The Rise of Autonomous Vehicles and What It Means for Our Interstate Highways

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As automakers and technology companies begin shipping and operating autonomous vehicles, legislators, regulators, and transportation planners need to examine and consider how autonomous vehicles and other innovations such as car-sharing and ride-sharing can be integrated in large-scale transportation planning.

We published a report last year that proposed a vision for converting I-5 into an autonomous vehicle corridor at some point in the future. This year, we updated that report based on new market conditions to be more specific and more aggressive as the roll out for autonomous vehicles has sped up beyond our expectations.

Travel between Vancouver and Seattle can be long, tedious, and dangerous, but autonomous vehicles offer a solution to decrease traffic accidents (and resulting congestion), decrease travel times, and help travelers recover valuable productive time. These vehicles will likely to be part of ride-sharing fleets and other travel services that will benefit the entire population and lower the cost of transportation for everyone.

In our updated 2017 report we propose to convert I-5 between Vancouver and Seattle into an autonomous vehicle corridor by 2040. We suggest a phased in approach that begins with allowing autonomous vehicles to share the HOV lanes immediately and progresses to devoting two lanes to autonomous vehicles (which will create space for three autonomous vehicle lanes). Finally, by 2040, we believe all lanes of I-5 will be dedicated to autonomous vehicles during peak travel times.

By actively embracing and planning for a future with autonomous vehicles, Vancouver and Seattle can be an innovation leaders to cities and regions around the world, serving as an example for how to proactively and responsible incorporate this important cultural and technological change into their regional city and transportation planning.

Madrona’s 2017 Investment Themes

Every year in March, Madrona wraps up what happened in 2016 and we sit down with our investors to talk about our business – the business of finding and growing the next big Seattle companies. First and foremost, our strategy is to back the best entrepreneurs in the Pacific NW attacking the biggest markets. But we also overlay this with key themes and trends in the broader technology market. As part of our annual meeting we present our key investment themes for the year. Below is a snapshot of what we are focusing on:

Business and Enterprise Evolution to Cloud Native

Tim Porter-Madrona-Venture Capital Seattle
Tim Porter

The IT industry is in the early innings of its next massive shift. The transition to “cloud native” is as big or bigger as the move from PC to mainframes, the adoption of hypervisors, or the creation of public clouds. Cloud native at its core refers to applications or services built in the cloud that are container-packaged, dynamically scheduled, and microservices-oriented. Cloud Native enables all companies to take advantage of the application architectures that were once the province of Google or Facebook. Companies like Heptio and Shippable are at the forefront of disrupting how IT infrastructure has traditionally been managed with vastly increased agility, computing efficiency, real-time data, and speed. We firmly believe software that helps applications complete the journey from development on a cloud platform to deployment on different clouds, and running them at scale, will become the backbone of technology infrastructure going forward. As such, we are interested in meeting more companies that are making it easier to network, secure, monitor, attach storage, and build applications with container-based, microservice architectures.

Intelligent Applications

Customers today demand their software deliver insights that are real-time, nimble, predictive, and prescriptive. To accomplish this, applications must continuously ingest data, increasingly using event-driven architectures, coupled with algorithm-powered data models and machine learning to deliver better service and novel, predictive recommendations. The new generation of intelligent applications will be “trained and predictive” in contrast to the old generation of software programs that were created to be “programmed and predictable.” We believe that intelligent applications which rely on proprietary datasets, event-driven cloud-based architectures, and intuitive multisense interfaces will unlock new business insights in real-time and disrupt current categories of software. Investments in intelligent app companies that leverage these trends will likely be our largest area of investment in coming years.

Voice and XR Interfaces for Businesses and Consumers

We believe the shift we are seeing for human computer interactions will be as fundamental as the mouse click was for replacing the command line or touch/text was for the rise of mobile computing. This shift will be as pertinent for the enterprise as it is for consumers, and in fact will serve to further blur the lines between productivity and social communication.

With voice, we are most excited by companies that can leverage existing platforms such as Alexa to create a tools layer, or build intelligent vertical end-service applications.

In the realm of XR (from VR to AR), we believe this is a long game. VR will not be an overnight phenomenon, but will play out over the next 5 years as mobile phones become VR capable and, particularly, as truly immersive VR headsets become less expensive and cumbersome. We are committed to this future and are particularly focused on VR/AR technologies that bring the major innovation of “presence” into a shared or social space, as well as “picks-and-shovels” technology that are needed by the XR community now to start the building process now even in advance of a largescale install base of headsets.

Vertical Market Applications that use proprietary data sets and ML/AI

As algorithms continue to become more accessible by way of access to open-source libraries and platforms such as the one our portfolio company, Algorithmia, provides, we believe that proprietary data will be the bottleneck for intelligent apps. Companies and products with ML at their core must figure out how to acquire, augment, and clean proprietary, workable data sets to train the machine learning models. We are excited about the companies with these data sets, as well as companies, such as Mighty AI, that help build these data sets or work with companies to help them leverage their proprietary data to deliver business value.

One area where we see this is happening is when ML/AI and proprietary data is applied to intelligent apps in vertical markets. Vertical market focus allows companies to amass rich data sets and domain expertise at a far faster pace than companies building software that tries to be omni-intelligent, providing both product and go-to-market advantage. Most industry verticals are ripe for this innovation, but several stand out including manufacturing, healthcare, insurance/financial services, energy, and food/agriculture.

AI, IoT and Edge Computing

Linda Lian

IoT can be an ambiguous term, but fundamentally we see the explosion of devices connected to the Internet creating an environment where enterprise decision-making and consumer quotidian life will be crucially dependent on real-time data processing, analytics, and shorter response times even in areas where connectivity may be inconsistent. Real time response is crucial to success and is difficult to meet in the centralized, cloud-based model of today. For example, instant communications between autonomous vehicles cannot afford to be dependent on internet access or the latency of connecting to a cloud server and back. Edge computing technologies hope to solve this by bringing the power of cloud computing to the source of where data is generated. We are particularly committed to companies building technologies that are focused on solving how to bring AI, deep learning, machine vision, speech recognition, and other compute-heavy services to resource-constrained and portable devices and improve communication between them.

Another facet of IoT where we continue to have investment interest is new vertical devices for consumer (home, vehicle, wearable, retail), healthcare, and industrial infrastructure (electrical grid, water, public safety), along with enabling supporting infrastructure. Opportunities persist for networking solutions that improve access, range, power, discoverability, cost, and flexibility of edge devices and systems management that provide enhanced security, control, and privacy.

Commerce Experiences that Bridge Digital to Physical

Retail is in a state of flux and technologies are disrupting traditional models in more ways than e-commerce. First, physical retail isn’t going away, but it has a fresh new look. 85% of shoppers say they prefer shopping in stores due to a variety of factors including seeing the product and the social aspect. This has led the new generation of web-native brands such as Indochino, Warby Parker, Glossier and Bonobos to open stores – but they are very different, carrying little physical inventory and geared towards intimacy with customers and helping find the right product for the buyer.

Second, the decreasing cost of IoT hardware technologies such as Impinj’s RFID, advancements in distributed computing, and intelligent software such as computer vision will fundamentally alter physical retail experiences. Experiments are already underway at Amazon Go where shoppers can pick what they want and casually stroll out without waiting in a check-out line.

Within e-commerce, vertically integrated, direct-to-consumer models remain viable and compelling. They bypass costly distribution channels and can build strong brands and intimate customer experiences like Dollar Shave Club, Blue Apron, or Stitch Fix. Marketplaces that leverage underutilized resources or assets; or the technology that underlies these marketplaces remain relevant and compelling particularly for the millennial generation that prioritize access over ownership.

Security and Data Privacy

While certain security categories have been massively over-funded, new investment opportunities continue to arise. Security and data privacy are areas of massive concern for businesses, particularly in the current macro environment. Internally, enterprises demand full visibility, remediation tools, and monitoring capabilities to guard against increasingly sophisticated attacks. Particularly vulnerable are companies that house massive amounts of customer data such as financial services, big retailers, healthcare, and the government. Externally, the collection and analysis of massive amounts of real-time consumer behavioral and personal data is the bread and butter of sales, marketing, and product efforts. But new privacy laws in the US and imminent from the EU are creating heightened awareness of both the control and security of this data. We continue to be interested in companies and technologies that take novel approaches to protecting consumer data and helping corporations and organizations protect their assets.

Technologies Supporting Autonomous Vehicles

Transportation technology is experiencing a massive disruption. Autonomous driving will be the biggest innovation in automobiles since the invention of the car, impacting suppliers, car makers, ridesharing, and everything in between. Lines are blurring between manufacturer and technology provider. We believe the value creation in AVs will, not surprisingly, shift to software, and the data that makes it intelligent. More innovation is required in areas such as computer vision and control systems. Important advancements also remain to be made in component technologies such as radar, cameras, and other sensors. Indeed, there are billions of edge cases due to construction, pedestrians, weather, and a murky regulatory environment that must be ironed out both at the technology and policy level before the promise of AV is a reality.

Additionally, the rise of AV could massively disrupt current modes of car ownership. Fleet and operations management software will become increasingly important as AV transportation-as-a-service becomes more and more tangible. Software and systems for other vehicles including drones, trucks, and ships will also be huge markets and create new investment opportunities.

Seattle and the PNW are emerging as thought leaders in the area of AV, and we believe a technology center of excellence as well, creating new investment opportunities. We are deeply interested in all the threads that go into this complex and massive shift in technology, the car industry and in social culture.

Well, there you have it – Madrona’s key investment themes for 2017. Thanks for reading. If you are working on a startup in any of these areas – we would love to talk to you. Please shoot any of us a note – our email addresses are on in our bios on our website.

The State of Today’s Autonomous Vehicle Market

Only five years ago, the autonomous vehicle future seemed like a distant vision.
This year at CES, the “frenzy” over autonomous vehicles stole the show with dozens of live demos, partnerships, and product announcements. In fact, 13 of the world’s 14 largest automakers have announced plans to bring autonomous vehicles to market, and 12 of the world’s 14 largest technology companies have announced plans to build technologies to support and operate autonomous vehicles.

This sudden interest in autonomous driving has bid up the “going rate” for autonomous driving talent to, at least in one case, $10 million per person (Harvard, MIT, CMU, and Stanford students take note!)

Clearly, many large companies are investing heavily in autonomous driving technology because they see that autonomous cars not only have the ability to drastically change the auto industry but also see the enormous cultural change that the presence of AVs could create. If we spend more time in the car and have more time there to do stuff . . they want to to be there.

As investors we have been most interested in watching how different stakeholders are shaping their strategies for competing in this market. For example, will automakers build their own autonomous technology, rely on partners, or both? Do automakers think they will continue selling autonomous vehicles to consumers or only to ride-sharing services? Will ride-sharing services companies want to move into other areas of the industry including building autonomous technologies?

The Ever Changing Autonomous Vehicle Value Chain

Here is our view of the current state of the autonomous vehicle value chain. The three high-level layers of the autonomous vehicle market are

  • Service providers (e.g., ride-hailing, ride-sharing, rentals),
  • Technology providers (both hardware and software), and
  • Automobile manufacturing

We see a significant number of companies sitting in between layers – such as Tesla building an autonomous driving system as well as being a car manufacturer – and we also see companies that have historically operated in one area making large investments of capital or time in other layers in order to move into other areas of the value chain. An example of this is

ReachNow, BMW’s rental and ride hailing service which is, among other things, a hedge against being cut out of a possible future where ride hailing vs car owning is the norm. Each of these companies sees an opportunity to capture a larger portion of the end-state autonomous vehicle value chain for themselves, and they are positioning themselves accordingly.

The AV Partnership Matrix – De-risking the future by teaming up

In addition to investing or acquiring companies or talent, companies have also begun forming partnerships to ensure they do not get cut out of valuable portions of the autonomous vehicle market or caught with single source suppliers for key technologies.

For example, with the rise of autonomous vehicles, companies realized that detailed maps might (though it is still under debate) be one of the most critical inputs to self-driving cars for determining whether the car is seeing the environment or another vehicle, person, or object in its environment. This led to several big moves in developing in-house maps and/or acquiring access to other sets of mapping data. For example, in August of 2015, a consortium of automakers bought Here maps for $3 billion; in July of 2016, Uber announced a $500 million plan to map the world’s roads; and in December of 2016, Mobileye announced a partnership with Here’s owners to share their mapping data.

Some other interesting takeaways we see from looking across the autonomous vehicle landscape are:

  • The companies working with the major technology providers are also developing their own homegrown systems. For example, while Volvo is providing Uber with vehicles for their well-publicized Pittsburgh, San Francisco, and Arizona tests, they are developing their own autonomous systems as well through their Drive Me research project.
  • There have already been some high-profile ‘breakups’ in the autonomous vehicle space. After Tesla’s crash, Tesla and Mobileye have pointed several fingers on who fired who (and whose technology led to a fatal crash), Baidu and BMW called off their joint work citing different development paces and ideas about research; but over time we will likely see more differences in tech and/or business philosophies that will lead companies to go their separate ways.
  • Most of the major automakers have aligned themselves with a ride-hailing service – either via investment in the case of Toyota-Uber or GM-Lyft or in other cases building it in house or making a full acquisition. These moves have been interesting because the strength of Uber or Lyft’s driver network becomes less relevant in an autonomous, ride-hailing future. When you can put cars on the road without a person at the wheel, different elements become more important levers of success – namely the ability to manufacture, finance, and maintain cars. This could give automakers a head start later in the game, so to speak. Though success in ride hailing is also dependent on consumer penetration so companies like Uber and Lyft might have their own leverage over the automaker latecomers.

Other Stakeholders – What are the regulators, drivers, and consumers doing?

As we continue watching the moves that software companies and automotive companies are making in the autonomous vehicle space, we have also been keeping track of what regulators, drivers, and consumers are thinking and saying about autonomous vehicles.

To date, we have been impressed with how proactive the federal, state, and local governments have been in their support of autonomous driving technology. It appears regulators and planners at multiple levels are bought into the potential promise of fewer accidents, less congestion, more productive time for citizens and freed up space now devoted to parking lots in cities. But they are treading carefully, encouraging companies to experiment in safe, controlled ways. When the US NHTSA investigated the fatal crash involving Tesla’s Autopilot – the findings were actually that, though it failed in that instance, Autopilot had decreased the amount of crashes by 40% since introduction of the technology.

However, as this technology becomes mainstream and moves from high-end cars to widespread adoption among ride-hailing and trucking companies, there could be massive disruption to the way the workforce is structured in many different places around the country. A 2015 NPR review of Census data shows that Truck Driver is the most common job in nearly every US state. Autonomous trucks will have a massive impact on the trucking industry.

As more startups and large companies begin public demonstrations and public releases of their products, they must find the right ways to introduce these technologies for both public safety and public perception. “Drive fast and break things” will not be the right approach to releasing autonomous vehicles, and companies need to be thoughtful about the best way to introduce these technologies.

As investors (and eager consumers and citizens) we are watching how the AV market is evolving and looking for opportunities. If the innovations in the last five years happened twice as fast as expected, imagine where we could be in another five – or maybe just two and a half!

Technology Trends Changing the World As We Look Ahead

Drones, Cars, Intelligent Apps, Virtual Reality and More – What to expect in 2017
There’s an age old saying that humans tend to overestimate what can be accomplished in one day, but underestimate what can be accomplished in one year. As 2016 comes to a close, it is a good time to zoom out the lens, and get reflective on what has happened this year, and predictive about what we are excited about for the coming 3-5 years.

1. Commercial Drone (UAV) Technology will Turn to Software

The 2015 hype around drones generated over $155M of VC funding in the second half of 2015, but 2016 has seen far chillier attitudes by VCs towards drone startups. However, we believe 2017 will be a year of renewal for investments and innovations in drone technology. For one, the FAA passed the first set of rules in June governing drone fly rules, allowing commercial drones to finally take to the skies without filing for lengthy and cumbersome case-by-case permission. Secondly, over the last year, the hardware war which has spooked many VCs from entering the space has been all but won. Forbes estimates that Chinese drone manufacturer DJI is valued at $8 billion and controls over 70% of the hardware market. Other contenders for this mantle such as 3D Robotics have retooled to focus on vertical software. For 2017, we see the main opportunity for drone technology to be in best-in-class tools and software deployed across platforms such as equipping drones with advanced sensing capabilities, or software for vertical industries such as real estate and farming.

2. Intelligent Applications

Customers nowadays demand their software delivers insights that are real-time, nimble, predictive and prescriptive. We have no doubt that in the future, every application will be an
intelligent application. However, the reality has not caught up to the hype. We believe data, not algorithms are the bottle-neck. Algorithms continue to become commoditized by the way of access to open-source libraries such as Algorithmia, Tensorflow, Hadoop and Cockroach DB. If products wish to do better than commodity performance, companies with machine learning at their core must figure out how to acquire proprietary, unique, clean and workable data sets to train the machine learning models.

Companies with a leg up are also likely to be vertically integrated in such a way that their data, learning models and product are all geared towards developing the best data network effects that will feed the learning loop.

We believe there is a big opportunity for companies focused on a specific industry such as healthcare, retail, legal, construction to build higher quality domain expertise at a faster rate, which facilitates the acquisition and labeling of relevant data critical to building accurate and effective machine problem solvers.

3. Virtual Intelligent Assistants with Focus on a Problem Space Will Succeed

A great example of vertical vs horizontal machine learning applications can be found in chat bots. There are some horizontal chat bot assistants that help you with any and all requests (, Magic, and Awesome to name a few). It would seem obvious that building NLP and intelligent capabilities across all conceivable tasks and requests could be a long slow training slog of manual human validation. These companies are also at a heavy disadvantage to incumbent players tackling the horizontal assistant space. Voice enabled platforms like Alexa, Siri, Cortana, or the new Google Assistant still see limited usability despite enormous access to training data bolstered by the distribution platforms of three of the largest companies in the world. Realizing this, Amazon announced at Re:Invent that Lex, the software that powers Alexa, is now available for developers to build their own chat bots. Every developer who designs their conversation on the Lex Console is now feeding Lex’s data model. Microsoft followed suit with a similar announcement of the Cortana Skills Kit and Devices SDK.

Assistants that will be more successful in the short term are bots that are narrowly focused. There is Kasisto for finance, Digital Genius for customer service, or the many virtual assistant/meeting scheduler apps (Meekan, JulieDesk,’s Amy and later “brother” Andrew, and Clara). What excites us about these vertically oriented chat bot startups is that they are applying machine learning, artificial intelligence and natural language processing in a highly specialized and narrow way. It is far easier to train a bot to recognize and act appropriately on the finite set of lexicon and circumstances around scheduling a meeting, compared to the infinite set of scenarios that could occur otherwise. In machine learning, it is better to be a master of one, than a master of none.

4. Blockchain Will Expand as Enterprise Services Embrace it


The technological innovation of Bitcoin, blockchain, seeks to create a global distributed ledger for the transfer of assets (currency, cryptocurrency, music, real-estate deeds etc). This enables peer to peer transactions that bypass traditional intermediaries like banks, credit card companies, and governments whose centralized nature slows down processing speed, increases cost of transaction, and are vulnerable to security threats at the hub-level. Blockchain technology has been heralded by some as being as disruptive to the way people view, share, and interact with their assets as the internet was for information. However, adoption has significantly lagged this envisioned seismic shift.

We believe blockchain’s path to mainstream adoption will be more likely to arise from the enterprise and infrastructure side (creation of APIs and protocols that enable ease of adoption) as opposed to consumer adoption of cryptocurrencies (i.e. Bitcoin). An example is R3 which has gathered a consortium of 42 banks to create the technological base layer for various systems including Bitcoin, Ethereum and Ripple to talk to each other and facilitate global payment transfers.

5. Autonomous Vehicles Have More Validation Work

Aside from machine learning, autonomous vehicles were one of the most hyped technologies in 2016. This year, we saw major product announcements and technology demos from Uber, Lyft, Ford, GM, BMW, Tesla, Cruise,, and many other startups and corporations. Google went so far as to create an entirely new company, Waymo, devoted to their driverless car technology.

Nearly all of the major car manufacturers have announced they will be releasing autonomous vehicles in the next five years, and Lyft has stated that they are planning for the majority of rides to be autonomous within the next five years. Even President Obama said “The technology is essentially here” in a November WIRED interview.

However, despite the hype, there is a tremendous amount of heavy lifting that needs to happen in technology, infrastructure and policy to say the least. Companies still need to solve basic problems related to sensors (e.g., see Tesla Autopilot crash where cameras could not distinguish white truck against bright sky), and billions of edge cases due to construction, pedestrians, and weather, and a murky regulatory environment.

We are huge believers in the long-term benefits of autonomous vehicles, but 2017 may be a year when autonomous vehicle companies and startups are heads-down solving tough problems rather than continuing to push out flashy tech demos.

6. Augmented Reality and Virtual Reality

We believe there is still a three-year runway before VR and AR sees wide adoption by mainstream audiences. Consumer adoption will be mobile-first and/or low-end tech – think the successful recent launch of Snap Spectacles, and the cheaper price points of Google Daydream, and the Samsung Gear. VR uptake today is still burdened by hardware adoption and ease of use. Prices are still too high for anyone but the hardcore technologist or gamer.

On the enterprise side, we see 2017 as a continuing year of innovation and activity particularly in core applicable industries like engineering, science, medicine, real estate education and manufacturing. However, until the dominant form factor (whether it is glasses, head-mounted-display, or some other yet to be seen hardware) emerges, time spent in VR will still be miniscule compared to time spent in this reality.

Ultimately, if gazing into the future of technology was really so straightforward, there would be no need for speculation and VCs would be out of a job. We’ll be back next year to see assess how many of these predictions hit the nail.

Autonomous Vehicle Plan for the I-5 Seattle/Vancouver B.C. Corridor

Executive Summary

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Seattle and Vancouver have a huge opportunity to reduce congestion, improve the travel experience, reclaim productive hours and reduce accidents on the I-5 Cascadia Corridor by implementing a plan over the next decade that accelerates the introduction of autonomous vehicles on the corridor. Committing to this vision would not only benefit all who use this corridor but would also demonstrate to the world our Cascadia region’s status as a leading global center of innovation where governments and private enterprises can work in partnership to solve human problems.

Leading technology companies, such as Tesla and Uber, and traditional auto companies, such as Ford and GM, are rapidly developing and testing new technologies in sensors and software that will make fully autonomous vehicles feasible and safe within the next five to ten years. Governments from Pittsburgh to Singapore, plus the U.S. Department of Transportation, are authorizing street trials and encouraging and even mandating that vehicles be equipped with autonomous technologies. The governments of the Cascadia Corridor would dramatically seize a leadership position on autonomous vehicles by committing to an innovative autonomous vehicle plan for I-5.


An autonomous vehicle plan for I-5 could initially allow autonomous vehicles to share the HOV lanes. Over time, with more and more autonomous vehicles on the road, this would evolve into HOV lanes being exclusively for autonomous vehicles. The final step as autonomous vehicles largely replace existing vehicles would be to exclude non-autonomous vehicles from I-5 except for certain defined times when highways are not congested such as most of weekends and 8:00 p.m. to 4:00 a.m. on weekdays. The first phase of this plan could begin to be implemented immediately and the final phase could occur in ten to fifteen years.

I-5 has a minimum of eight lanes (and sometimes 10 lanes) from downtown Seattle to the northern boundary of Everett and then six lanes to the southern boundary of Mount Vernon, all of which could accommodate dedicated lanes for autonomous vehicles. North from Mount Vernon I-5 is four lanes up to the border-crossing in Blaine, WA, where it becomes Highway 99 with four lanes in British Columbia. Traffic planners in the future may want to add additional lanes to the four lane portions from Mount Vernon to Vancouver (82 miles) to support dedicated autonomous vehicle lanes.

The last eight miles on Highway 99 from the Vancouver airport into downtown Vancouver present a challenge for any intercity travel because it consists of city streets with traffic lights. This could be alleviated when travelling by autonomous vehicle from Seattle by having your autonomous vehicle drop you off at the SkyTrain Bridgeport Station in Richmond near the airport and go park itself at the nearby park and ride lot or elsewhere or pick up another passenger. The SkyTrain departs every 6 minutes most of the day and takes 18 minutes to downtown. SkyTrains in Vancouver are fully autonomous without drivers.

There are many benefits from autonomous vehicles, but the principal benefit is that it allows drivers to recapture all the time otherwise spent behind the wheel. This is at least two and one half hours from Seattle to Vancouver. Imagine being able to watch a video or sporting event, prepare for a business meeting, work on your novel or plan a game with your children. It is difficult to place a dollar value on this but one source has estimated this at more than $1 trillion a year in the U.S. Because of wireless and software technologies we can be entertained or productively engaged wherever, whenever.

Other very significant benefits from autonomous vehicles include substantial reductions in vehicle accidents and deaths, less environmental damage, increased capacity of existing roads, reduction of the need for more freeways and lanes, increased use of shared vehicles, reduced congestion and lower transportation costs for consumers.

Although accidents have occurred in the early use of autonomous vehicles, in the longer term the number of accidents and deaths will be reduced. U.S. Transportation Secretary Anthony Foxx recently said that as many as 25,000 road deaths could have been prevented last year if driverless cars were in operation. Annual cost savings for the United States from reduced traffic collisions, including medical costs, have been estimated at several hundred billion dollars.

With autonomous vehicles, the capacity of roads is increased by closer spacing and platooning of vehicles, narrower lanes, reduction in the wave effect of braking, faster average speeds and fewer accidents. Major and minor accidents cause substantial traffic tie-ups.

The availability of autonomous vehicles will likely cause more people to travel in vehicles, including the elderly and infirm, but we expect this will be offset by more vehicle sharing by individuals and through commercial services. Using apps, mobile devices, data analytics, mapping technologies and the cloud, new ride sharing services are already becoming available through companies such as Uber and Lyft. With travel times shortened and the cost of drivers eliminated, buses will be more attractive and the introduction of new autonomous mini-bus and van services would likely occur. Autonomous vehicles will also include trucks of all kinds. When trucks are autonomous, there will be more flexibility on scheduling and incentive structures could be created to encourage trucks to travel in non-congestion time periods.

Although not the focus of this paper, all the benefits of autonomous vehicles on I-5 also apply to commuting in the major metropolitan areas on the corridor including Seattle and Vancouver. Moreover, this plan should be extended to serve drivers on the I-5 Corridor between Seattle, Tacoma, and Portland.

This proposal will initially be highly controversial because of the public’s natural concern about the likelihood and timing of autonomous vehicles, initial accidents and failure to recognize the benefits. All of the fundamental technologies required for autonomous vehicles, however, are available and only require refinement which are occurring at a rapid rate. Compared to the cost of improved and high speed rail, estimated by others at upwards of $30 billion, the cost of this plan would be orders of magnitude less and consumers would begin to benefit decades earlier.


New technologies that benefit consumers tend to be adopted quickly once made widely available. Automobile ownership in the U.S. went from 10% of households to 67% of households in 14 years – and since then, adoption rates have accelerated. To reach 90% penetration in the U.S., wired phones took 70 years, cell phones 15 years and smart phones 8 years. App-based rideshare services only started 4 years ago, and they are already ubiquitous in most major cities across the globe. We cannot predict the specific adoption rate for autonomous vehicles but with many major vehicle manufacturers announcing that they will be selling autonomous vehicles within five years and the advantages of autonomous vehicles, we expect very significant penetration in ten to fifteen years.

Accordingly, we recommend that our local and regional governmental entities along with private companies form a joint commission to develop a plan for accelerating the introduction of autonomous vehicles for I-5. They could engage the University of Washington’s new Mobility Innovation Center and a comparable group from the University of British Columbia to assist in developing recommendations.

Tom Alberg, Managing Director, Madrona Venture Group, Craig Mundie, former Chief Research and Strategy Officer, Microsoft Corporation, Daniel Li, Associate, Madrona Venture Group, Connor Raikes, Consultant

Section 1: Background

Seattle and Vancouver: Economic Partners

Seattle and Vancouver, BC have had a long complementary economic relationship. Situated only 120 miles as the bird flies from each other, they share an environmental and cultural heritage. They have two of the largest ports in North America, and as West Coast cities both Seattle and Vancouver are important gateways to and from the Asian continent. Their cooperation with a touch of rivalry has made the Pacific Northwest a vibrant international hub in a globalized world, and their relationship continues to grow even as they transition away from the harbor and resource industries that were once their bedrock, and towards technology and service economies.

This is especially true of the tech industry. Seattle has long been a leading tech hub in the United States, boasting the headquarters of Amazon and Microsoft. Vancouver is a new and growing tech hub; the tech industry is the second fastest growing industry in British Columbia, according to KPMG. In 2015, Seattle and Vancouver both ranked in the Top 20 world’s leading startup cities according to Compass, as they did in 2012.

Seattle and Vancouver do not only have a similar heritage of technology and entrepreneurship; they also work with one another. In 2007, Microsoft opened a large office in Vancouver, Canada, which has since been expanded, and they have considered moving their Canadian headquarters to Vancouver from Mississauga, ON. Amazon has also had a presence in Vancouver as early as 2008; they opened an official Amazon office in 2011 and expanded in 2013 to accommodate up to 1,000 employees.

This is in part in order to attract talent and to keep it near to them in the Pacific Northwest. Vancouver and Seattle boast some of the best supply of tech talent in their respective industries; three of the top five computer programming universities in Canada are located around Vancouver and Seattle’s University of Washington was named the most innovative public university in the world by Reuters. Their historical ties to Asia are also very important; they both have had a long presence of Asian immigrants, which makes Seattle and Vancouver attractive to Asian and Indian tech talent.

When Microsoft opened its Vancouver office in 2007, it emphasized that the company was motivated by frustrations with U.S. immigration and visa restrictions, particularly pertaining to high-skilled labor and the H-1B Visa cap, and so it hired in Canada where immigration restrictions were more relaxed. Hiring in Vancouver meant that Microsoft could locate talent just a short distance from their headquarters without the headache of U.S. restrictions, while taking advantage of the tech workers that were already there. Amazon seems to have been motivated in part by the same reasons.

Notwithstanding these connections between Vancouver and Seattle, a recent study of LinkedIn data surprisingly indicated that connectivity of business people between the two cities is low relative to connectivity with other cities. “Among the cities with the strongest connection to Vancouver, Seattle ranks #11, behind three other US cities. Similarly, Seattle has stronger connections with 26 other cities, compared to Vancouver.” Overall cross-border talent flow is also limited even though Microsoft and Amazon have large offices in Vancouver.

Transportation Problem

Seattle’s and Vancouver’s tech and startup companies would benefit greatly from greater ease of intercity transportation. The connectivity of the digital era has not diminished but seemingly has rejuvenated the value of physical location and meeting in person. Improved transportation from Seattle to Vancouver is not merely about leisure and travel; it’s about making sure Seattle and Vancouver maintain and improve their competitive edge in the modern economy.

Yet in spite of the need for high speed, convenient transportation, the options available have not kept pace with the economic growth in Seattle and Vancouver. The Amtrak Cascades trains are renowned for their views but take up a four-hour trip, at a $40-$70 standard ticket. Greyhound buses are cheaper but take at least as long. Air Canada and Alaska Airlines offer flights between Seattle and Vancouver that cost hundreds of dollars per trip for an hour in the air, but with travel to and from the airport and the additional hassle of check-in and airport security, the total time spent can be three hours or more.

Beyond that, there is driving. And here is where Seattle’s infamous congestion comes into view. A 140-mile commute which could take 2 hours and 20 minutes is stretched an extra 30 minutes to 90 minutes during working and rush hours – a delay that is costly in both gas and lost productive working hours. The present difficulties of driving between the two cities significantly reduces tourist and business travel and interchange.

The Rise of Autonomous Vehicles and Services

A few years ago, it was still a major question whether autonomous car technology would be feasible and even if feasible it was not considered likely for 30 or more years. But today we already have self-driving cars from Google, Tesla, and Uber driving on our roads. Although initially led by these tech companies, all of the major auto companies have joined in to develop autonomous vehicles. Seemingly every day we read news articles about auto manufacturers announcing plans to introduce autonomous cars or pilot projects being planned in various places. Here are some of the companies involved with autonomous vehicles.

In August 2016, Uber announced that their first fleet of self-driving vehicles would be launched in Pittsburgh. Home to the National Robotics Engineering Center at Carnegie Mellon University, Pittsburgh will host Uber’s most ambitious step yet to integrate fully autonomous vehicles into their service. The custom-built Volvos will be supervised by humans in the driver’s seat for now, but if the experiment is successful, Uber aims to gradually replace their 1 million human drivers with autonomous systems.

Transportation in cities is on the verge of large-scale transformation, according to the President’s Council of Advisors on Science and Technology (PCAST), through the effort to develop connected and fully autonomous vehicles. New technologies that benefit consumers tend to be adopted quickly once made widely available. We cannot predict the specific adoption rate for autonomous vehicles but we believe that widespread adoption of autonomous vehicles is inevitable and will be here sooner than most observers expect.

Ride Sharing

Uber and Lyft are introducing ride sharing services in many cities using innovations in mobile and cellular technologies. Consumers are responding favorable to the lower prices and convenience and in some cities in California, Uber and Lyft report that more than 50% of rides are shared.

Ride sharing by individuals, commercial companies and transit authorities will be further stimulated by the introduction of autonomous vehicles. Entrepreneurial individuals will be able to rent their autonomous vehicle to others or share a ride with them. New operators of autonomous mini-bus and van services can be launched.

Section 2: Our Vision

We propose that local, state and provincial governments on both sides of the border collaborate on a plan to accelerate the introduction of autonomous vehicles on I-5. Initially autonomous vehicles should be authorized to share the HOV lanes. Just as traffic planners incentivized carpooling this would incent the purchase of autonomous vehicles and use of autonomous vehicle services. We recognize this would require a sizeable collaboration between several governmental agencies. But doing this sooner rather than later would not only allow residents of the Cascadia Corridor to reap the direct benefits sooner it would better connect the two cities and send a message that Seattle and Vancouver embrace new ideas and new ways of thinking, further cementing a reputation for innovation in the Cascadia region.

If phased in with the growth of the number of autonomous vehicles being purchased, this plan will be less disruptive of existing usage than might be feared.. At the first stage, autonomous vehicles would simply join in use of the HOV lanes. I-5 from downtown Seattle to Everett is at least eight lanes and could accommodate a shared HOV lane. This is also likely true north of Everett to Mount Vernon which has six lanes. As more autonomous vehicles are introduced, this shared lane could become exclusively for autonomous vehicles. At a later stage, transportation authorities could consider building additional lanes in sections of I-5 north of Everett. Ultimately, I-5 could become exclusively for autonomous vehicles except during certain low traffic times at night and on weekends. Taking on this project, even though ambitious, would set Seattle and Vancouver on the path to be the example for the future of transportation, and to set the standard for major cities and corridors in North America.


Section 3: Benefits and Risks of Autonomous Vehicles

When discussing autonomous vehicles, there are different levels of autonomy with anywhere from a single function being automated, such as automatic braking, to the highest level where the car can drive itself without a person supervising or even present in the vehicle. It was not long ago when even the first level seemed like a major innovation, but R&D have pushed us to the point where full unsupervised autonomy will be in mass produced vehicles as soon as five years from now. We are focused on this highest levels of vehicle autonomy – effectively self-driving cars.


What would the greatest benefit be of having your own personal chauffeur? Sure, that chauffeur might be a better driver; you might get to your destination more quickly, and safely. But for many people, the greatest benefit of all would be a better riding experience and a recapture of lost time. Maneuvering in traffic behind the wheel takes time away from your work life and your personal life, and replaces it with anxiety and frustration. That is bad for business and health. But if you were driven around, it would not only reduce the time spent in traffic; it would give the time spent on the road back to you.

You could relax. Would you use that time to do work in the car? Catch up on a TV show? Safely take a phone call or read and send texts? Play Angry Birds? You decide. You are freed up from being cramped behind the wheel, worrying about gridlock. That’s the benefit of being chauffeured from place to place, and that is what autonomous vehicles will provide. The only difference is, this chauffeur is built into the car.

There are many social benefits from road safety to reduced congestion and energy use. According to the Insurance Institute for Highway Safety, up to a third of traffic fatalities could be reduced with forward collision prevention and side view assists alone, and greater automation could reduce the United States’ yearly 32,000 traffic fatalities even further by replacing the primary cause of road accidents: human error. Furthermore, automated vehicles can accelerate and decelerate more quickly, which improves fuel economy, and would likely greatly enable the use of alternative fuel sources. At a possible future high level of the technology, the disadvantages of electric power and fuels cells could be mitigated by allowing fully autonomous self-driving cars to drop off their passengers and automatically find a station to refuel.

Autonomous vehicles also facilitate and optimize connectivity. Put simply, autonomous vehicles can join a network and coordinate with each other. This increases travel lane capacity, reduces fuel waste, and reduces travel delays by avoiding quick unexpected stops that cascade through traffic.

The potential cost savings from autonomous vehicles are very significant – and not just by reducing delays, improving fuel economy and facilitating alternative energy sources. Autonomous vehicles will also reduce the number of accidents. Nationwide, the cost of traffic collisions is approximately $300 billion a year. Vehicular congestion costs about $124 billion per year in the U.S., as well as tens of billions of associated healthcare costs. These do not include the opportunity cost of productive hours spent in traffic, which is estimated at $1.2 trillion per year, or the costs of parking spaces. 31% of the space in central business districts of major cities currently is devoted to parking. Autonomous vehicles will be able drop off their passenger, and immediately pick up a new person or find a place to park – which need not be close to the destination. If the car is low on fuel, it can drive itself to a station and fuel up.

It is also useful to point out that dedicated autonomous lanes multiply the benefits associated particularly with connectivity. They facilitate larger convoys of closely spaced autonomous vehicles – caravans” or “trains” of sorts – which enable road efficiency, higher effective speeds and fewer accidents.


As with most beneficial innovations, there are risks. For example, autonomous vehicles will make it possible for people incapable of driving because of age or infirmities to use vehicles thereby increasing the total number of vehicle miles traveled. Of course, providing a means for these people to travel or visit friends and doctors is itself a social benefit. Such usage will also be offset by increases in ride sharing in private autos, Uber-type services, and mini-buses and buses which would reduce the number of vehicles on the road.

Also, given that autonomous vehicles depend on network systems that would presumably be standardized, this might make them vulnerable to computer crashes and hacking although mechanical breakdowns and malicious hacking are already a risk for standard vehicles. Also, autonomous vehicles will cause economic disruption in manufacturing and employment, as disruptive technologies have done in the past.

Autonomous vehicles may not be as affordable for all classes of people. Tesla and Ford, however, are working on launched autonomous vehicles that cost less than $35,000. Policy makers could also provide subsidies through vouchers for low income groups for them to use autonomous vehicle services.

We hope policy makers will recognize the benefits far outweigh the risks.

Section 4: Comparison of the Alternatives

There is some movement to make better and faster rail options. Notably, the Washington State Department of Transportation (WSDOT) is using funds from the American Recovery and Reinvestment Act (ARRA) to improve Amtrak service from Portland, OR to Vancouver, BC. One of their goals is to increase maximum speeds from 79 mph to 110 mph but because there is only a single track from Everett to Vancouver and it is shared with freight trains, their plans would only reduce trip times by five percent. New overpasses are also needed in Everett, Marysville, Mt Vernon and Bellingham.

For several decades, many local officials and economic development organizations have advocated proposals for true high speed rail from Portland to Seattle to Vancouver, BC. This would provide fast service between train stations.

According to various estimates. high speed rail costs between $125 million and $1 billion per mile, depending on the surface and location. Using these numbers, there is a projected a cost of $20-30 billion total for a high speed rail between Seattle and Vancouver, which may still be optimistic.

Large-scale transportation infrastructure projects typically take decades to envision, plan, and build and have traditionally taken much longer than originally projected. For example, in 2012,

Not only does this delay the economic benefits, but it also exposes the project to greater economic risks. The challenges of regulatory and public approvals, construction funding and likely needed operating subsidies even with one-way fares exceeding $100 per person raise questions as to the feasibility and desirability of high speed rail. By the time the high speed rail is completed, new technology might completely change the transportation paradigm.

This is not to reject the promise of high-speed rail. The dream of one-hour travel by rail between downtown Seattle and Vancouver is worthy of considering. We welcome consideration and discussion of such a proposal. However, we should not limit ourselves to conventional prescriptions to transit needs. Policymakers have to think beyond 20th century solutions to new solutions being made possible by rapid innovation.

By way of comparison, for $30 billion we could buy every household in Seattle and Vancouver a new Tesla with autonomous driving features or buy Delta Airlines at its market cap of $29 billion. Of course, these are outlandish suggestions that serve only to illustrate the fact that traditional transpiration projects are much more expensive than observers typically realize.

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Building additional autonomous vehicle lanes would be far cheaper and less time-consuming. These take advantage of the infrastructure that is already built around HOV and expands on it. It is also an incremental, flexible project, whose benefits will be felt much earlier and would provide point to point solutions from where you live or work to the specific location of where you want to go.

Another worthy but limited proposal for speeding movement between Seattle and Vancouver is to institute regularly scheduled seaplane service from South Lake Union in Seattle to Coal Harbour in Vancouver. Currently, there are no direct regular seaplane flights from Seattle to Vancouver, BC, although Kenmore Air operates dozens of flights a day from docks at South Lake Union and Harbour Air likewise handles many flights from docks at Coal Harbor which is adjacent to the downtown business district.

Charter flights are allowed between these destinations, but they are prohibitively expensive for even most business people. But a daily scheduled service easily could be instituted comparable to the cost of the international seaplane flight from Seattle to Victoria – that is, $160+ one way, which is regularly used every day by business people and tourists. Facilitating a seaplane service between Lake Union and Coal Harbour would be a convenient, quick and scenic option from Seattle to Vancouver. Its utility, however, is severely limited in scale. Kenmore Air and Harbour Air, the largest American and Canadian seaplane services in the Pacific Northwest respectively, have fleets of 24 and 43 planes respectively. More importantly, most seaplanes only fit 6 to 7 passengers at a time. Even assuming eight daily flights this would only mean about 50 passengers per day. Nonetheless, these flights would provide an attractive alternative to conventional travel, particularly for business people and tourists.

Section 5: Conclusion recommending joint US/Canada I-5 Planning Committee and advocating for forward thinking regarding autonomous and ride-sharing infrastructure projects

As leaders in the global information economy, the Cascadia region needs to explore innovative ways to incorporate new technologies into our transportation planning process that can significantly reduce the cost of transportation and improve connectivity within the region.

Most technology industry experts believe that the widespread adoption of autonomous vehicles is a “when, not if” question. Indeed, we are already seeing public pilots of autonomous vehicles ferrying passengers to their destinations both domestically in Pittsburgh and internationally in . As transportation planners examine different options to connect the Cascadia corridor that may take 30 years or more to build, it is critical to consider the impact of these autonomous vehicle technologies in that planning process.

Autonomous vehicles will drastically change the way people get from Point A to Point B, and major transportation and technology companies are investing heavily in an autonomous future. Recently, GM paid more than $1 billion for the autonomous vehicle startup Cruise (more than 2% of its $50 billion market cap), and Uber acquired a self-driving truck company for $680 million. Our local, state, and federal governments need to understand this technology and invest accordingly as well. As the region moves forward in exploring different ways to connect the Cascadia region, autonomous vehicle technology needs to be a major consideration in any transportation plan.

We recommend that lawmakers enact legislation that allow autonomous vehicles to operate in the state of Washington and the province of British Columbia with clear guidelines. We also recommend establishing a joint US-Canadian commission composed of private and public sector leaders who could engage the University of Washington’s Mobility Innovation Center and a comparable group from the University of British Columbia to make recommendations on the best ways to incorporate autonomous vehicles in transportation planning and specifically to implement a plan for I-5. (9.19.16)




Anderson et al., Autonomous Vehicle Technology: A Guide for Legislators, RAND Corporation, 2016.

Foxx, Anthony, Remarks on Automated Vehicles at the Detroit Auto Show, Department of Transportation, January 14, 2016.

Insurance Institute for Highway Safety, “New Estimates of Benefits of Crash Avoidance Features on Passenger Vehicles,” Status Report, Vol. 45, No. 5, May 20, 2010.

President’s Council of Advisers on Science and Technology, Technology and the Future of Cities, Office of Science and Technology Policy, February 2016.

Shoup, Donald C., The High Cost of Free Parking, Planner’s Press, 2005.