This is an excerpt from ‘Corporate Venturing and the Future of Mobility, Automotive and Travel’, a new report from Global Corporate Venturing and Leif Capital, which is sponsored by BP Ventures, Denso International America, and JetBlue Technology Ventures.
I hired a car to drive from San Francisco to Monterey for GCV’s summit earlier this year. This London-based Brit enjoyed the sun, the views, singing along with the audio system, and the general Californian vibe. I enjoy driving, particularly in southern California.
By way of contrast, Meghan Sharp, the San Francisco-based managing director of BP Ventures, the venturing unit of the energy major, took an Uber to the summit and did three conference calls in the two-and-a-half-hour journey. (When I say “an Uber” here and below I don’t necessarily mean the car service of that name; I simply mean a car service enabled by a smart phone).
Like many I speak to in the venture business these days, Meghan travels so much that she’s stopped driving. “For me, the opportunity cost of driving is just too high. It doesn’t make sense to be behind the wheel when I could be working,” she explains. “I also save money by not owning a car – I’ve done the math.”
Meghan is also happy to rely on Uber to transport her 83-year-old mother to the Dallas Ft. Worth airport to visit her in San Francisco. “This type of chauffeur service is a luxury that until very recently was only available to the very rich,” she says. Although she draws the line at using Uber to transport her children to school (as some San Franciscans do), she predicts that a business model that fuses child care with Uber could work. (How about ‘Kinder-Uber’? You heard it here first).
The more you travel, the less you want to drive; the less you drive; the more work you can do and the more money you save; the readiness to trust a driver you’ve never met before and sit in an ‘impersonal’ car you’ve never sat in before: as such truths dawn, they are rapidly and thoroughly disrupting travel and the several industries that depend on it, including BP’s main business, energy.
In the interview below, Meghan explains some of the ways in which BP is using venturing to participate in this disruption and find new business models which draw on and build on BP strengths. “For example, BP has all this real estate and all these gas stations. How are you going to monetise that?” she asks. “We can explore adding electric vehicle charging facilities, for example” she answers. BP is also considering the shift to autonomous vehicles (AV), partly through investing in artificial intelligence (AI). “With AV, there’s a huge opportunity to increase safety. We have to get it right and AI is going to play a huge piece.”
BP is increasing its commitment to lower carbon and digital businesses through its Alternative Energy business and across five focus areas to $500m per year. “I don’t think there’s a bubble. I think it’s a real trend,” says Meghan.
She cites two California-based venture investments that are supporting the parent company’s strategic shift to electric and autonomous mobility.
FreeWire, a manufacturer of mobile rapid charging systems for electric vehicles, received $5m earlier this year from BP, which will trial its technology at selected retail sites in the UK and Europe. “BP has the ability to help FreeWire scale,” says Meghan. “It should be a mutually beneficial relationship.” BP’s investment was part of a $13.33 million Series A1 venture funding, which was led by Stanley Ventures, the venturing subsidiary of Stanley Black & Decker, the US power tool business.
In the summer of 2017, BP was the sole investor in the $20m Series B round of Beyond Limits, an AI and cognitive computing company, which is commercialising software from NASA, the US space agency, and the US Department of Defence (software that was used in the Mars Rover exploration). “Beyond Limits is genuinely cognitive. It’s not just deep learning,” says Meghan. “It is looking at mobility with BP and other partners.”
Meghan, what do you drive? I rarely drive. I use Uber or Lyft. And it’s changed my life, professionally and personally. My working days starts on the phone in an Uber. At BP we have a strict policy that you can’t be on the phone while driving. But there’s no way I’m going to spend an hour driving to work in the morning. I need to catch up with Europe and the East Coast, which means I’m on the phone. So, I get an Uber every day. (And by the way, this is at my own expense). On the personal side, we’ve been able to use curb-side check in at the airport, and Uber and competing services to very conveniently, safely and inexpensively transport my mother to come and see us in San Francisco. She lives in a different city and there’s no way this would be possible without the innovation in travel we’ve seen in recent years.
So, there’s a personal as well as a professional commitment to venturing in new mobility technologies? Yes. I’ve embraced the new model of transport. Or maybe it’s embraced me. Sometimes there is wifi in the cars I’m in. This is going to become increasingly the norm – the car is going to be very similar to the office environment in terms of the amenities it offers. This means that the car is going to be competing more with the plane, and many of us will choose to be driven rather than to fly. For example, to get to LA from San Francisco is an 8-hour drive. Sure, it’s longer than a two-hour flight, but if you factor in the ride to and from the airport, the security clearance and the hassle, the 8-hour car journey is increasingly attractive, particularly as we switch to autonomous vehicles, which will increase safety.
Where and when do electric vehicles feature in this picture? Most of the cars you get in today are still powered by the internal combustion engine. Yes, they are. But I was picked up by a Tesla last week and I expect to be sitting in more EVs in the very near future.
Don’t you worry that there is a lot of hype around EVs and AVs? Is there a danger we’re in a bubble? I don’t think there’s a bubble. These are real trends that are underpinned by societal demand. BP is an oil and gas major. The internal combustion engine is a big part of its history and we believe it will still be a big part of its future. However, our perspective is that the EV market is real and emerging, and we want to create a disruptive, distinctive and differentiated offer looking at supporting that market.
How? What are you prioritising? What type of venture investments are you looking for? Over the next 12 months a big focus for us will be on what we do with BP’s forecourts. BP has all this real estate and all these gas stations. How is it going to monetise that? What are the gas stations going to be in the future? BP isn’t betting that they are going to remain just gas stations. They are going to introduce more electric vehicle charging facilities at them. That’s why we’re really interested in fast charging. We are also very focused on the material technology that enables this.
Let’s hear about your most recent investment in charging technology, FreeWire Technologies.
FreeWire is a great example of the type of investment we want to make. It’s the market leader in mobile fast charging for electric vehicles. It’s going to be trialled on our forecourts. We’ll learn a lot. FreeWire will learn a lot. BP has the ability to scale FreeWire. It should be a mutually beneficial relationship. If all we can offer a venture investment is dollars, it’s not the right relationship for both parties. The strategic relationship has to go both ways.
Why should the EV owner charge his vehicle at a BP gas station? What can BP provide that you can’t get elsewhere?
It turns out that lots of people don’t have garages they can charge their vehicles in. Around 50% of people simply can’t charge at home. Charging on a BP forecourt will be a winning proposition if you can charge in about ten minutes and drive for about 300 miles. If you re-charge at home, you don’t care how long it takes to re-charge. But with recharging elsewhere, speed is a big issue. So, we’re very interested in fast-charging deals.
Turning now to autonomy, what’s your most recent investment here? We were the sole investor in Beyond Limits, a cognitive AI business whose team came out of Jet Propulsion Labs [part of NASA]. To date, most of the work we’ve done with Beyond Limits is to find what relief they can provide to our pain points in the upstream, but we know there will be applications also for the downstream. Beyond Limits is looking at mobility with BP and other partners. We will get proof of concept on its applications before going into deployment. It’s really exciting. We know that Beyond Limits is genuinely cognitive. It’s not just deep learning. With AV, there’s a huge safety issue. We have to get it right and AI is going to play a huge piece.
With EV and AV, how big a pond are you fishing in? What types of deals are you after? How early stage do you go? We’re happy to do all stages including very early. BP is making a lot more capital available for advanced mobility opportunities and other core focus areas so we are not constrained. We recently funded and sponsored a smart mobility competition for entrepreneurs at the NYU Tandon School of Engineering as well as partnering with TechX, an oil and gas incubator in the UK. But we’re also interested in technologies that are closer to commercialisation as well as in growth capital opportunities.
Other than fast charging, what else are you prioritising in mobility? We’re taking a very close look across the value chains and how it all fits together. We’re keen to see venture opportunities that disrupt the value chain at any point. We are continuing to explore opportunities in smart and advanced mobility. As BP’s recent Energy Outlook found, the interaction of fully-autonomous cars with shared mobility has the potential to substantially boost the intensity with which electric cars are driven. BP has a new business unit, the Advanced Mobility Unit, which is focused on exploring various mobility options, and which will help inform our venturing. This is mission critical work, which can have a huge impact on not only BP’s overall business, but wider society as well.