups, General Motors, venture capital and Lyft? Jon McNeill, co-founder and partner of DVx Ventures, joins TechCrunch editor Kirsten Korosec on Equity to discuss how Elon Musk’s pay package has influenced founders, when it makes sense to go light on cash and heavy on equity, and his firm’s unique approach to investing that eschews the traditional management fee structure. McNeill describes DVx as VC 2.0. The firm comes up with business ideas and builds them into a startup within the firm before it goes out to find the leadership team. To date, the firm has started and invested in 14 portfolio companies that span EVs and AI, SaaS, consumer tech and climate tech. McNeill also walks Equity through the startup creation process, managing risk and how to spot opportunities that can disrupt the market. Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes over at Simplecast. Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:11Kirsten Korosec?

  Hello and welcome back to Equity, TechCrunch's flagship podcast about the business of startups. I'm Kirsten Korisak, Transportation Editor here at TechCrunch, and this is our Wednesday episode where we hone in on a trend in the startup world and dive deep. Today, we're talking to partner and co-founder John McNeill of DVX Ventures. But John is more than just a venture capitalist. He's a serial entrepreneur, the former president of Tesla, former COO at Lyft, on the GM board, and more recently, on the cruise board. So we have quite a bit to talk about today. John, welcome to the show.

• 0:52Speaker 01

  Thank you. Nice to be here.

• 0:53Kirsten Korosec?

  All right. Well, it's already been a crazy summer in the world of transportation, which I kind of want to jump into first. I have to ask you, before we start talking about DVX, because you're a former Tesla and worked closely with Elon, I have to get your take on Elon Musk's recently approved $56 billion compensation pay package. This is what shareholders recently reapproved after a court rejected it as flawed. You were still at the company in 2018, when that package was originally proposed. I love your perspective as not just former Tesla, but as a serial entrepreneur and as a VC who has led a number of companies. Do you support

• 1:34Kirsten Korosec?

  these kind of performance-based pay schemes? Or is this really a only works for Elon type of deal?

• 1:42Speaker 01

  Great question. I think as entrepreneurs, we think about alignment with our investors, and maybe the purest form of alignment is that everybody owns the same security, and that's equity. And we think a lot about that at DVX, too, to be honest. Elon thinks about things orthogonally and uniquely, obviously. And he wanted to go all in and align his compensation with shareholders in a way that really hadn't been done before, and in a scale that hadn't been done before. And you mentioned the number. I think the alignment is a great first principle to start with, and I think that's a positive. I think the Targets that were in that particular pay package at the time, nobody believed they

• 2:25Speaker 01

  were attainable. And so there was a big number attached. But one of the things a compensation committee has to do is they've got to basically discount that back to reality. Like, what are the probabilities this happened? And so they do a lot of analysis around that. And the number came back a lot, lot lower, like, single-digit billions. And so even the comp committee's analysis didn't believe it could be done. So here we are with the benefit of hindsight that it was done. I think one of the downsides in retrospect to these kinds of packages that can be easily adjusted, but the downside is, when you take care of one founder, there are a lot of people doing the work. In Elon's case, it's even more, I think, accentuated in that Elon's at Tesla a day or two a week, which means there's

• 3:07Speaker 01

  a team there that is largely responsible for doing enormous amounts of work that is not being compensated in that way. And so, in retrospect, I think if the comp committee had a do-over, they would, I think they would want to think about the people that are doing the work seven days a week there, that probably also deserve a piece of the pie. The second downside of those kinds of comp packages is, in this case, it gives a founder 55 billion reasons not to leave. And so, folks talk about, in these particular companies, hey, why isn't there a strong number two that emerges? And the reason is, is because the talented, strong number two probably looks at that situation and says, there are 55 billion reasons why I'm not going to have autonomy in this role. And so I think that's

• 3:49Speaker 01

  something to think about, too, for comp committees. But, we do see now a whole generation of entrepreneurs who've adopted this kind of mentality of alignment. They want to be comp this way. And, probably the most common discussion we have with co-founders of our businesses, because we come up with a business idea, and then somebody comes along and says, hey, this is, this is one I'd like to lead. We have these kind of conversations with folks, and probably the most common denominator in the conversations over the past few years has been, I'm happy to go light on cash, I want to go heavy on equity. And that, I think, is a result of Elon kind of breaking the paradigm. So for that, I give him a lot of credit.

• 4:27Kirsten Korosec?

  Yeah, it's interesting, though, because when it's a publicly traded company, you know, I see some real downsides, some of which you mentioned, but also that the incentive can be to get that stock price higher. And sometimes it can be based on real work and real achievements, right? And other times, it can just be based on the fact that, in Elon's case, he has a particularly large platform. So backing up to your startup founders, do you talk about, like, these are privately held companies. This is a little different. How do you talk to them about weighing that risk of just taking in all equity? And also making sure that the folks below them are properly compensated?

• 5:12Kirsten Korosec?

  Like, how are you advising them? Are you actually telling them, maybe steer clear of that model a little bit? Or do a hybrid approach?

• 5:19Speaker 01

  I think it's more of a hybrid approach. And it's based on not only my experiences with public companies, but as you mentioned, my experiences as an entrepreneur, as a seven-time entrepreneur. And what I've learned over time is you've got to take care of your team. And by taking care of your team, that means it's maybe not a one-size-fits-all, because there are folks that are at different stations in life. And some may have a cash need that is greater than it may be in a different part of their life. And so there are some folks that can go light on cash-heavy equity. There are other folks that can't. Oftentimes, you see that with folks early in their careers. They haven't had a big win yet. They've been scrappy. They may have paid their own way through college and may have started a business, or have just been working at a large business, but haven't had a chance to really fill in their bank account. And they're going to need cash to live.

• 6:03Speaker 01

  And especially if they're starting a household or kids or educations, that sort of stuff obviously puts cash pressure and demands on them. So we, I'd like to think about with our CEOs, let's think about how we take care of the team, not just you, because we're going to have to build out a world-class team here, not just a world-class CEO, and what that compensation will need to look like in a framework for folks, both equity and cash, where people can, within boundaries, choose the path that really works for alignment of interests for them to make this thing work.

• 6:34Kirsten Korosec?

  Backing up a little bit, way back before we get to the CEO piece, DVX is actually structured quite differently, and from the beginning, than a lot of the VC firms that we're familiar with in the Valley. You've described it to me in the past as VC 2.0. But I love to know, what does that mean? Because it almost looks like what you've done is created a startup incubator. So what is it?

• 7:02Speaker 01

  We describe ourselves as a company creation platform. And it starts with the fact that a few of us that are involved have an idea disease. And we generate business ideas pretty fluidly. And so oftentimes we'll have 35 to 50 different ideas that have been generated in the hopper. We start from there, like so different than other venture studios or incubators or venture funds. For sure, we're not out hustling to get ourselves in front of the next entrepreneur with a great idea. We're starting from a different vector, which is we have an idea. And now we got to make sure it's the right idea, the best idea, et cetera. So the front end of our process looks quite different from VC 1.0, which is a lot of serendipitous meetings with entrepreneurs to get in front of the entrepreneur at the right place, right time, when they have that fantastic idea.

• 7:47Speaker 01

  We're doing something quite different, which is we are vetting ideas. We're really kind of beating the stuffing out of these ideas to make sure that they are viable. They can be large, they can be very profitable and that we've got a path to emote. And we spend a lot of time on that. In terms of the structure of the fund, that also looks different. One of the things that really struck me over the past five to seven years in venture is a lot of close friends of mine who were principals in Sand Hill Road firms were saying, hey, the game has changed and the game is now raise and deploy as fast as you can. So you can raise some more. And the fee income that we're seeing is incredibly luxurious. And I watched their risk profile shift with that because obviously there's no risk to fee income.

• 8:31Speaker 01

  On a 2 in 20 fund, you get those 2% management fees year in and year out. So if you're constantly raising larger and larger funds and adding to your assets under management, your compensation is shifting more and more towards fees and away from carry. And carry was the thing that motivated, that's the 20 part of the 2 in 20. And as I watched that, I started to ask the question that we touched on earlier, which is alignment. Like, how could you get ultimate alignment with your investors as a venture fund? And I came down to the simple principle that the best way to get alignment is to hold the same security. And so we are no fee, no carry. We're like a private Berkshire Hathaway.

• 9:12Speaker 01

  And I own shares of that entity. My investors own shares of that entity. The only way I make money out of this is if those share values go up and that we get liquidity eventually. So we're perfectly aligned. And I wish I could say I came up with that idea on my own, but it was really inspired by a conversation with Mike Spicer at Sutter Hill, who, when he described their fund structure, and I described some of the pitfalls that I was seeing in the 2 and 20 structure, he said, let me tell you about our structure and why this works for alignment. And so we took a page out of the Sutter Hill book and have gone down the no fee, no carry path. And our upside is totally aligned with our investors. And I think you're going to see more and more of this in venture, which is why we call it BC 2.0. I think the investors in

• 9:56Speaker 01

  venture, which are often called limited partners, are going to start to demand more of this kind of alignment as performance has to really outperform other asset classes just due to the time it takes to bake these startups and to get liquidity. There needs to be a return premium that exists for investors. And I think one way to do that is through alignment of these kind of structures.

• 10:17Kirsten Korosec?

  What do you think is prompting the shift? I mean, you mentioned Sutter Hill, and then, of course, your own firm, but you also said that we're going to see this more and more. Why wouldn't VCs just stay with the 1.0 model and those management fees? What's prompting the shift?

• 10:34Speaker 01

  What's prompting the shift is there are a certain class of long-term investors, the sovereign funds, large family offices, who want long-term compounding.

• 10:44Speaker 01

  And they want incentives aligned for that. They feel like the two and 20 model was invented 40 some years ago and hasn't really changed. And they were looking for innovation and as Sutter and others started innovate, there are other big firms that have stepped in to this. And so Sequoia restructured into a permanent structure over the last 18 months. So you've got big, big names like Sequoia that are also moving in this direction. And I think that's largely because some of their investors are saying, hey, we, we want to be aligned with you. We want to be long-term compounders with you and we feel like the structure optimizes for that. But there's a big hurdle in the way from a lot of funds and that is they've got institutional investors who need predictable liquidity and the two and 20 vehicle serves that purpose very well.

• 11:29Speaker 01

  If you're a retirement fund or a university fund and you need to fund professors and buildings and maintenance, you need to know that there's liquidity cycles and there are harvest periods and things like that. And the two and 20 structure serves that investor class well. And I think there's a number of VCs who majority of their investors fit that profile. And so therefore they're probably not going to move to this more aligned structure because they would have to walk away from a number of their LPs. And those are relationships that they've developed over years, if not decades. And that's a big risk.

• 12:00Kirsten Korosec?

  Right.

• 12:06Kirsten Korosec?

  I want to go back to when you started to describe it, you talked about ideas and that at your office, you might have 35 to 50 different ideas at any time. And so are these ideas that come out of committee form? Or is John walking down the sidewalk, sees something, gets an idea, brings it and it goes from there? Talk to me about that idea process and specifically, how do you, how do you vet it? Because you're taking on quite a bit of risk, right? To take it from idea to a startup. So walk me through that process.

• 12:39Speaker 01

  So it kind of comes, the ideas are formed two ways, outside in and inside out. The outside in approach is a typical approach where you take a thematic look at a space and you start to analyze that space and see where there's investment opportunities. So maybe a couple of years ago, an example that would be cloud. A couple of years ago, 18% of compute had moved to the cloud. And the question we started to ask ourselves is if 18% of computes moved to the cloud, what happens when the next big chunk of the 82% that hasn't moved to the cloud moves? What does that look like? What tools need to be created? What things will need to exist that don't exist today? And that's an outside in look. And we start with a big, big idea and try to boil it down to ingredients that we might be able to have a hand in. That's the outside in process. The inside out process is one that you described as more serendipitous. It's walking down the street.

• 13:24Speaker 01

  Or more typically for me, it's some orthogonal thought that happens in a board session. Where I'm in a board meeting and I'm starting to see an angle on a business in a different way than I've maybe thought about it before. So an example of that is a few years ago, I was in the audit committee meeting for Lululemon. And one of the things the audit committee has to do as part of the cybersecurity risk is they've got to approve the cyber insurance premium for the year. And so it's not a very exciting thing that you go through, but you go through a big presentation on, on the health of the, the cyber stack within your company. And here's why the cyber insurance costs what it costs. A few weeks later, I was sitting in on the Lyft audit committee meeting, they're approving the cyber insurance premium.

• 14:05Speaker 01

  Ironically, Lululemon and Lyft were asked to pay the same amount for cyber insurance that year. And I asked the CFO of Lyft, I said, how can this be? Like Lulu barely has an email address from a customer. At Lyft, we have driver identities, we have their passports, we have their birth certificates in some cases, we have their bank accounts. We have their credit card accounts and we are getting bad actors trying to break in several hundred times a minute. How can those two things pay the same amount? He said, John, you won't believe this, but cyber insurance is not a tech product. It's a paper product. I said, what do you mean? He said, we fill out a 25 page PDF. And it basically comes down to our S I C code and our number of employees. And I said, well, that's the way workers' comp insurance is underwritten. Cyber shouldn't be underwritten that way.

• 14:50Speaker 01

  There's no way Lulu should pay the same amount as Lyft. He said, exactly. The system's broken. So that's where the idea starts. I come back to our team. I say, can we figure out? How big is the cyber insurance market? How fast is it growing? Why is it structured this way as a paper product? What would we need to believe if we could really disrupt this market? And so we start working on that and it takes us about a year. And we come out with something that is incredibly unique. And so we launched a company in January that gets inside a security stack of a company. Most tests are done from the outside. This is inside out. It basically is like a, it's like an MRI for a company. It tells you where the danger is, where it's not. It's an underwriting model, so it prioritizes those things for the company.

• 15:31Speaker 01

  That idea has gone from idea to company in about two years. And in about three months, it's gone from zero revenue to now on its way to a million in ARR, on its way to two million in ARR, and then five million in ARR. It's growing like crazy. That started with the inside out idea process.

• 15:48Kirsten Korosec?

  Interesting. So now you have from idea to company, 14 portfolio companies that have been built from the ground up, really, and have raised funds. I believe about, I think, 40 million total raised in these portfolio companies to date. Maybe you can update me on that. But what I found really interesting is that they span all these different sectors and industries. You've got consumer tech and B2B SaaS and AI and climate tech, very diverse. What is the connecting thread here? Going back to what you described a moment ago about sort of the idea to launch process,

• 16:31Kirsten Korosec?

  how do you navigate so many different areas of expertise? There has to be like a common theme or thread, right?

• 16:39Speaker 01

  You're on to us. Yeah, there definitely is a common theme, and that is there's a very hard technical problem inside what looks like a very profitable business market. So in that cyber example, it was, okay, how do you get inside the stack and know what's there? Nobody's going to let you inside the stack is the first response you have as you're going through that idea. But that then results in a really hard technical problem to go solve. And so if you looked across all of our businesses, we've got, as you said, we've got clean tech, we've got cyber tech, we've got payment tech, fintech, we've got some consumer stuff. Inside every one of those, there's a really hard, at least one technical problem, sometimes multiple technical problems. And so we'll spend the first chunk of our work trying to see if we can solve that technical problem. And if we can, then we're going to wrap that with really good product design and really good go to market.

• 17:24Speaker 01

  But it all starts with that common thread, and that is there's something really tough here that hasn't been solved, and we're going to try to solve it.

• 17:29Kirsten Korosec?

  Do you? Dear clear of hardware or do you have some hardware startups as well?

• 17:35Speaker 01

  We have some hardware. Yeah, we're not afraid of hardware if that's part of the solution. We've got a clean tech business where Elon and I actually, we used to riff on, riff on HVAC quite a bit when we were traveling. Because when you, at a really high level, when you look at the way the world's energy spend, it's kind of in a pie of equal thirds. So a third is in transportation. That's where Tesla lives. A third is in industry and a third is in heating and lighting and cooling buildings. And most of that last third is in heating and cooling. And Elon's been kind of obsessed with finding a new residential HVAC answer. And I was more obsessed with the commercial side of the business because there's so much real estate footprint there. And so we started to explore that and said, what if, we usually start with a what if statement.

• 18:18Speaker 01

  So the what if statement here was, what if we could save half of the building's energy cost? Find out a way to do that. It turns out that as we kind of pulled the string on this idea, we found out that 90% of the real estate footprint in the US is 50,000 or square foot or less buildings that are greater than 20 years old, which means they have multiple HVAC systems sitting in them. It's a bunch of different stacks of stuff on the roof. So that's why when you go to these buildings, you see like different brands of thermostats on the walls. And so we started to ask ourselves, okay, there's a tough technical problem here. Could we rewrite the firmware on those thermostats? Could we use an appliance to talk to the HVAC system and make it a lot smarter and better? That's a really tough technical problem. We worked on that for, for the course of two years.

• 19:02Speaker 01

  Watched the company. It's called Cogitions Controls. It's led by this wonderful CEO Natalie Elliott. And she is tackling that problem, but there's a hardware element and we're not afraid of hardware at all. If it's going to solve a big problem, she's now approaching a thousand different walls with this product and is saving 40% of the building's energy costs. So it's right on our what if statement, right out of the gate, which is what we hope to do. We want to really change the world in a big, big market and that's what this is going to do.

• 19:25Kirsten Korosec?

  The technical aspect of all of these different companies is so fascinating to me because you really have to become an expert in so many different areas. So are you bringing in different people to

• 19:37Speaker 01

  For sure.

• 19:38Kirsten Korosec?

  you know, vet ideas?

• 19:39Speaker 01

  Yeah.

• 19:40Kirsten Korosec?

  Is this group constantly changing?

• 19:42Speaker 01

  It is. So we bring, when we have an idea that goes through the initial part of our process, which is basically it's proving that we've got a big market, there are larger profit pools here and that we think we've got an angle to win. Then we bring an advisory board in, people that have domain expertise that's way deeper than ours. And that advisory board then helps us with the next step, which is, okay, let's design a product or that's solved the technical problem to go after this opportunity. So the short answer to your question is, yeah, we don't have domain expertise in everything. We're careful to choose areas where we've got some exposure, but we want people around the problem that have a lot more exposure than us. A lot of times have just a stellar track record of solving problems in this particular domain. And so that's a part of our process.

• 20:24Kirsten Korosec?

  So is this where you find your CEOs? Because then again, this is the next, you know, difficult hurdle, which is a finding a person who is technically and has a business experience to do it. But also a lot of founders, and we ascribe this, especially in the valley and other areas, is the passion for the thing that they're obsessed with, right?

• 20:44Speaker 01

  Yeah.

• 20:44Kirsten Korosec?

  So how do you find that person when you are the ones who came up with the idea? What does that process look like?

• 20:52Speaker 01

  One of the most common things I heard in CEO groups that I've been a part of my whole career is, I'm ready to do my next one, I just don't have an idea. And there are a number of like really talented people walking around. And I would say that described me when Inland and I crossed paths. Tesla obviously wasn't my idea. Electric cars were not my passion, but I adopted it as my passion and went after it full throttle. And I was really inspired by Reid Hoffman's story about Jeff Weiner and how Reid had started LinkedIn. And the whole founding team had really developed an incredible product. But four or five years later, when Jeff Weiner joined, he transformed that company. And Reed called him a co-founder, even though he showed up four or five years later.

• 21:36Speaker 01

  I found a lot of inspiration in that story because I felt like that was the story of some of my career. But also I knew a number of people like that. And so we tend to follow that model, which is we want to go find somebody who will be transformative, but may not have the next idea sitting at the top of the stack for them. We've got 14 different ideas right now that could be attractive and they're largely de-risked because we've worked on the product, we've worked on product market fit. But oftentimes, somebody will come in and be able to scale a company quite differently. So we're looking for those kind of leaders. But this is the hardest part of what we do. It is finding incredible co-founders to lead these businesses over the long time.

• 22:13Kirsten Korosec?

  Yeah, I have to, I wonder where you find them? Is it a word of mouth process? Is it just folks in your circle? And then how do you ensure that you're sort of turning over every rock to find new and interesting people? Because I think that one of the things we see is sort of a recycling of the same folks you keep seeing, which are great, but then how do you bring in more new and interesting people into this realm of startup founder status or CEO?

• 22:46Speaker 01

  I think one of the things I really got worried about is like my circles are too limited. They're limited age-wise, demographically. We're not going to find diversity of thought or other forms of diversity in that circle. So we made a decision early on to partner with strategically partner with some search folks who had broader networks than us, more diverse networks than us geographically and all kinds of ways. And so I would say our first CEOs who've come into these companies have mostly been from that process, maybe 60% from that process, 40% from our own networks. And what that led to is it's pretty incredible. Like out of the first six company CEOs we have, four are diverse, three are female. So we've created 50% female CEOs.

• 23:30Speaker 01

  And these folks are just have been fantastic at hitting the ground running. So I think we wanted to bust the self limiter of our own networks. Clearly, that's a key part and it's a part that we use, but we wanted to expand well beyond that so that we got talent that we didn't know, that we didn't see, because you can't be everywhere and you can't see all the talent that's out there. And so to your point, we wanted to turn over rocks that we personally weren't turning over and we found that we needed to have partners that could do that with us.

• 23:57Kirsten Korosec?

  You talk about finding that technical hard pinch point. That's sort of that common thread between all of your portfolio companies.

• 24:06Speaker 01

  Yeah.

• 24:06Kirsten Korosec?

  And so I have to bring up AI because it's one of the buzziest right now, specifically generative AI. How are you handling that? Because there's so much hype and buzz around it. And there are, you know, legitimate, interesting companies popping up, but quite a bit of vaporware. How are you even thinking about AI? And are you thinking about it in terms of how it's applied? For instance, with autonomy, which is an area that you're kind of in right now as a board member of Cruise.

• 24:39Speaker 01

  For me, I think about it first as infrastructure. This feels a lot to me like the early, early days of the internet. When I first got access onto the web, it was still a university access system and you were doing a billion searches on Archie and Veronica and people were talking about packet transmission and Akamai was just getting started. All that stuff was infrastructure and people were really excited about it, but it was just infrastructure and the really interesting stuff was yet to come. It was what was going to get built on that infrastructure. And people weren't imagining things like Expedia or Airbnb, but they certainly weren't imagining things like the iPhone and then apps, et cetera. And so this feels to me like that the GPT models are infrastructure and they're advancing

• 25:22Speaker 01

  so rapidly that developing those models obviously takes incredible amount of talent and cash, but if you're only going to have a model advantage for say 30 days, there's no way you can extract enough profits to justify the kind of valuations that are out there. So I think those are going to become less interesting investments and the more interesting investments are going to be what's built on top of this. And so you mentioned one, one of the things that I'm super passionate about is autonomous driving. And it's largely for two reasons. One is there are more than 40,000 people in the US every year that have to go through the loss of a family member due to a car accident. And 95% of those accidents are avoidable because they're human error and autonomy could address that. The second is I've got a good long-term friend. His name is Dale.

• 26:05Speaker 01

  Dale is legally blind, has been for years. When I started to work at Tesla, he called me and said, when can I take my first drive by myself ever? And I said, I think we're a few years away. And that few years has turned into more than a few years, but Dale is front and center of my mind when I think about folks who don't have the ability to have transportation freedom will have the ability to have transportation freedom. These are super kind of disruptive applications that are going to be built upon generated AI and other AI tools. And I think that's where we're going to see real world change. And so we're thinking about that second layer, not the first layer, and we're looking for those second layer opportunities.

• 26:45Kirsten Korosec?

  In terms of autonomy, you said you were passionate about it and you were, you obviously are involved over at Cruise. You came to Cruise board through your, you know, appointment to the GM board in October 2023. Really, I think it was like a day or two after what has now become quite the infamous incident on October 2. And that's when a Cruise robot taxi hit a pedestrian that had first been hit by a human driven vehicle, but then dragged that person. And what ended up happening is permits being pulled, Cruise really going into some internal chaos, the founder, co-founders and CEO stepping down. It felt like right before that moment that here we were, autonomy was happening, was

• 27:30Kirsten Korosec?

  happening in San Francisco. And then it just abruptly spiraled. From where you sit now, how have your feelings around autonomy and its readiness for the public changed? Was this, it just seems like there's this possibility where one incident and how a company reacts to it can actually take that technology and move it in terms of commercial applications way back. What is your viewpoint now of where autonomy sits? And has it been sort of forever pushed back due to that one incident?

• 28:04Speaker 01

  I don't know if it's been pushed back, but I think the bar has definitely been raised. It has been raised, I can speak specifically to Cruise, because as you mentioned, Cruise and Waymo, last fall, we're out on the roads in San Francisco, and autonomous robot taxi is ubiquitous. And it looked like we were right on the precipice. What needed to happen at Cruise in response to the accident was a couple of things. It was not only a technology issue that caused that accident, but it was a regulatory response right after the accident. It was maybe even a bigger issue. And we needed to do a reset at Cruise that put safety first and regulator and constituent interests way more at the top of the agenda than they had been previously.

• 28:49Speaker 01

  The good news is GM's really good at that. And Mary Barra in particular is really good at that. She led GM out of the ignition crisis, which could have been an existential crisis for GM. She reset the culture around safety. And her team that helped her through that period and transition has really helped Cruise over the last six months. And a huge amount of credit goes to them. But I think the second thing that happened is the bar has been raised. We have two very strong leaders at Cruise. One who's been dealing with the regulatory and the safety front that I mentioned, he's doing an incredible job, Craig Glidden. The second is our engineering leader, Anne Mo, has really described a reset to, not only do we need to be better than the average driver,

• 29:32Speaker 01

  we need to be better than the most attentive driver, a really good driver. And so the bar has been raised from what the public expects and what we expect of ourselves. And I think that's healthy. And so the Cruise team went to work on that in the past six months. We're now re-entering the markets. We're doing this in a very different way. And I think it's in a way that builds confidence amongst the people that are in those communities, builds confidence with the regulators, and helps to usher this technology forward. Because the technology is necessary. We don't need to have tens of thousands of people dying in traffic deaths. We need to solve this problem. And we're not the only ones trying to solve it. I was just in China two weeks ago, and China's got very formidable autonomous driving companies.

• 30:15Speaker 01

  They're out on the roads with significant numbers of cars, offering robo taxi services. There will be other countries that emerge with this. But I totally believe the US has to be a player and Cruise is going to be one of those players, and I'm excited to be a part of it.

• 30:29Kirsten Korosec?

  I would love to have a whole nother episode to talk about autonomy with you and also your impressions in China. Unfortunately, we're all out of time. One final follow up, though. With Cruise, do you expect that it's made enough progress on safety and changing the culture that we'll see the company operating commercially again within 2024?

• 30:56Speaker 01

  I think what you're seeing is we're taking, we're taking steps and rather than saying to the team, we want to be live with robo on this day, which may create compromises and misaligned incentives. We're saying, let's go through these right steps. Let's start with supervised driving and then let's work our way back to commercial robo taxi, but in a different way and in a way that is really reflective of our need to be a partner with communities and regulators and have the safety first mentality. So you'll see us marching towards that and no public pressure on dates with the team because we want the team to do this the right way. And we're in this for the long haul and this definitely has proven to be a long haul problem, not a short haul problem.

• 31:38Kirsten Korosec?

  Great. Well, thank you so much for joining us. We're about out of time, but John, where can our listeners connect with you online?

• 31:45Speaker 01

  You can find me at DVX.Ventures or you can find me on LinkedIn. Those are the quickest ways to get to me.

• 31:51Kirsten Korosec?

  Great. Well, thanks so much for joining us on the show. And to our listeners, you can always find me on pretty much every social media platform at Kirsten Corasek on X and Threads and LinkedIn. And of course Equity is on X and Threads at EquityPod. Equity will be back on Friday with our weekly news roundup, so we'll talk to you then.

• 32:16Kirsten Korosec?

  Equity is produced by Teresa Loconsolo with editing by Kel. Bryce Durbin is our illustrator and we'd like to give a big thanks to our audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thanks so much for listening and we'll talk to you next time.