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Making Markets EP16: Driving Toward the Future with Luminar CEO Austin Russell
by Daniel Newman | November 15, 2021

On this episode of the Making Markets Podcast, host Daniel Newman welcomes Luminar CEO, Austin Russell to explore the company’s recent quarterly results while also digging into a series of design wins including a selection as NVIDIA’s reference design in its new Drive Hyperion 8 offering. The discussion looks closely at Lidar technology, how it is set to change the autonomous vehicle industry making the next generation of self-driving and assisted-driving cars safer and more intelligent.

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Disclaimer: The Making Markets podcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such. 

Transcript:

Daniel Newman: In the not too distant future we will be driven around by cars that drive themselves. We’re moving from Level 2, 2+, to Level 4 autonomy with our vehicles. And one of the companies that is leading the way is Luminar with their LiDAR for Long Range. This week the company was announced as part of a reference design for NVIDIA’s Hyperion 8. Its technology is found in the next generation of XC90 Volvos. And today we have CEO, Austin Russell joining us here on Making Markets.

Announcer: This is the Making Markets podcast brought to you by Futurum Research. We bring you top executives from the world’s most exciting technology companies, bridging the gap between strategy, markets, innovation, and the companies featured on the show. The Making Markets podcast is for information and entertainment purposes only. Please do not take anything reflected in this show, as investment advice.

Now, your host, Principal Analyst and Founding Partner of Futurum Research, Daniel Newman.

Daniel Newman: Austin Russell, CEO of Luminar, welcome to Making Markets.

Austin Russell: Yeah, thanks for having me.

Daniel Newman: Super excited to see you again. We’ve crossed paths in the real world, which in COVID time is kind of odd. A couple times now, I saw you in Germany, I saw you at COTA, at F1, where we had a very impromptu meeting in a parking lot. It’s good to see you again, here on video. It looks like you’re in San Jose? Or where are you today?

Austin Russell: Actually, today I am in Orlando, hence the kind of half palm tree.

Daniel Newman: That was a total… I absolutely missed that one, but you know what, it’s just my natural gravity towards cool technology, startups, breaking things, and disrupting things, must be in San Jose. But heck I moved to Austin, so I’m hoping more of that’s going to happen here as well, but-

Austin Russell: Well, Orlando is interesting because I was here, and we broke away from the traditional Silicon Valley trend, is the highest concentration of these type of LiDAR engineers out of anywhere in the world. It’s actually all largely driven from the defense industry and there are a lot of these original systems that were pioneered out of here. We do have a significant presence in Silicon Valley as well, in Palo Alto, which is great. And that’s where a lot of our software is. But when it comes to the core hardware development, advanced manufacturing, and everything goes into that, that’s out here.

Daniel Newman: And it’s funny that now that you said that, I still remember sitting in Germany talking to you where you actually explained that whole thing to me. So it’s a matter of memory and just, gosh, the world is going fast right now. But that was a really great time, by the way, everyone out there. I had the chance with the Luminar team, with Austin here, to get into one of their LiDAR powered vehicles, Long Range LiDAR powered vehicles. And I had a series of demonstrations and I actually published some videos. I will put some links in the show notes, but I didn’t, I don’t need Austin here to talk about all the great adventures we’ve had. We’ll have many more adventures in the future.

But just a quick start. I’ve got a couple questions for you. You just had earnings, you got some big announcements this past week, but I always like to just set the stage here on Making Markets. This show is all about getting between the lines, what the traditional coverage of companies often misses about them, and in your case, really interesting story, you mind giving just a quick couple minute background on kind of how Luminar came to be and how you ended up in this space?

Austin Russell: Yeah, for sure. I mean, so what started, it’s a project 10 years ago now. You develop a new type of LiDAR authentic system, from the ground up to be able to enable autonomous cars in the industry to happen for them to see and understand the world around them accurately. And ultimately building software on top of that, to be able to power the industry and make vehicles substantially safer and ultimately eliminate vehicle accidents.

So, it was a very intensive journey. We had to build up all the different components that we had from scratch in order to make this happen. You know, there was no combination of off-the-shelf parts that could make this work. That’s where we spent so many years just diving in, brought on some of the best engineers from around the world to be able to really execute against the vision that we had and from the technology roadmap that I laid out.

And this is something where we were able to produce effectively the first and only system that can actually meet this very stringent performance requirement that corresponds, safety economics, scalability as auto grade system for autonomous vehicles and actually going into production. And that was kind of the lead up, scaled up the business pretty significantly over the past handful of years. And now we even doubled in size alone this past year to now, it’s approaching 700 full-time and equivalent folks.

So it’s been a great journey and ride and yeah, with that we’re just continuing to focus and execute in the industry.

Daniel Newman: And you have one of the coolest tickers in the market, LAZR, L-A-Z-R, right?

Austin Russell: Yes.

Daniel Newman: So if you don’t follow the company, you would maybe, wouldn’t have the easiest time figuring out how Luminar ended up being LAZR. Before, I ask you about your earnings, is there any story there, how that actually came to be?

Austin Russell: Yeah, well, I mean, obviously we do lasers.

Daniel Newman: Right.

Austin Russell: So, with that, but it was actually, to give credit to our CFO, it was his idea. We were debating between, actually LT for Luminar Technologies was available, which is cool, but LAZR takes it to- [crosstalk]

Daniel Newman: I love it. And that was sort of obvious to me, but it doesn’t make the obvious connection to people. Because you know, given kind of the crazy year with SPAC, de-SPACing with some Meme-Stocks, and like I said, you’re far from an actual Meme-Stock based on the type of technology you’re building, but because you were a SPAC you sometimes got rolled-in and people would see LAZR. And I would actually be telling people about Luminar and I’d be like, “You know, L-A-Z-R.” And they’d be like, “Oh, I know that stock.” And I’m like, “You didn’t know Luminar.” and I’m like, “They’re the same thing.” Because people sometimes are looking for that obvious, like Zoom Z-M, Microsoft M-S-F-T, like something that’s super [crosstalk]

Austin Russell: Well L-M-N-R was actually there, but it was taken, I think, by some mining corporation a while ago.

Daniel Newman: Yeah, well that’s not cool and that’s not… I love the ticker and I think it’s a fun story to obviously be able to get something that’s catchy like that.

Austin Russell: Yeah.

Daniel Newman: Speaking of, you know, LAZR ticker, you just announced earnings yesterday, pretty significant revenue growth, some strong overall announcements. Quick, give me a quick overall impression on the quarter and the growth year over year.

Austin Russell: Yeah. So, the key is with this, is that we’ve just been executing to a T as it relates to product, programs, everything, what it takes to see this industry through and deliver it. For this past quarter we’ve actually really scaled up in terms of just number of new business wins that we’ve had. I mean, just in the past few months, and actually just a couple of days ago we had a big win within NVIDIA that we publicly announced and went out with. But also everyone from Polestar, Kodiak, Embark, Webasto and Alpha, like Mobileye just launched their vehicle, there’s a lot that’s happened and that’s just additive to what we’ve already had. I couldn’t have imagined how successful it would be, but that’s also part of the reason why the prior quarter we raised guidance and number of new wins and everything.

Obviously there’re revenues that and other things that all that, I mean that are right now, but I’d say any revenues, other stuff that happens today are from previously won programs. And now the real key is how you get to serious production. That’s where the financials really start mattering to a significant degree of scaling this up, penetrating the technology, and seeing that market adoption that it takes to be able to really proliferate this and standardize this. And that’s what’s only been accelerated.

Daniel Newman: So, to give the viewer a little bit more clarity there, ZENSEACT, Luminar announced a partnership not too long ago with Volvo and right, or on the XC90, I believe it is?

Austin Russell: Right. Right. So, yeah, Volvo is using our tech and they’re actually are deploying it in series production, just actually not too far around the corner here, on consumer vehicles, things that you can buy, this is historically this kind of tech has been constrained to test vehicles and development vehicles that are owned by autonomous vehicle development companies.

Daniel Newman: Yeah. The crazy Apple cars with the giant LiDAR systems on the roof. That’s what most people think about, right?

Austin Russell: Yeah, exactly. And you can see the Googles and as you said, Apples, or all the other types of tech companies and even Waymo crews, ARGO Aurora, they have these huge roof racks full of sensing system in a supercomputer in the truck to run the thing. Is a totally different transformation, whereas actually being embedded onto production vehicles and that’s something that’s really an industry first, to be able to make this happen. And it’s pretty exciting to see it through. And Volvo of course they’ve historically had a strong brand in safety and that’s what they’ve driven forward, where introduced new safety technologies before they get standardized throughout the rest of the industry. That’s exactly what’s happening here as well. So not only is it going to be an option on the vehicles, it’s now going to be embedded on new Volvo vehicles and platforms, introduced as standard, starting with the electric XC90. So that’s the…

Daniel Newman: Yeah, what I was trying to reiterate there, Austin was, when you talk about where does the revenue come, it, those kinds of wins that start to really aggregate into significant, more predictable revenue growth, right? And you start to see it in series and you start to see it across their portfolio and these OEMs state they implemented it in one vehicle and then they implemented across all their vehicles. And then you’ve got bigger targets out there with some of these names where they have like a Volkswagen group, I’m not saying you have that, but I’m saying where they have 20 OEM, 20 different. And then you start to create real scale for this technology being implemented. And I think there’s two big things happening at least in, from my perspective as a third party, because I don’t want you to have to speak to this, but is that, as they start to get standardized and people see that LiDAR technology, which can accomplish a lot of things that traditional sensor and radar cannot, can be safely added at an affordable price.

And you and I had a long talk about this in Germany, it becomes, it really becomes this, the required standard to meet what consumers want in the market and say, “Hey, you’re telling me you can offer another level of safety and you can make it affordable within the realm of what I’m going to pay for my next vehicle. Why would you not do that?” And it starts to become a question that really becomes a favorable situation for a company like Luminar.

Austin Russell: Totally 100%. And I think that’s absolutely it and you know, this is that whole next generation wave of technology. And in fact, if you could actually have a safety benefit that’s so significant, like at this level, because here’s the thing, 95% of accidents were caused by human error. And there’s the direct opportunity to be able to prevent that with this kind tech.

So moving towards the vision of ultimately building the uncrashable car, so to say. And with that, the distinction here is the savings from safety are actually so significant. I mean, there’s an ultimate vision of where you see this almost included for free on every vehicle that’s out there, just by recapturing the safety savings and everything from an insurance perspective and from other things. Obviously that’s over the longer term, but this is something that automakers are willing to already make bets on today. Like Volvo has and ultimately like other automakers will as well. Now of course, a lot of times it starts on higher-end vehicles and proliferates down to mid-range and lower range vehicles, but that said, this doesn’t have to be on a super car, you know, to start out, it’s already going on mainstream vehicle platforms.

Daniel Newman: Yeah. And that’s what I really liked. And by the way, when I saw the way long range could get out in front of a vehicle where a child running out after a ball and it could actually be the difference between traditional L2+ ADAS technologies using radar and sensors versus using LiDAR. I watched in real time, one child be legitimately run over and the other one’s life was saved. And if that doesn’t make you think twice when you’re at the dealership about what kind of technology on your car, you need to see that demo.

Austin Russell: And for making clarity, these are crash dummies.

Daniel Newman: Yes, I apologize if I wasn’t clear on that. Thank you. They did not use any real humans in these demonstrations.

Yeah. So you mentioned Hyperion 8 and NVIDIA had a huge week with GTC. And this was a big week for you and it was something that I thought was worth reiterating, here on Making Markets, because the initial announcement came out. And of course they talked about a handful of different LiDAR technologies being compatible with Hyperion 8, but it looked to me and from what I understand, is that Luminar’s technology was chosen as reference design, which is like gold in the world of being a partner with a company like NVIDIA, big deal for you guys? Excited? Is that going to be a pretty, you see that as a pretty big growth vehicle?

Austin Russell: Oh, absolutely. I mean, this is one of the, maybe the biggest wins that we had this year. It’s a really a platform play, it’s, so being integrated into their full stack solution, that they’re developing their stack on top of, is absolutely key. And again, there’s an important distinction here too, and NVIDIA works with a lot of different companies there too that say buy their chips or compatible with building stuff that could work on chips. That’s not what we’re talking about here. And that’s I don’t think particularly newsworthy, but maybe were some, if there was any confusion on that with other companies, the key distinction here is they’re actually building the full stack on top of the data, on top of the LiDAR, on top of these capabilities, such that when they’re winning in the industry, we’re winning right alongside with him.

And that’s what makes it really interesting and valuable. Ultimately, we’ve really cornered a lot of the market at this stage, if you take a look at the two key players of this, you have NVIDIA and you have Mobileye and from a compute standpoint and that’s something that from a systems’ perspective we’ve been designed into both. And additionally, we work with OEMs directly ourselves as well. There’s a lot of different aspects of it, but we’re basically, we’re creating the scenario of the heads we win, tails we win type circumstance, where regardless of the specific outcome of who they’re working with, which we do think NVIDIA is incredibly promising and they have a lot ahead of themselves, but you know that we’ll be alongside it.

Daniel Newman: Absolutely. I mean, there’s a company there that’s had massive momentum. I wrote a piece on Market Watch about a year and a half ago where I said that they’re going to be the next trillion dollar company and-

Austin Russell: Well, that was a bold bet at the time, but hey, it’s happening, right?

Daniel Newman: Yeah. Well it was right around when ARM, it’s basically hedging on the ARM deal getting done, which is probable. But some of these advancements in other areas like Omniverse, and of course they call Omniverse. Some people are calling it Metaverse, it’s basically the blending of our, it’s basically you and I having this conversation in Avatar form and sometime in the future, right?

Austin Russell: Should we now announce that Luminar is compatible with the Metaverse?

Daniel Newman: Well, I hope so. I mean, you guys got to get that synthetic data, you got to be able to do that, I’m kind of kidding, but the digital twin. Is a great way to get a whole bunch more data for real world applications. And I don’t know if you’re actually doing that, but it’s certainly a way to test crash safety and stuff like that. And we’re going to see more and more of that as these technologies continue to proliferate.

Austin Russell: One last thing I was going to say, though, is, actually, if you look at our LiDAR RD and everything, it almost feels like you’re in The Matrix in some ways too, as you’re like flying through it. I don’t know if you saw the demo with all the different colors and all this stuff, it’s truly a 3D map of everything going on. So I guess there is actually some legit correlation, but anyway, yeah.

Daniel Newman: So yeah, no, it’s a great point. It’s something we’re definitely going to be going up against.

With just a couple minutes I have left, you guys are ahead or on par right now with, I think you guys have your big five milestones and it looks like you guys have met all of them?

Austin Russell: Yeah. Yeah. I mean, we’ll do the official tally for the end of the year, but we’ve been beating pretty much, or meeting, all of them at this stage. And we actually raised guidance on a few of them, even in this past quarter. So, we’ve been tracking through that well. We’ve been tracking all of our respective internal goals, milestones for what we’ve talked about publicly. That’s been good.

But for sure, it’s really important to be able to also just be open about how you’re measuring big picture progress for this, obviously there’s a lot of different things that we have going on internally, but the question is like, what does it mean? How do you measure overall progress for the business and where you’re going and that’s something that’s been exciting for us and just powering through getting it done. I think we would all be pretty blown away if you said at the beginning of the year, what we were able to accomplish now, so it’s been good.

Daniel Newman: Well, it’s going to only continue to move faster. So right around the corner, the world has opened up a little bit. Like I said, we saw each other in public. The safety requirements were pretty stringent and but we do, we have a couple of COVID-19 pills now, therapeutics coming out and they’re going to be available in abundance. And between the vaccine, the therapeutics, and I think the overwhelming desire by society to get back to some level of normalcy and events and mobility, it looks like CES is going to happen, it looks like MWC is going to happen. I imagine you guys are going to be at both of these, any big predictions as to some of the big announcements, what to expect in the new year from Luminar and then from the broader EV’s connected vehicle space?

Austin Russell: Yeah. I mean, for CES, we are all in. We’re going to have a blowout CES. I would say with all these different things we got going on, we’re going to be doing. We’re actually going to be showing off our software stack for the first time publicly, with live demonstrations there too, for anyone to be able to go in. It’s going to be in a really interesting setup of both our vehicles and Luminar equipped vehicles as well as existing vehicles of how they do in these kind of proactive safety situations. So imagine, kind of Dan, what you experienced in Germany, but to the extreme.

And then equivalently, we’re going to be launching a couple other things as well, which will be some exciting stuff and making it a reality, but you’ll have to see it, check it out. So we’d welcome anyone that’s going to, that’s thinking going to go and come on and check out what we got going on, as well as everything else. It’ll be seemingly the first kind of major event that’s happening, in a post COVID or since the start of COVID, so to say. So it’ll be cool.

Daniel Newman: What a just absolute crazy year and a half it’s been, so-

Austin Russell: Yeah, seriously.

Daniel Newman: One last question before I let you fly. It’s my favorite question to ask here on Making Markets, what do you think maybe is the biggest thing that the market, or that people are not appreciating about your company that they should be?

Austin Russell: Hmm, it’s a fair question. I think there’s actually a lot to it, is it people are very good at looking at the service level, but then the question is, is that everything that goes down beneath it? And I think… I would say the most, the big picture, the most significant thing is that we really have the, I mean just from a positioning standpoint in the broader market, I think we have the only clear trajectory and technical capability for how to actually capitalize and monetize on the holistic autonomous vehicle theme and trend, and by leveraging existing production vehicles and OEMs and lines and everything that goes into that, there’s a lot of different efforts going on with robotaxis, with assisted driving efforts, like all of the Tesla autopilots of this world that sometimes people try and call self-driving that are not self-driving at all.

Daniel Newman: Clearly, based on their track record.

Austin Russell: Exactly. And that it’s assisted driving, and that’s the problem is people get confused because the naming is weird. And the same thing for robotaxi systems, they’re full systems. These are, they have $100,000 roof rack full of sensor systems and a supercomputer in the trunk, so that doesn’t work either. We’ve compressed all that technology, amplified the performance of a 10X and gotten down into this $1,000 system that can actually go into a car that you can buy from OEMs that produce these vehicles at scale. And that’s the thing that I still think sometimes is it can be lost on folks. And at the same time too, I mean, a lot of people see us as a LiDAR company specifically, or kind of like a component company of what’s there, what’s the all this of what’s going on.

The reality is that we are all-in as a solutions company, a software company, as much as anything with our hardware, to be able to enable this. And that’s like the stuff of what you saw, there’s so much that goes into that stack to enable an end-to-end solution that’s unlike what anyone in the industry has seen or is capable of developing at this stage. And that’s where we really have the first opportunity to capitalize and monetize. And I think the other side of it is, obviously is that I think that there’s a broader trend of, there’s a lot of different types of companies out there. There’s interesting, particularly in the past year, a lot of obviously SPACd companies as well.

We were at the forefront of kind of that trend. And I think people really took it to heart. And I think saw some of the success that we had amongst a couple other companies. But I think part the challenge is that there’s been a lot of variation in quality of companies as well, that have gone public. And it’s interesting to see that all play out of where we’re obviously staying super focused on a core vision and what we’re doing because we know that there’s a direct opportunity to win the industry, if we can, and build an incredibly valuable business. The ultimate goal is to try and build as one of the next great technology companies of our generation, but it’s going to take a lot to get there. And I think with that, being able to see the tech, the technology that we have is here today and we have to successfully execute and deploy. We’re not trying to fundamentally build something new.

There’s a lot of companies that probably very much shouldn’t be public at this stage or shouldn’t be out there with certain sets of claims and everything. We’re trying to build a lot of trust and credibility here. And to be able to execute over the long term and have that kind of five year and 10 year type time horizon on what we want to do.

So that’s the quick overview I’d say of that can be overlooked holistically when it comes down to it, but it’s a really important one.

Daniel Newman: Well, you hit it on the head and you gave me way more than I could have hoped for there, Austin. I appreciate that. I mean, obviously you guys are doing things that can impact the world immediately, that can support the current existing OEMs to be able to make safer vehicles, to help them get to the Level 4 through a solutions approach.

And then of course, I do like the fact that you pointed that out, not all SPACs or publicly traded companies are created equal in that sometimes because of some of this, the stuff that happened later in that whole SPAC craze, some people are judging based upon that. And Luminar certainly is doing disruptive stuff and is in the market today.

So Austin Russell, CEO Luminar, thank you so much for joining Making Markets.

Austin Russell: All right. Thanks.

Talk to you soon.

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About the Author

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio