Uber paid $680 million for self-driving truck company Otto for the tech, not the trucks


And Uber helps Otto accelerate its path to market.

If the fact that Uber acquired a self-driving trucking company for $680 million along with an agreement that included giving the company 20 percent of its trucking profits shocked you, you’re not alone.

Uber and Otto aren’t exactly a natural fit.

While Uber has made investments in both self-driving technology and delivery services, the company has largely focused on moving around people, food and — in New York — small items. Uber has never once mentioned going into the long-haul trucking business or creating a logistics platform for truck drivers as one of its ambitions.

On paper, Otto doesn’t yet need a company like Uber. The startup just launched out of stealth mode in May and had 91 employees. It built proprietary, autonomous technology and was already testing its self-driving technology in trucks on highways in San Francisco.

But the acquisition gives each company a way to accelerate the development of autonomous driving into commercial reality. Otto’s core value is both developing self-driving technology and helping consumers realize its safety benefits — trucking was just a means to bring its software to market faster. For Otto, the opportunity to accelerate its path to market was one that it couldn’t refuse.

Otto was built by Google veterans (none of whom had backgrounds in trucking) eager to ship autonomous technology. While Google is often lauded for being one of the pioneers of self-driving technology and for being the first to test autonomous technology on public roads, the company has yet to unveil a clear path to market.

In a way, Otto was built out of a sort of PTSD of working at a technology company that never shipped. With Uber’s resources — not to mention its logistics know-how and platform — Otto could bring its safety and autonomous technology to market even faster.

“This was always about executing,” Otto co-founder Lior Ron told Recode. “There’s a real societal problem of safety on the road. How do we [safely] scale the backbone of [the U.S. economy] which is trucks? Every morning we would wake up and keep asking ourselves how can we move faster? How can we scale faster? That was always the goal. When we started discussions with Uber we realized there is a complete understanding of the need for acceleration on all aspects: On technology, on knowledge, on resources.”

“We’re not going to trade it off for independence to execute faster,” he continued. “We’re going to open a platform business independently in Uber and have the ability to make the right decisions together.”

For Uber, the impetus behind the acquisition is clear. By buying Otto, Uber bought proprietary autonomous technology that can be retrofitted into vehicles and — maybe more importantly — a new leader for all its self-driving efforts: Otto co-founder Anthony Levandowski. Not to mention another revenue stream. As an Uber property, Otto stays largely intact and will continue to focus on getting self-driving trucks on the road and building out a logistics platform. But Levandowski — the original architect of Google’s self-driving cars — will now be leading all of Uber’s self-driving efforts, which includes Otto.

“Anthony has always been passionate about self-driving technology and the future,” Ron said. “We don’t see this is as a distraction [from Otto.] We see this as a combined future. Those cars and those trucks don’t [operate] separately in silos on the road. They’re all interconnected. When you are on the road and you see a truck, you want your car to be connected to the truck and for it to have all the same safety mechanisms in place. You want both to use the same maps, the same sensor technologies … That means the technology platform is very similar and we see that as an opportunity to bring the most focused and most comprehensive solution on the market.”

With Uber pulling out of China earlier this month, it’s clear the company is freeing itself up to focus on other priorities: Optimizing UberPool, winning in India and self-driving technology. As the company focuses on pursuing an IPO in 2017, Uber needs to make good on its deep investment in self-driving technology; introducing a few self-driving cars to its fleet is a good start. But getting a hold of proprietary technology that can ostensibly turn any car into a self-driving car is even better.

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