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With many people sheltering at home, demand for grocery delivery has skyrocketed — so much so that companies are scrambling to hire workers and keep them safe. Which puts Dave Ferguson in a unique position.
Nuro, the self-driving and robotics startup he co-founded, is poised to roll out a fully autonomous grocery delivery service in Houston in partnership with Kroger grocery stores. While the Silicon Valley company has competitors in the space, last month it secured the first federal exemption to test its vehicle, called R2. The compact, sensor-equipped electric pod will have no backup driver — in fact, it has no room for either a driver or passengers, just space for cargo.
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Last year, Nuro tested autonomous delivery in Scottsdale, Arizona, with its first-generation R1 vehicle, and for the past year has been delivering groceries with Kroger in Houston using its Prius self-driving fleet, a service available in six ZIP codes. When the coronavirus crisis hit, the company, which received a $940 million investment from SoftBank last year, was weeks away from launching the R2. Now, Nuro is aiming to hasten that timeline while trying to keep its 500 workers healthy.
In a recent conversation with Protocol, Ferguson — who along with his co-founder, Jiajun Zhu, left Google's self-driving division in 2016, before it became Waymo — talked about his vision for the company, the future of robotics and automation, and how grocery delivery might fare after we are out of pandemic mode and can begin coming within 6 feet of each other again.
This interview has been lightly edited for length and clarity.
How is the coronavirus crisis affecting your business? How are you adjusting?
I think like most companies right now, we're trying to figure out a path through this where we're prioritizing the safety of our team and the community. Almost all the team is now working from home. We still have some of our operations team on the ground, performing limited delivery in Houston through our Kroger partnership. We've seen increased demand and frankly a need to get core essentials delivered. We're trying to help as much as we can.
This is a massive challenge for the country. It's also going to be a fairly long-term problem. We're trying to make sure that as a company we're part of the solution. We're trying to get our second-generation vehicle out and making a positive contribution as quickly as possible. And so we do have a very small team that is actively trying to go through the final stages of testing. One of the things that we're very excited about is we can provide true contactless delivery with that vehicle.
Has the crisis sped up your timeline?
We've been contacted by some government entities about what we can do to help. So in the last couple of weeks we've been thinking really hard and talking with a bunch of our partners about what we could do together. There's a real need for vehicles like our R2. We had a timeline where we were looking at deploying it in a matter of weeks. When the crisis hit, we tried to take stock and figure out: How do we provide a strong contribution to the community while also managing the health and safety of our team, which is of paramount importance to us?
We obviously designed our vehicles to transport goods. Mostly that's through deliveries, whether that's with Walmart, Kroger, Domino's or other partners we haven't announced yet. Because it does provide a complete customer interaction and can transport anything, we've also been looking at other uses. For instance, can we aid some of our partners in COVID-19 testing? We could help provide contactless testing. We're trying to figure out if there's a way to accelerate some of our plans, including how many vehicles we have deployed and where we're deploying them.
What are your plans for expansion?
The only active delivery service we have right now is in Houston with Kroger. Our plan was always to scale up to the full city of Houston over the next year. We're also planning to expand with Walmart and Domino's. We've also been doing tests in Sacramento and Scottsdale. A lot of this is in flux right now; we're trying to figure out what the updated plan is. Every day we're having conversations with partners. I do hope that we have some more exciting developments over the next week or so.
Really as a company, this is core to our DNA. Our mission is to accelerate the role of robotics in everyday life. It's about being able to play a positive role in this crisis — not just lip service and not just token PR stunts.
How does the service work? Who are the people involved in getting groceries to customers?
With our R2 vehicle in Houston, a Kroger store employee will be doing the pick, pack and bagging of the groceries. The same infrastructure they use for in-store grocery pickup, they also use for delivery. They'll put the groceries in a staging area. Then a vehicle will turn up, and it will notify them. A Kroger employee loads the vehicle, then the vehicle will take off. The nice thing there, it's the minimum amount of personnel touching goods. The customer then interacts with the vehicle, which has doors that open automatically. The customer can use a touch screen or phone app. With the phone app, you don't have to touch anything. You just grab your groceries. It's truly contactless.
Let's talk about why you and your co-founder decided to leave Waymo and strike out on your own, and why you decided to start with driverless deliveries.
JZ and I have been working together for nine years now. We worked together at Google for about five and a half years.
If you look back over the past 30 years, we've seen a tremendous amount of transformation in the digital world, in how we produce and consume information, everything from the internet to smartphones, laptops, computers, all the rest. But if you look at the physical world, we've seen far less innovation. Our day-to-day life, and interaction in the physical world, is not that changed relative to 50 years ago. We still drive cars that look similar. We sit around the same tables, desks, chairs. Everything is relatively manual.
What we felt very confident about was that in the next 30 years, we're going to see massive transformational change in the physical world — and we're going to see it through the advent of intelligence agents, like robots. So we wanted to play a key, positive role in helping bring about that transformation, because we also saw the potential that this wasn't all going to be positive.
When we started the company we weren't sure what our first application was going to be. We thought about a ton of different things, everything from automated manufacturing to home assistant robots, and we landed on last-mile goods transportation. It was this really compelling juxtaposition of a massive need with technical readiness, and a huge market opportunity as well.
In the U.S. alone we take 400 billion personal vehicle trips a year. Clearly that's a lot of trips, and this is one of the reasons why people are so excited about self-driving tech in general. Couldn't we make it safer and more convenient, and give that time back if we had the car drive itself? One of the nuances we saw was that 43% of those trips are for shopping or running errands. If almost 50% of trips could be replaced by vehicles running errands for us, we could not only regain an hour of leisure time a day, we could also make roads safer.
What is the proper place for robots and automation in society, especially at this time?
I don't think any of us except Bill Gates really thought deeply about the consequences of a pandemic, and how it would change the way that we think about things. But in this context, services like contactless delivery through robotics suddenly have a real tangible value that frankly probably wasn't there three months ago. Automation as a potential hedge to our existing workforce, when for whatever reason that workforce is stretched thin, is something we're going to be thinking about a lot more as a society in coming years.
One of the things that attracted us to goods transportation is that we do care a lot about what sort of impact we're having on society. When you think about automation and the future of work and what role robots play — are they taking jobs? Are they contributing or are they detracting? It becomes tricky to figure out a path that is very clearly purely beneficial.
What really attracted us about last-mile goods transportation is that we're very, very confident that this is going to be a net increase in overall jobs. We're dealing with markets that are very nascent right now. We also felt we could work with local businesses to help extend services they provide.
What does the current demand for online grocery delivery — which has had an interesting and troubled history — say about the industry's future?
The grocery industry is a roughly $850 billion market in the U.S., and today about 3% of that is online and delivered. The main reason is really cost. It's far too expensive for the average American to pay to get groceries delivered. [Nuro charges $5.95 per delivery.] However, they all want it. Studies have shown 90% of Americans want it, if we could overcome the cost hurdle. If we can make this cheap enough that the average American can afford it, it can make their lives better.
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At the end of this crisis, I fundamentally believe we're going to be at a new minimum bar in online penetration. We're not going to be at 3% anymore. People will have tried it enough during this crisis to stick with it, and I think we're also going to be living with the implications of COVID-19 for a long time. People are going to appreciate the lower-contact nature of delivery.
As a result of this pandemic, there will be an acceleration toward transitioning to more delivery groceries and goods in general. This is not me being particularly insightful. We're already seeing that with demand for Amazon, Instacart and DoorDash going through the roof. For Nuro, this is what we've always seen as the future. This has just helped provide clarity.