|Investor Call Transcript|
Bob Safian, Editor in Chief, Fast Company
Chris Urmson, Co-Founder, Chief Executive Officer, Aurora
Mark Pincus, Reinvent Technology Partners Y
Michael Thompson, Reinvent Technology Partners Y
Sterling Anderson, Co-Founder, Chief Product Officer, Aurora
Good day. Welcome to the Aurora and Reinvent Technology Partners Y Merger Investor Call.
The information discussed today is qualified in its entirety by the Form 8-K that has been filed today by Reinvent Technology Partners Y and may be accessed on the SECs website, including the exhibits thereto. In conjunction with todays discussion, please see the investor presentation furnished as a Form 8-K to follow along and carefully review the disclaimers included therein. Please note that a live Q&A session will not be conducted as part of todays presentation.
Also, statements made during this call that are not statements of historical facts constitute forward-looking statements that are subject to risks, uncertainties, and other factors that could cause our actual results to differ from historical results and/or from our forecast, including those set forth in Reinvent Technology Partners Ys Form 8-K filed today and the exhibits thereto.
For more information, please refer to the risks, uncertainties, and other factors discussed in Reinvent Technology Partners Ys SEC filings. All cautionary statements that we make during this call are applicable to any forward-looking statements we make whenever they appear. You should carefully consider the risks, uncertainties, and other factors discussed in Reinvent Technology Partners Ys SEC filings. Do not place undue reliance on forward-looking statements, which we assume no responsibility for updating.
Participating in todays call are Chris Urmson, Co-Founder and CEO of Aurora; Sterling Anderson, Co-Founder and Chief Product Officer of Aurora; and Mark Pincus and Michael Thompson of Reinvent Technology Partners Y.
With that, Ill turn it over to Bob Safian to lead todays discussion.
Thank you. My name is Bob Safian. Im the former Editor in Chief of Fast Company, and Im here to interview and have a dialogue with Aurora Co-Founders Chris Urmson and Sterling Anderson, alongside Mark Pincus and Michael Thompson, of Reinvent Technology Partners Y, or RTPY. Today, Aurora and RTPY announced plans to merge. Through this route, Aurora will be going public listing on the Nasdaq. Congratulations to all of you for reaching this milestone, this moment. Very exciting, and worth noting.
Id love to jump into this conversation and start with you, Chris, actually, to talk a little bit about what is important about this stage. Aurora has been around for only four years, so this is a rapid move to a public listing for a lot of start ups. Why make this step at this stage, and what will it enable, allow, for Aurora to do from here?
Yes, this is a really exciting day for us. Weve been working on the mission of the Company, to deliver the benefits of self-driving technology safely, quickly, and broadly for the last 4.5 years, and really, this transaction allows us to forward that mission. Ultimately, we expect to be able to bring the product to market, and it brings along these incredible partners for us, these strategic investors, that believe in the mission and vision of the Company and help us move that forward.
Now, I want to ask this question of Mark and Michael because you guys have lots of options at Reinvent Technology as to who you might partner with. What made Aurora the partner you wanted to align with? What was special about this opportunity, this organization?
This is Mark. Ill just jump in first, and Michael can add to this. First of all, weve known Aurora virtually since its founding, where our partner Reid Hoffman has been a founding investor and board member, and Reinvent was fortunate enough to be a private investor along the way. Weve had the opportunity to watch Chris and team build out this incredible Company and opportunity.
Now, from a public market standpoint, we think that Aurora will be a truly unique opportunity for public market investors to bet on the future of self-driving against all categories in transportation from trucking to passenger to delivery.
One benefit of the SPAC process that weve all gone through is that this deal has already been vetted, priced, and backed by blue chip leading investors like Baillie Gifford, T. Rowe Price, and Fidelity. With this infusion of around $2 billion in capital, Aurora will be the only self-driving company funded through commercialization of the trucking opportunity and positioned to leverage this same solution for the even bigger passenger and delivery market opportunity.
Maybe Ill add a couple of things to what Mark said. This is Michael. When were evaluating venture capital at scale investments, we think of a few core principles.
Number one, is it a sufficiently large prize? In this case, with trucking, ride sharing, and delivery, youre talking trillions of dollars of value in the U.S. alone.
Then we think about, number two, what are the unit economics and potential for network effects look like at scale? We view this business model as like a Twilio (phon) on steroids. Its a uses-based model, its scale is going to have very high margins, and its a sufficiently difficult problem that we dont think theres going to be a lot of companies that will be able to solve it. We think youre going to see something that looks like winner take most economics in most of the markets where theyre going to be operating.
Most importantly, number three, whats the quality of the team? As Mark was saying, weve known Chris and Sterling, and the other key executives for many years, and as part of this process, weve had the privilege over the past few months to get to know the rest of the team very well. Not just the brilliant engineers and PhDs that work at Aurora, but also people, for example, within corporate development, people within government relations, and our assessment has been very clear that this is a world-class organization from top to bottom.
Bob, let me add one more point that really attracted us to this deal. The fact that with this $2 billion in new capital, Aurora will be funded all the way through commercializing the trucking opportunity, and yet still positioned to leverage this same technology to go after the broader passenger and delivery market opportunities, really makes it a truly unique opportunity in the public market.
Yes, there are a variety of players who are approaching the self-driving market opportunity.
Chris, I want to ask you, can you encapsulate for us what differentiates Aurora? What makes its road to scaled impact more clear, has an advantage. What differentiates you?
I think thats obviously a bit of the story weve been telling for the last little while, but it points down to four parts. One is the people, the second would be the technology, the third would be the partnerships that we have, the incredible partnerships we have, and then the fourth would be the go-to-market.
On the people, were one of the few companies that actually has the scale to solve this problem. We think thats really important. This is not a small problem, this is fundaone of the engineering challenges of our lifetime, and just couldnt be prouder of the quality of people we have and the depth of experience they bring.
That experience has allowed us to invest in technologies that are maybe not obvious for those tackling this for the first time, that are really about not just get to the first demo, but actually have a scalable, commercializable product. These are things like the places where were invested in lidar, the way we think about mapping, some of the approaches weve taken to how we blend machine learning and kind of classically engineered systems. We think thats a long-term advantage for us.
On the partnership front, we are just fortunate to have incredible partners. Were partnered with PACCAR trucks and Volvo trucks who together make up about 50% of the trucks produced in the U.S. market. Were partnered with Toyota, the number one global auto manufacturer, and then were partnered with Uber, the number one ride hailing platform around the world. That allows us to lean into one of our core values of focus, and actually build the core product technology of the driver, and then work with these partners to grow and scale their businesses, and thus, scale ours as well.
Then finally, the path to market that we have, where were entering the trucking market first because we have these unique technologies, because we have these tremendous partnerships, and we think we can build a heck of a business there, but were not cheating personal mobility because the technology were building, were engineering it to be used in both applications. That makes us a unique company, certainly, a unique publicly traded company, to tackle both of these great opportunities and have the huge social impact, but ultimately, create an immense amount of value for our shareholders on the way as we (audio interference).
I want to drill into what you said there, Chris, just a little bit more, if I may, because it sounds like theres technologies, theres this path to market and theres partnerships that, in some ways, link those two together.
Sterling, can you explain a little bit about how you approach the technology? You havent focused on flashy demos the way some others have. How do you measure progress in this technology, and how should the investors think about what progress is for the self-driving market?
Sure, yes. We think about what were building as, effectively, the 2.0 approach to self-driving. When we say 2.0, were referring to not only the technology, what were building, but also how were building it, how were partnering, and how were bringing it to market.
When it comes to that development, this has implications across both how we architect it to begin, specifically with a common driver platform that is capable of safely operating everything from a large Class A truck, all the way down to a small passenger vehicle. This is really important because this common platform enables the leveraging of a common set of developments that are required to better understand the world, and operate safely within it across several markets, use cases, application (inaudible) and vehicles classes.
In terms of our development, we have been focused on not the initial demonstration of what it means to drive around the block. Weve done that. In past lives, many of us here at Aurora have worked at a number of companies who have done the baby steps and first-generation approaches, developed this. Our model was instead that of, lets bring together the 2.0 approach, how we would develop this system if we were developing it from a clean sheet, and with the benefit of that hindsight and that experience.
That then has implications for how we developed our hardware, our software, our data services, everything from our industry leading sensor suite, many of the key elements of which have been developed internally here at Aurora, all the way to our virtual development engine, which allows us the ability to spool up the equivalent of 50,000 trucks at a moments notice to test our software before the client (phon).
As Im listening to you, Sterling, its clear you guys dont like small problems. You like big problems that require big challenges. As youre talking through the technologies, theyre daunting, theyre exciting. At the same time, there are other challenges, obstacles, opportunities to get the self-driving business to scale, ecosystems, habits, business structures.
Chris, how do you think about bringing a tech like this to market with all of those elements in play?
I think at the heart of it is really partnership and teamwork. Internally, weve built a culture where people respect one another, where we challenge each other about how do we make the product and the business better, but fundamentally, theres respect. We famously have this no-jerks corporate value. We want good people that are excited about the mission.
Externally, its really about partnership. Its about partnership whether its somebodys working with us on a technology, or working with us to build our business. Its partnership with regulators and policy makers, helping them understand the incredible benefits that this technology will bring to society, making our roads safer, making them more accessible, making it less expensive and more efficient, while also having an honest conversation with them about the challenges and risks, so that they can be prepared for that and represent the constituents in the nation and as this technology comes to market.
Theres a future vision about what the transportation and mobility environment is going to be thats embedded in your ideas for Aurora, and thats both something that youre creating through the technology, but also, youre gauging to help people and organizations recognize how its going to change their lives, how we have to change our habits and our approaches?
Thats right, and as we think about things like freight (phon), where our first product will come to market, this is the backbone of the American economy. Its so important that we reinforce this (inaudible). Today, that backbone doesnt have enough drivers to actually serve the needs.
As weve talked to partners and customers in that space, its clear that we can address a fundamental problem that today we have 60,000 too few people that are wiling to go drive trucks. By the end of the decade, were going to be (audio interference) drivers short. The technology were delivering with the Aurora driver will actually go in and fill that need and work next to the folks that are driving trucks today. We think that thats going to be an important part of keeping the economy charging forward, and doing our part in that.
Mark, I think you alluded to this earlier, but the part of your calculation and your support of Aurora is about accessing both trucking and passenger mobility together thats sort of this broad exposure and opportunity across both is differentiated here. Can you explain that a little bit more?
Sure. Theres companies in the self-driving market that are focused specifically on narrower solutions that are just addressing the trucking opportunity, and then there are a few large players who are focused on the general problem of self-driving across any type of mobility solution.
When we look at Aurora, we think its amazing that theyre going to be the first to commercialize the trucking opportunity at scale, but then leverage this same technology solution, the Aurora Driver is built to then work across all passenger opportunities, and ride hailing, and delivery. When we look at the ambition of the team and the technology combined with their pragmatic, strategic approach, we think this will be a truly unique opportunity for public market investors to basically make a venture at scale investment here where they get to bet on the broader self-driving opportunity across all market.
If Im hearing you right, the breadth of the opportunity, or the breadth of the bet in a certain way is youre not overreaching because theres a common platform across this? In other words, youre leveraging one for the other?
Thats right, yes.
Yes, sosorry, Ill answer, and Chris and Sterling can give much more specific technical and product answers, but from a market standpoint, its exciting that the Company is at the forefront of the innovation curve, both for the near-term opportunity where its a more constrained problem set to solve this for, first, long-haul trucking, but then leverage that same lidar and complete solution, lidar software, everything, integrated solution, to apply that same product and technology to the broader passenger and delivery market. It gives them, it accelerates the Companys movement to address the broader market.
Just to add a little detail around that, Bob, the hardware and the software and the data services are substantially common across trucking (inaudible) cars like commercial vehicles for delivery use case. This was an intentional decision we made at the outset of the
When we originally architected our system, it was specifically to enable this commonality such that the most difficult parts of the self-driving problem, which tend to include perception of the world around you, forecasting of the future, of the intent and future actions of other actors, and the appropriate selection of a decision to make in the midst of them were leveraged across all of the use cases.
I think weve seen tremendous benefits already from this. In the early years at Aurora, we deployed our testing fleets almost exclusively on passenger vehicles in urban settings where the learnings were rapid, specifically as you encounter complex environments like downtown San Francisco, downtown Pittsburgh, Palo Alto, other areas.
When we made the leap to trucks as the natural extension of that platform that wed architected for doing so, we immediately saw that our trucks were benefitting from an inheriting many of these advances that had been made for years on our passenger vehicle fleet, and we expect that continued leveraging of the developments, the learnings, the advancements that are made in any of these application domains to be inherited by all others.
Then that way, we expect that that scale that were able to drive for our truck (inaudible) car, light commercial vehicle fleets will accrue to the benefit of all markets, all vehicles, by a virtue of this common driver, whose experience grows irrespective of which platform its deployed in, or which industry its operating.
The vision you see for where this ends up is massive, right? Economically as well as in our societalour habits and our ways of operating.
Its an incredible privilege. How many problems are there that you get to work on in life where you get to solve something that is technically very interesting and complex and stretches the mind where it has a profound social benefit, economic benefit to society, and then has the opportunity to create immense amount of shareholder value, all while doing that with great people. I wake up every morning and think about that, and its just an incredible place to be.
I have one last question I was to ask you, Chris. Youve been called the father of self-driving. Aurora as a public company is a coming-of-age moment, in a certain way. How far along is your child, if youre the father? What will the next phase of its development look like?
For us now, the last few years have really been about investing in that foundational technology, making sure we understand this, and we understand how to deliver a scalable, commercializable product. The next couple of years are really about heads down, lets take that amazing technology, that amazing group of people that we have, focus it, harden it, and get it out in the market and actually doing something useful for the world.
Through that, we will see those social benefits and societal benefits weve been talking about, and well create immense amount of value for our shareholders, is the plan. Were excited for it, and were really proud to have the opportunity to bring more people along on this journey with us as we enter the public markets.
Well, congratulations, again, to all of you for reaching this milestone, and thanks for sharing and answering my questions, and good luck to you.
Cautionary Statement Regarding Forward-Looking Statements
This document contains certain forward-looking statements within the meaning of the federal securities laws with respect to the proposed transaction between Reinvent and Aurora. These forward-looking statements generally are identified by the words believe, project, expect, anticipate, estimate, intend, strategy, future, opportunity, plan, may, should, will, would, will be, continue, likely, and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including but not limited to: (i) the risk
that the proposed transaction may not be completed in a timely manner or at all, which may adversely affect the price of Reinvents securities, (ii) the risk that the proposed transaction may not be completed by Reinvents business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by Reinvent, (iii) the failure to satisfy the conditions to the consummation of the proposed transaction, including the adoption of the Agreement and Plan of Merger, dated as of July 14, 2021 (the Merger Agreement), by and among Reinvent, Aurora and Reinvent Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of Reinvent, by the shareholders of Reinvent, the satisfaction of the minimum cash condition following redemptions by Reinvents public shareholders and the receipt of certain governmental and regulatory approvals, (iv) the inability to complete the PIPE investment in connection with the proposed transaction, (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, (vi) the effect of the announcement or pendency of the proposed transaction on Auroras business relationships, operating results and business generally, (vii) risks that the proposed transaction disrupts current plans and operations of Aurora and potential difficulties in Aurora employee retention as a result of the proposed transaction, (viii) the outcome of any legal proceedings or other disputes that may be instituted against Aurora or against Reinvent related to the Merger Agreement or the proposed transaction or otherwise, (ix) the ability to maintain the listing of Reinvents securities on a national securities exchange, (x) the price of Reinvents securities may be volatile due to a variety of factors, including changes in the competitive and highly regulated industries in which Reinvent plans to operate or Aurora operates, variations in operating performance across competitors, changes in laws and regulations affecting Reinvents or Auroras business and changes in the combined capital structure, (xi) the ability to implement business plans, forecasts, and other expectations after the completion of the proposed transaction, and identify and realize additional opportunities, and (xii) the risk of downturns and a changing regulatory landscape in the highly competitive self-driving industry. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the Risk Factors section of Reinvents registration statement on Form S-1 (File No. 333-253075), its Quarterly Report on Form 10-Q for the period ended March 31, 2021, the registration statement on Form S-4 discussed below and other documents filed by Reinvent from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Reinvent and Aurora assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Neither Reinvent nor Aurora gives any assurance that either Reinvent or Aurora or the combined company will achieve its expectations.
Additional Information and Where to Find It
This document relates to a proposed transaction between Reinvent and Aurora. This document is not a proxy, consent or authorization with respect to any securities or in respect of the proposed transaction and does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Reinvent intends to file a registration statement on Form S-4 with the SEC, which will include a preliminary prospectus and proxy statement of Reinvent, referred to as a proxy statement/prospectus. A final proxy statement/prospectus will be sent to all Reinvent shareholders. Reinvent also will file other documents regarding the proposed transaction with the SEC. Before making any voting or investment decision, investors and security holders of Reinvent are urged to read the registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC in connection with the proposed transaction because they will contain important information about the proposed transaction.
Investors and security holders will be able to obtain free copies of the registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC by Reinvent through the website maintained by the SEC at www.sec.gov.
The documents filed by Reinvent with the SEC also may be obtained free of charge at Reinvents website at:
or upon written request to 215 Park Avenue, Floor 11 New York, NY.
Participants in Solicitation
Reinvent and Aurora and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Reinvents shareholders in connection with the proposed transaction. A list of the names of the directors and executive officers of Reinvent and Aurora and information regarding their interests in the business combination will be contained in the proxy statement/ prospectus when available. You may obtain free copies of these documents as described in the preceding paragraph.