This is a blog series based on ARK Brainstorming, a weekly discussion between our CEO, Director of Research, thematic analysts, ARK’s theme developers, thought leaders and investors. It is designed to keep you engaged in an ongoing discussion on investing in disruptive innovation.
1. Google vs. Uber
This week David Drummond from Google stepped down from Uber’s board in response to an increasing number of conflicts of interest. Shortly after this announcement, Google unveiled a carpooling service hosted by traffic and navigation app, Waze, in San Francisco. Owned by Google, Waze already has gone live with a carpooling service in Israel, where it takes a 15% cut. It will not take a cut in San Francisco for now, instead charging Bay area commuters and paying drivers 54 cents per mile, undercutting Uber and Lyft.
Next up, autonomous taxis! ARK estimates that Google could charge just 35 cents per mile for autonomous travel and still turn a profit. At that price, taking an autonomous taxi would cheaper than walking.
2. The Brave Browser
Brave Software, which provides a controversial web browser that automatically blocks ads and trackers, launched Brave Payments this week. Brave Payments allows users to allocate a monthly amount for ad-free Internet access, deploying an algorithm to dispense those funds to sites based on the user’s viewing activity. A monthly payment solves the obstacles created by micropayment models which require the reader to pay page-by-page. While Brave Payments compensates content creators directly and protects user privacy, Brave Software boasts faster performance by blocking ads which typically take up to 60% of the time necessary to load a page. While advertisers and ad-blockers are waging digital warfare, we think Brave seems to have stepped outside the box, blocking them all.
3. The Great Purge at Alphabet
During the past few months, Alphabet has been shuffling management and killing projects at a rate unseen since the company’s founding. Some notable examples:
- This week, Google killed off Project Ara, a much hyped project to build modular phones.
- Chris Urmson and several senior members of Google’s self driving car project have left.
- Bill Maris, head of Google Ventures, Alphabet’s VC division, has left.
- Tony Fadell, the CEO of Google’s Nest division has left and its software engineers have been absorbed into Google.
- Google Fiber is under renewed pressure to cut costs.
- Boston Dynamics, Google’s famed robotics company, is reportedly up for sale.
What could be causing this upheaval? Last year, the company reorganized itself into a holding company under the Alphabet name to improve the transparency and accountability of its subsidiaries. As the one-year anniversary of this reorganization approaches, the first house cleaning after holding senior executives accountable may be in force. More than a coincidence,CFO Ruth Porat joined Alphabet not long ago with a mandate to add fiscal discipline to the organization and enhance shareholder value.
We believe the scale of impact suggests the direct involvement and backing of co-founders Larry Page and Sergei Brin. Larry and Sergei hold shares with voting control of the company.
It is clear to ARK that Alphabet is no longer a moon shot, open-ended research lab. Clearly, the message is: ship product, or ship out.
4. Ride Sharing in the Health Care Space
For some 3.6 million Americans, transportation is an impediment to keeping doctors’ appointments. Transportation impediments include limited access to cars or public transportation, as well as the prohibitive cost of taxis or Ubers for many low income patients. According to Kaiser Health News, transportation is a barrier to health care access for up 51% of patients in certain jurisdictions.
The cost of these transportation issues to the U.S. health care system is significant. According to STAT news, “missed appointments and the resulting delays in care cost our health system an extra $150 billion” annually. Medicaid’s non-emergency medical transportation (“NEMT”) program, which has attempted to address the problem, has fallen victim to outdated technology which, among other issues, does not accommodate unscheduled appointments, a real problem for patients requiring emergency room service.
Several early stage public-private partnerships between ride sharing services and Medicaid agencies hold some promise in addressing these transportation issues. For example, National MedTrans Network is partnered with Lyft and MedStar Health with Uber, not only giving patients access to ride sharing through the hospital’s website but also reminding them of their appointments. Reimbursement depends on state rules, but Medicaid does cover transportationfor non-emergency medical visits in full.
At some point, we believe the decentralization and digitization of health care services could limit the potential demand for ride sharing in the health care space, as could other practical and legal considerations. For example, telemedicine and virtual clinics could continue to gain traction. More complicated cases requiring doctor or hospital visits often require wheelchair-accessible vans or cars outfitted with oxygen which, in turn could introduce questions of legal liability.
That said, ARK will continue to research the important role that ride sharing companies could play in medical transportation associated with non-emergency and chronic care visits to doctors’ offices and hospitals.
ARK’s statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.
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