In August 2023, when Waymo first launched its self-driving vehicles in San Francisco, the market shares of Uber and Lyft were 66% and 34%, respectively.
By the end of last year, these market shares had dropped to 55% and 22%, respectively, with Waymo on equal footing with Lyft. (These numbers specifically refer to rides that start and end within the boundaries of where Waymo operates and do not, for example, include rides to the airport.)
So the result was low double-digit losses in market share for both companies. This is not all that surprising given that autonomous vehicles are a novel thing and that Waymo's cars seem to be nicer than most Ubers and Lyfts. But it also shows that there maybe isn't a great deal of customer loyalty between the various platforms, that is, as long as the wait times are reasonable.
I think the more difficult questions remain: What does the ride-hailing space look like as AVs become more ubiquitous across our cities? Who is going to own what? And will individual car ownership fall?
We've spoken before about the peak load problem that Waymo faces as a result of owning its own cars. It's expensive to manage a fleet like this, especially relative to Uber's variable supply model. So one scenario remains a close partnership between Waymo and Uber, where Uber handles any above-base spikes in demand with actual humans.
But another scenario might be a hybrid approach where some of the AVs are owned by a ride-hailing company and some are owned by individuals who just contribute them to the network when they don't need them. This is what Tesla has been promising and, who knows, maybe it'll actually happen someday. Reilly Brennan recently wrote about this over here.
Personally, I would love to not own a car. It's also hard to imagine being able to make much money off a car that only goes to work during peak times, when the other robots are too busy. So I'm not convinced of this model. But I can see why Waymo is gaining market share. Privacy and a nicer cleaner vehicle are desirable features.
Cover photo by gibblesmash asdf on Unsplash
Happy new year, everyone! Yesterday we spoke about what actually happened in 2024 (and evaluated my predictions from exactly a year ago). Today, let's prognosticate about what might happen in 2025 (keeping in mind that I'm based in Toronto and so there will naturally be a bias toward this market):
Very broadly speaking, our current commercial real estate downturn started, in my opinion, around the middle of 2022. That's when sentiment started to feel different and the market was starting to respond to increasing interest rates. Over the past few years, I've been overly optimistic in terms of how soon the market would reset. But eventually I'll be right. So I'm going to call 2025 as an important turning point where we see more capitulation, more bankruptcies, and a shedding of legacy assets/deals. For the other side of the market, this will mean more new deals.
This, however, does not mean that we will see a development environment that anywhere resembles what we saw prior to 2022. On the new construction residential side (condominium and multi-family rental specifically), I think it's going to take 2-3 years for us to work through and absorb our current supply pipeline. This will be an obvious headwind for land prices. The successful projects in this environment will be located in core/prime locations, underwritten at more modest scales, and focused largely on end users.
In 2024, we saw the continued rise of more people going back to the office. Here in Toronto, the average weekday figure is approximately 73% of what it was pre-COVID (data from November 2024). This year, I think we'll see this figure get close to 90% and then likely start to level off, some five years after the first lockdowns. I think it makes sense that we'll stabilize at some number below pre-COVID levels, but I also think it'll be a number that is much higher than most people expected just a few years ago.
I am reversing my position on autonomous vehicles (relative to last year). I believe we're much further along -- specifically Waymo is -- than most people think right now. Autonomous vehicles are happening and, in 2025, I think we'll see a significant expansion of coverage across the US led by Waymo + Uber. I don't think we'll see anything earth shattering from Tesla in regards to FSD, but who knows, Elon is good at making things happen. The big test will be cities with snow. This will likely take longer.
At the time of writing this post, the price of EU carbon permits is approximately €71.98 per tonne of carbon dioxide. It's all-time high was €105.73 in February of 2023, but some/many believe that it will need to be closer to €150 by 2030 if the world hopes to reach net zero by 2050. So for this reason, I'm going to say that its price rebounds to between €90-100 this year. This is largely a guess, but I'm including it in my predictions (at least partially) because it's quantifiable and easy to score later.
Crypto and technology more broadly are going to have an awesome year in 2025. As Fred Wilson wrote on his blog yesterday, one of the things we saw in 2024 was "Silicon Valley's hostile takeover of the federal government, via an infiltration of Donald Trump's MAGA movement." The "establishment government" was seen as being antagonistic toward tech and innovation, and so the industry jumped teams. One would expect that to pay dividends this year.
More specifically, I think we're going to see a web3 consumer application that finally breaks into the mainstream. Already, I've been impressed by NFT marketplaces like Rodeo. Many people won't appreciate that it's powered by some blockchain, but that's exactly what we want. We want the underlying technology to recede into the background and for the experience/utility to come into the foreground.
And with that, I will end and leave you all with this recent tweet from Chris Dixon. It's worth clicking through and reading the entire thing.
And so this knowledge will be unfolded…
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A big thank you to everyone who continues to read this blog. We're now into year 12 of this daily writing practice (my first post was in August 2013), and I'm still feeling more inspired than ever. It truly feels like we're at the dawn of so many new and exciting things: a new real estate cycle, an unprecedented innovation environment, and the list goes on. Next up, I'm going to write specifically about what we at Globizen are focused on for this upcoming year.
Cover photo by Tyler Rooney on Unsplash
Exactly a year ago, I wrote this post talking about "what might happen in 2024." Now let's see what actually happened and how I did with my predictions.
Interest rate cuts: This was perhaps an easy one as there was already a market consensus that rates would start to come down in 2024. The Bank of Canada cut its policy interest rate by 175 bps (target of 3.25%), and the US cut its federal funds rate by 100 bps (target of 4.5%). [1 point]
Impact of higher rates: I predicted that things would get worse in 2024 before they started to get better (maybe toward the end of 2024 or perhaps in 2025). In some ways, I think I was right. But I'm not sure we've returned to a "risk-on" approach in commercial real estate, like I suggested. Toward the end of the year, my American friends were telling me that things were suddenly feeling a lot more optimistic and that more deals were being done. But I still feel like we've been kicking the can down the road here in Canada. The public markets certainly did very well, but I think the private markets are still hiding some underwater real estate investments. [0.5 point]
Balanced residential resale market: I thought that we would return to a more balanced resale market in 2024, certainly for the most-in demand cities and submarkets. Here in Toronto, it remains a buyer's market on the condominium side, but the freehold market in Central Toronto has shown signs of improvement over the last few months. Detached house values are up 4.6% year-over-year, despite listing supply also being up 29%. The resilience of core submarkets is what you would expect to see right now during this part of the cycle. (If you're interested in Toronto real estate, my friend Christopher Bibby has a great newsletter that he publishes periodically.) At the same time, I thought that the Bank of Canada would be more resistant to lowering rates compared to other central banks, and that this would be good for the Canadian dollar. I was wrong. [0 points]
Finding good real estate deals in 2024: I argued that this year would be a pivotal year for finding new opportunities. Maybe that was the case for some of you, but as I said above, I think that here in Canada we're still kicking the can down the road. So this one is hard to say. 2025 may end up being more pivotal for many real estate developers and investors. [0 points]
Declining hard costs: Like many of my other predictions, this is market specific. But this absolutely happened here in Toronto. For some trades and divisions, costs are down in the range of 25-30%. And I can tell you that over this past year I received many phone calls from construction executives that sounded something like this, "Hey, I'm about to lay off a bunch of people, so I just wanted to call and see if you might have any new projects starting up in the near future." [1 point]
Return to office: A year ago, I wrote that return to office seemed to have stalled out at around 50% utilization. But I argued that this wouldn't hold and that, of the people who work in offices, most would go back to spending > 50% of their week in it. Looking at the latest data for Toronto's CBD (from November 15, 2024), the average weekly utilization figure is now up to 73%. And the peak day figure (Wednesday) is now 84%. (Both of these are relative to pre-COVID.) This is up meaningfully compared to last year. I don't know at what point we reach an equilibrium, but for now, we seem to be still heading up and to the right. [1 point]
Augmented reality: 2023 was the year of AI. I argued that this year would be the year of augmented reality and that this would represent a further blurring of our offline and online worlds. This was, I think, coming from the fact that Apple Vision Pro was set to be released. But if this happened at all, it happened only incrementally and it certainly wasn't a mainstream phenomenon. Most people I talk to haven't even tried Apple Vision Pro, though I remain blown away by the technology. If you haven't yet tried it, do yourself a favor and book a demo at your local Apple Store. That said, I'm not going to give myself any points for this one. [0 points]
Autonomous vehicles: I was somewhat bearish on this a year ago. I said that it feels as if we're in the trough of disillusionment (within the hype cycle), even if I was optimistic long term. So this year was a pleasant surprise and I was thoroughly impressed by the progress that Waymo, in particular, made. As of June of this year, they had already logged over 22 million rider-only miles. They are the company to beat right now. [0 points]
Impact of automation: This was a weak prediction because it wasn't particularly precise. I said that our shift toward greater automation would feel more insidious than immediate (certainly in 2024). I guess this is true. Elon Musk unveiled dancing bartender robots this year, but they weren't exactly ready to take all of our jobs. Reluctantly, I'll give myself a half point. [0.5 point]
Growth of TikTok Shop: This is where I argued that we should be looking for the future of shopping. And the data certainly supports this. According to recent research from The New Consumer, over 60% of Gen Z's report using TikTok every day. And half of all monthly active users report having already made a purchase through the platform. For those that use it every day, this figure increases to 57%. I don't use TikTok very often -- if at all -- but I know it's extremely popular. I'm also not an expert on e-commerce, but I have a belief that TikTok (and the likes), augmented reality, and crypto are going to give birth to some interesting new ways of buying things. [1 point]
Return of crypto: When I wrote last year's post, the total crypto market capitalization was approximately $1.74 trillion. This was down from almost $3 trillion at the peak of the market in 2021. I argued that the "crypto winter" would end this year and that its total market cap would exceed its previous peak by the end of this year. Today, it's about $3.45 trillion. If only I bought more. But to be honest, this was a total guess. [1 point]
Total score: 6/11 (~55%). Not bad.
I like this score because it means I'm not being too consensus. What fun would that be? That said, I do think some of my predictions were a little obvious. I don't want to be just extrapolating existing data forward; I want to be thinking critically. I also try not to stray too far into topics that I'm not well versed on, like shopping on TikTok. But it's a fine line given my strong interest in tech and crypto. I'll see what I can do to tighten things up and be a little more non-consensus with my predictions this year.
Stay tuned.