Self-driving truck startup Otto was acquired by Uber for $680 million in August, just months after posting a video of an Otto truck barreling down a freeway without a driver. According to Backchannel, that test was conducted despite being a violation of Nevada’s self-driving vehicle rules:
When Otto performed its test drive — the one shown in the May video — it did so despite a clear warning from Nevada’s Department of Motor Vehicles (DMV) that it would be violating the state’s autonomous vehicle regulations. When the DMV realized that Otto had gone ahead anyway, one official called the drive “illegal” and even threatened to shut down the agency’s autonomous vehicle program.
Problem is, there is no real penalty for defying those regulations—and the irony is that Otto cofounder Anthony Levandowski helped create those rules in the first place when he was at Google. For Otto, it made sense to go ahead with the test, thereby preserving its competitive advantage and ensuring it was first to market.
Otto’s founders were faced with a stark choice. They could submit to the DMV and undertake the laborious process of modifying, testing, and licensing their truck. This would likely take a month or more, and could risk their first-mover advantage in driverless trucking. Or the engineers could continue with their test as planned.
They decided to go ahead with the filming, and over the weekend Otto started to emerge from stealth mode.
The move sure paid off for Otto, which was soon courted by Uber and then acquired, barely three months after releasing the video. Read more.