Blodget Disses Google Over Development of Robot-driven Cars

The world has been mesmerized over recent revelations that a small team at Google has made major progress in developing a car that drives unaided or with minimal human intervention. In fact, Google has logged over 140,000 miles in their robotically-controlled cars. It’s obviously a phenomenal achievement, tackling a hard problem that car-makers have spent enormous sums on but failed to achieve much.

Kudos to Google, right?

Not according to Henry Blodget.

He rants that Google, which earned nearly $2 billion (net) in the last three months alone shouldn’t spend $10 million a year on this project (Blodget’s estimate).


He sees no value, for maybe decades.

So he writes:

But we do have to ask:

Why is Google developing this technology?

Why is Google spending the $10+ million of shareholder money per year the project consumes (15 engineers, plus drivers, plus the cars).

Isn’t there something closer to its core business that Google could spend this money on?

Well, Mr. Blodget. I have some news for you. It was Google’s technology that made the robotic car possible, As Google said in the release that you quote:

Our automated cars use video cameras, radar sensors and a laser range finder to “see” other traffic, as well as detailed maps (which we collect using manually driven vehicles) to navigate the road ahead. This is all made possible by Google’s data centers, which can process the enormous amounts of information gathered by our cars when mapping their terrain.

Google goes on to note:

According to the World Health Organization, more than 1.2 million lives are lost every year in road traffic accidents. We believe our technology has the potential to cut that number, perhaps by as much as half. We’re also confident that self-driving cars will transform car sharing, significantly reducing car usage, as well as help create the new “highway trains of tomorrow.” These highway trains should cut energy consumption while also increasing the number of people that can be transported on our major roads. In terms of time efficiency, the U.S. Department of Transportation estimates that people spend on average 52 minutes each working day commuting. Imagine being able to spend that time more productively.

So let me think about this. Google is spending about four hours’ worth of earnings a year advancing a project that can save maybe 600,000 lives a year, and open up billions of dollar in new markets for Google. Mr. Blodget is whining that this is bad use of the shareholders’ money?

Mr. Blodget, I hope you did not short Google’s stock. I noticed that it gained 18% since September 1  (from $454.98 on September 1, 2010 to $532.77 on October 8, 2010 the most recent trading day).

Mr. Blodget warns us:

“We,” says Blodget, using the plural of majesty, “continue to worry that the company’s focus is spread too thin.”

Mr. Blodget’s solution to this supposed problem?

Larry [Page] should just found another company to make robot-cars. He can fund it himself. He can hire a CEO and management team and also take outside investors if he likes.  The company can focus one hundred percent of its energy and resources on perfecting robot cars.  And Google, meanwhile, can stay focused on its core business and other related businesses.

What a great solution. Deprive Google shareholders of the value of that technology. Distract Page from spending 100% of his time building Google. What an amazing way to add value to shareholders.

Mr. Blodget: There is a reason that you are a journalist and Mr. Page is one of the richest men in the world. He is very, very smart, works hard, honest, sees far into the future, is not afraid to tackle hard problems and has the good sense to trust his own judgment and not to listen to you.

I would put my money on Google over, Silicon Alley Insider, Inc., the parent of your company, The Business Insider,  any time.

Go ahead. Prove me wrong.


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