Thursday, February 19, 2015

Silicon Valley is gunning for Detroit.

For the past year I've been going to a lot of these connected car conferences. This encompasses self driving cars, and bleeds even slightly into drones. I haven't written much about it because I grew up in the Valley and I take more of a wait and see approach to new market sectors. Especially in the early stage.

Over the summer I noticed an interesting theme when it came to these conferences. It was almost a feeling of nostalgia for the return of a previous time.

What I remember about The Valley is that it used to be filled with orchards. And I don't even really remember it that well. Mostly just stories from old people reminiscing about the old days and how these buildings ruined all of their pristine orchards.

What I didn't know was California used to manufacture a lot of cars here as well as ship parts to the rest of the country. We used to be a car parts exporter after World War II. I didn't really realize this until at one conference a while back - one of the speakers said the Great Mall in Fremont actually used to be an old Ford Manufacturing plant in the 1950's. I was pretty surprised because I grew up here and it wasn't something I'd ever heard before. I never knew that mall used to be an auto plant. Nummi is the only plant I've ever known about. But it seems the tech guys know this and want to make Silicon Valley a parts hub again. Only in a new modern way. By turning your car into a computer.

Since I don't know anything about this part of California History I had to do a bit of googling to confirm the info. And as it turns out California does have a long history of manufacturing auto's and auto parts. I ran across a list of all the plants that have been closed in the past almost century. Here. I also ran across another article that shows the history. Here.

"The Ford Motor Company called its Richmond plant a branch plant, and it was one of many Ford branch plants throughout the U.S. and the world. Headquartered in Detroit (and later Dearborn), Ford manufactured most of it's auto parts there, and in the early years assembled it's autos there as well. But because it was more costly to ship fully assembled automobiles than it was to ship auto parts (auto parts can be packed in railroad cars or ships more densely than can assembled autos), Ford soon established a practice of assembling its autos at plants throughout North America to supply a geographically vast market."

The other thing I've been finding interesting is that Silicon Valley feels like your car is an untapped resource. It's one of the most costly purchases you make next to your house, but they estimate that most people only utilize it about 4% of the time. Unless you are a salesman or someone who drives a bunch. So you are basically buying a car to mostly park it. They are feverishly working on ways to fix that and tap that resource. Which is why the sharing economy is such a big theme right now.

I see the sharing economy as transitory. When you are 20, you don't mind lending your car or stuff to friends or other people who might screw it up. By the time you hit 30 you start to want to have nice things. I also see it as a side effect of the recession. I think some of it will live like Uber and ride sharing, but the other stuff I think will go away if the economy ever recovers. I could be wrong.

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