A few days ago announced a partnership with Avis, the car rental company, to have them manage their growing fleet of self-driving Chrysler minivans. Waymo _Waymo, the self-driving car unit of Alphabet, has reached an agreement for to manage its fleet of autonomous vehicles. It's the…_www.bloomberg.com Alphabet Inks Deal for Avis to Manage Self-Driving Car Fleet Apple also announced (suspiciously on the same day) a deal to lease a small fleet of cars from Hertz for its autonomous vehicle testing. These deals are noteworthy because up until now (as far as I know) the autonomous driving players (Uber, OEMs, nuTonomy, etc) have managed their own relatively small fleets. Why the partnerships? Stratechery’s Ben Thompson correctly points out that car rental companies are ideally positioned to manage self-driving fleets due to their existing capabilities: A screenshot of the relevant Stratechery section is in this tweet in case you are not (yet) a subscriber. _To read this daily update you must be a subscriber (Current members login here.) The Daily Update consists of…_stratechery.com The Justin Caldbeck Affair; The Enablers; Avis, Hertz, Waymo, and Apple But, partnerships bring complexity, coordination costs, and can potentially inhibit experimentation. Alphabet has indicated a need for financial discipline within its upstart business units, but I doubt Waymo is partnering with Avis to lower their costs. As I wrote in the below piece on Uber’s potential competitive advantages in a world of autonomous vehicles, there is a feasible scenario (Scenario 1) in which all the necessary pieces of a ridesharing platform are available as-a-service. _I received the following question in response to my article on Uber’s Master Plan. I reference the model developed in…_medium.com Does Uber have any special advantages in the world of autonomous vehicles? In this world, micro ridesharing fleets could be set up and run at low capital cost, much like start-ups today are able to get off the ground using AWS. For example, an entrepreneur could purchase a number of cars at auction which are all “Waymo Ready”, meaning they have a sensor/hardware kit that meets Waymo’s minimum specifications to be able to run their autonomous software. The entrepreneur gets these cars at a great price and pays to enable the Waymo autonomous driving software. In order to get her fleet up and running she needs a few other pieces of the stack, like mapping, routing, payments, customer service (chatbots?), and fleet for servicing/fueling/cleaning/etc. management Alphabet itself will likely be able to provide many of the software components, leveraging services like Maps, Waze, and Google Assistant. What does not fit within its capabilities and culture, however, is fleet management (Google’s Alphabet, not BMW’s Alphabet, which happens to be a major fleet management player). Google What is important to recognize at the moment is a forward-looking Waymo is not just working on developing its self-driving hardware and software. It is also most certainly looking ahead to the ecosystems required for potential end state (or local equilibria) business models. I don’t think they plan to vertically integrate like Uber has. Sure, there are advantages in doing so, but that kind of vertical integration is not in Alphabet’s DNA. Rather, Waymo would like to own profitable and defensible parts of the value chain (an article for another time). Even better if that means enabling entrepreneurs to be able to cheaply experiment with different uses of autonomous driving technology. In this sense, Waymo might see itself as the AWS of the mobility space. In order to realise this, they need to prompt the development of modular as-a-service providers of parts of the value chain they aren’t interested in. Enter Avis. By engaging Avis in their current operations, they are both experimenting with how a fleet operator can work as a modular part of the value chain, and pointing to a part of the future ecosystem other players — large and small — should consider building capabilities in. When thinking about competitive strategies and end states, it’s important to consider players’ business models and capabilities. I see this move as a very deliberate attempt to stimulate development of parts of a nascent ecosystem which Waymo needs but does not want to manage. Just as I don’t expect Waymo really wants to be a hardware provider in the future despite their development efforts, I also don’t believe Waymo engaged Avis because they couldn’t handle fleet management on their own. They are thinking several steps ahead, as we all should. _The latest Tweets from Whitney D. Zimmerman (@WhitneyZim). 🇺🇸 in Munich @BMW. Enjoy 🏔 & Lederhosen, but not together…_twitter.com Whitney D. Zimmerman (@WhitneyZim) | Twitter is how hackers start their afternoons. We’re a part of the family. We are now and happy to opportunities. Hacker Noon @AMI accepting submissions discuss advertising & sponsorship To learn more, , , or simply, read our about page like/message us on Facebook tweet/DM @HackerNoon. If you enjoyed this story, we recommend reading our and . 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