CHAPTER 1
Electrician, Gunsmith, Physicist
Automobile Pioneers Then and Now
Be a realist and demand the impossible!
—ANARCHISTS’ SLOGAN
Who were the pioneers who swept away the horse industry with their automobiles? If we take a look at the life and education of Carl Benz or Ferdinand Porsche, we immediately realize that they did not start out in the transport industry. Benz was a mechanical engineer, Porsche originally trained as a plumber and electrician, and Nicolaus Otto, father of the Otto motor, was a merchant who taught himself all the relevant knowledge he needed to tinker with his inventions. Gottfried Daimler completed his training as a gunsmith before studying mechanical engineering. August Sporkhorst was the owner of a weaving mill, and Robert Allmers was a publisher when they founded Hansa-Automobil.1 Johann Puch was a locksmith, and Wilhelm von Opel was an engineer.
Ludwig Lohner, by contrast, was one of the few who came from a family of carriage builders. Heinrich Lohner had fled from Napoleon’s troops in 1821 and moved from Alsace to Vienna, where he founded his company. Jacob Lohner & Co. manufactured horse-drawn carriages and luxury coaches and was even nominated purveyor to the Imperial Court in Vienna. In 1897, the company produced the first electric vehicle in collaboration with Ferdinand Porsche.2 Only a short time later, Lohner focused on the construction of airplanes and tramways and later on building motor scooters. In the United States, we find Studebaker, who started out as a coachbuilder and then produced cars until the 1960s (see Table 1.1). In fact, it was Fred Fish, the son-in-law of one of the five Studebaker brothers, who took that path after he became chairman of the company.
TABLE 1.1 A Selection of Automobile Pioneers and Their Training and Education
Regardless of whether we take a look at automobile pioneers from the German-speaking world or from France, England, and the United States, hardly any of them had worked in the coach and carriage or horse industries before. How is it possible that outsiders pushed out established companies and that those companies were unable to manage the transition into a new era?
Harvard professor Clayton Christensen examined this phenomenon a number of years ago. When he conducted a study of storage media across several generations and looked at the manufacturers of magnetic tape, floppy disks, and memory sticks, he noticed that among the manufacturers of the new generation of media, 50 to 80 percent were newcomers. The previously dominant manufacturers only rarely managed to continue into their respective next technological era and defend their dominant position.3 This applies to all industries in which there is a disruptive innovation that shakes the foundations of said industry, independent of the context. Kodak and Polaroid completely missed the moment when the world turned to digital cameras. The video rental chain Blockbuster obstinately remained concentrated on renting videos from stores until it was too late to challenge Netflix. As late as 1975, Eumig was the biggest producer of film projectors in the world, but all that became obsolete when video recorders were introduced into the market. In 1982, the company filed for bankruptcy, holding 100 percent of the market share in a market that had decreased to zero. In 2007, Nokia was the uncontested market leader in cell phones, dominating a third of the market, but only one year later, the company’s inventory turnover dropped sharply. Apple’s iPhone had started its triumphant advance. From 1956 to 1981, 24 companies were removed from the Forbes 500 list every year. Between 1982 and 2006, the number rose to 40 in every given year.4 Every two weeks, a company disappeared from the Standard and Poor’s (S&P) 500 Index, which meant that 75 percent of all listed companies had changed within a period of 16 years.5 Any company missing the moment or lagging behind lost. Perhaps you might want to explain it with Google’s unofficial motto: “If you are not fast, you are f**ked.”
Studebaker and Lohner were the exceptions who managed the changeover from coachbuilder to automobile manufacturer. Usually, the upheaval is not initiated in the company’s own industry but is triggered or at least accelerated by other industries around it. In 1859, the first oil well was drilled in the United States. At the 1876 World’s Fair in Philadelphia, mechanical, agricultural, and scientific achievements were presented—these in addition to the first typewriter, the bicycle, and Heinz tomato ketchup. The bicycle allowed an entire generation of mechanics to find work, many of whom would later apply their insights to the development of the automobile and the airplane. By 1900, almost a third of all patent applications submitted in the United States offered improvements to the bicycle. Without typewriters, modern companies with their mass production and their constant need for documents would be almost inconceivable.
This pattern becomes obvious again in the second automobile revolution. The indicators are there in the background; we see them in the modern pioneers and in the progress made in essential technologies. Tesla’s CEO Elon Musk is a physicist. Google’s Larry Page and Sergey Brin are computer scientists, as is Shai Agassi, who founded the battery-swapping company Better Place. The founders of Uber and Lyft, as if to make a point, did not originally work in the transport or taxi industries either. Six of the eight founders of Drive.ai hold postgraduate degrees in AI.6 Sebastian Thrun, winner of the DARPA Grand Challenge and cofounder of Google’s self-driving division, used to be a professor of AI at Stanford University. Kyle Vogt, cofounder of GM Cruise, is a roboticist, and Anthony Levandowski, whose startup 510 Systems was incorporated into the Google self-driving division, and who had a leading role in its development together with Thrun, is an industrial engineer.7 The breakthroughs in AI occurred almost simultaneously. The price of sensors fell, and their performance increased. A greater amount of memory and faster processor speed allow for the rapid processing of incoming data.
But let’s go back to David and Goliath again for a moment. Just how exactly did those alleged outsiders manage to shake solid industries, change them permanently, and oust the top dogs from the business? What was the weapon they used to overthrow their opponents? The answer may well be a new approach to (specialist) knowledge and the right mindset. Please do not get me wrong: sound expertise is important for innovation and creativity; it is one of its cornerstones. However, it can become dangerous when you no longer see the forest for the trees, when you delve in too deeply and fail to recognize solutions when they are outside your own specialized field.
For the coachbuilders, horse breeding and carriage building were the center of attention, whereas with the construction of automobiles, the focus shifted to the engine and everything connected to it. At the same time, expert knowledge of horse (transportation) became superfluous.
Although the first drivers still had to tolerate many disadvantages compared with the tried and tested transport system with four legs and two to four wheels, the experience as a whole became different. Disruptive innovation should not be equated with purely technological innovation. Although the latter was available, with all respective consequences, other factors gained at least the same level of importance. Vehicles could cover longer distances faster. The physical limitations of horses no longer played a role. Expenses for stables, feed, veterinarians, and stable hands could be cut, and the stench of the stables and the accompanying hygiene problems could be avoided as well. Admittedly, the first motors still gave off sooty smoke and were terribly loud, and there was no well-developed system of gas or service stations where pioneer drivers could get technical help in case of breakdowns. However, those negative aspects would be remedied over the years, and mobility by automobile proved to be much more advantageous than by horse carriage.
Counterarguments were made at every progressive step; this is as true today as it was then. Experts discourage the use of electric vehicles or self-driving cars and warn of their dangers. The network of charging stations is insufficient! Whose fault is it if a self-driving car is involved in an accident or kills someone? How dangerous can a battery be when it goes up in flames? How do you stop a self-driving car in which someone has planted a bomb?
The new automobile pioneers of the digital era regard problems first and foremost as purely software-related problems, however, and apply methods and principles from the software industry with which automobile experts are not familiar. Instead of waiting for perfection, they just release a beta version. Reid Hoffmann, cofounder of the social network LinkedIn and the internet payment service PayPal, comments: “If you are not embarrassed by the first version of your product, you’ve launched too late.”8 The added value is not so much derived from “bending metal” but from programming new software codes. All of this allows you to question the fundamental use of a car. What exactly is it good for?
Consider the slogans the car manufacturers have been feeding us for decades, such as “Progress through technology” and the simple “Das Auto,” which were only abandoned when the emissions scandal dominated public discussion. They sound out of touch at a time marked by traffic congestion and environmental pollution. BMW and its “Joy of driving” totally overlook the fact that far fewer people have a passion for driving than the company believes. This is probably due to an inherent selection process for new employees. After all, who is likely to apply for a position with GM/Ford/BMW/Daimler/VW/Audi? People who like to drive, naturally. So what the car manufacturers forget completely is their underlying mission, which is not to make joyful driving possible. Nor is it to find solutions to the problems of transportation or mobility. A car is meant to create connections among people, places, and things in the physical world. The car is a “connector.” I do not drive into town because I love driving but because I want to meet friends. I do not drive to work just because driving is so wonderful but because I need the interaction with my customers and colleagues in order to achieve something together.
Mobile devices can take over this task in many cases today. An iPhone is a virtual connector between people. If I have to drive the car myself, I cannot connect well with other people at that time because I have to keep my eyes on the road. It is obvious just how strong this desire for contact is if we consider how many people use their smartphones while driving, fully aware of the danger this poses for themselves and others.
Traditional automobile manufacturers are shooting themselves in the foot without even noticing. The importance of this particular sector for the local economy makes politicians eager to make concessions to this industry time and again and to create advantages for them. Lobbyists know perfectly well how to play on such readiness. Eased emission regulations, little or no punishment in cases of violations, subsidies favoring domestic manufacturers—all this under the pretense of maintaining jobs and promoting business locations. All the while people believe they are safe but are completely overlooking the tsunami that is about to arrive.9 Just like “helicopter parents” wanting to protect their young from disappointments and ending up making them dependent on their parents, local governments try preventing new companies from entering into the competition and endangering the existing industry.
Politicians worry that long-term measures might lead to short-term “punishment.” A diesel ban might lead to withdrawal of affection on the part of car manufacturers as well as enraged diesel car owners if they are kept from entering certain areas of towns, and who will therefore refuse to reelect those politicians. The truth is that this fear is rather unfounded. According to a study conducted at Columbia University, voters get used to an unpopular measure after six to nine months and forget their initial resistance.10 Instead, politicians often succumb to “vetocracy,” meaning that it is easier to prevent something than to make something happen.11 The promise of a well-paid position with one of the lobbying companies after the end of a political career helps pass a number of laws that do not have the general public’s interest at heart, when all we really wish for is people who look further than the next election or quarterly report. The Iroquois Confederacy’s Great Law of Peace considers all the effects of a measure under discussion until the seventh generation.12 In our era of quarterly figures and shareholder value, seven generations seem as far away as the dinosaurs—just in the other direction.