Business
Column: Excited about AI and self-driving cars? A top roboticist is here to burst your bubble
If you’re a fan of techno-hype, 2023 was the year for you.
Believers felt themselves validated by seeing excitement and fear about AI chatbots reach previously untouched heights. Skeptics may have felt initially confounded by the rollout of driverless robotaxis in San Francisco and a few other cities, but ultimately validated when they were ordered off the streets by authorities concerned at their tendency to create traffic jams, interfere with emergency responses, and injure the occasional bystander.
Everyone else was probably confused by the relentless promises by commercial tech promoters that we were standing on the doorstep of a new world.
Get your thick coats now. There may be yet another AI winter, and perhaps even a full scale tech winter, just around the corner. And it is going to be cold.
— Rodney Brooks
Rodney Brooks is here to put it all in perspective, with his sixth annual Predictions Scorecard.
As he wrote in issuing the scorecard Jan. 1, this is his “sixth annual update on how [his] dated predictions from January 1st, 2018 concerning (1) self driving cars, (2) robotics, AI , and machine learning, and (3) human space travel, have held up.”
Long story short: They’ve held up very well.
Why should we care what Brooks thinks? As I wrote a year ago in reporting on his fifth annual scorecard, Brooks is “one of the world’s most accomplished experts in robotics and artificial intelligence … a co-founder of IRobot, the maker of the Roomba robotic vacuum cleaner; co-founder and chief technology officer of RobustAI, which makes robots for factories and warehouses; and former director of computer and artificial intelligence labs at MIT.”
In other words, he’s the opposite of a Luddite. On the contrary, Brooks is deeply involved in technology research and development, but sufficiently independent-minded to call out hype where he sees it. He sees it a lot.
He is also a hands-on technology analyst. During 2023, he writes, he took almost 40 rides in Cruise robotaxis in San Francisco and wrote several blog posts about the experience.
On the whole, he found them less flexible or expedient than Lyft or Uber; the cars wouldn’t service his street and they were delayed or the rides canceled more often than the ride-hailing services.
He witnessed some decidedly dangerous behavior by the vehicles that would not have happened with human drivers, and on one occasion the Cruise in which he was riding froze in the middle of an intersection right in the path of an oncoming vehicle, to the point where Brooks was convinced he was about to be the victim of a violent collision. Luckily, the other driver slowed down, averting the accident.
“I have spent my whole professional life developing robots and my companies have built more of them than anyone else,” he writes in his scorecard, “but I can assure you that as a driver in San Francisco during the day I was getting pretty frustrated with driverless Cruise and Waymo vehicles doing stupid things that I saw and experienced every day.”
Rodney Brooks
(Christopher P. Michel)
Brooks pigeonholed his original 2018 predictions into three categories: technological advances projected to happen by a given date; those he expected to happen no earlier than a given date; and those he projects to happen “not in my lifetime” or “NIML” — meaning not before 2050, when he will have turned 95.
Since then, he has scored his and others’ predictions against those yardsticks. On the whole, Elon Musk’s 2015 prediction that the first fully autonomous Tesla would appear in 2018 and be approved by regulators by 2021, for example, gets a failing grade on both counts, since neither happened within the predicted time frame.
Let’s take a look at some of Brooks’ other scores.
Self-driving and electric cars take up the largest share of Brooks’ 2024 scorecard. In part, that’s because the technologies have occupied so much public mind space: When he first issued his dated predictions, he writes, “the hubris about the coming of self driving cars was at a similar level to the hubris in 2023 about ChatGPT being a step towards AGI (Artificial General Intelligence) being just around the corner.”
The focus then was on the advent of Level 4 autonomy, in which the car can do everything though human override is still possible and occasionally required; and Level 5, in which no human interaction is needed. Through 2017, car manufacturers, autonomous systems developers and ride-hailing firms such as Uber were predicting that self-driving cars would be available no later than 2022.
As of now, Brooks notes, “there are no self driving cars deployed (despite what companies have tried to project to make it seem it has happened).” The prospects for robotaxis, he adds, “took a beating” in 2023, with Cruise robotaxis being ordered off the streets. General Motors, the owner of Cruise, appears to be growing disenchanted with the enterprise after having poured billions of dollars into it; Cruise chief executive and co-founder Kyle Vogt resigned in November.
Meanwhile, Waymo, the leading Cruise competitor, is a money pit for its owner, Alphabet. As for Tesla, where Musk constantly issues torrents of hype about self-driving being already achieved, if you believe anything Musk says on any topic, that’s your problem.
Brooks is a believer in electric cars; he owns one and says he loves it. But he is also fully alive to the obstacles still confronting their market growth. Many people even in affluent neighborhoods have no access to private parking spaces where they can charge up day or night.
“Having an electric car is an incredible time tax on people who do not have their own parking spot with access to electricity,” Brooks observes. That’s one reason that EV sales are plateauing, except in pockets such as West Coast cities and Washington, D.C. At this moment, the future of the electric car rollout appears to be in hybrids, which will run on electricity or gasoline.
Then there’s artificial intelligence, a field with which Brooks is intimately familiar and that he watches very carefully.
He is especially wary of the public’s tendency to project contemporary claims ahead to the science fiction of robots taking over the Earth.
He doesn’t expect to see “a robot that seems as intelligent, as attentive, and as faithful as a dog” before 2048. “This is so much harder than most people imagine it to be,” he writes. “Many think we are already there; I say we are not at all there.”
And “a robot that has any real idea about its own existence, or the existence of humans in the way that a six year old understands humans”? Not in his lifetime.
Brooks predicted in 2018 that the “next big thing” in AI beyond deep learning, which was what the field had reached by then, would emerge between 2023 and 2027, though he did not know what it would be.
It happened in 2023, with the emergence of large language models, or LLMs — the ChatGPT-style chatbots that have consumed the attention of the entrepreneurial world and the popular press over the last year.
In his writings and a talk he gave at MIT in November, Brooks has been “encouraging people to do good things with LLMs but to not believe the conceit that their existence means we are on the verge of Artificial General Intelligence.”
But he takes the long view of AI — not merely looking ahead, but looking back at AI’s past. The field, he writes, is “following a well worn hype cycle that we have seen again, and again, during the 60+ year history of AI.”
The lesson that Brooks strives to leave us with is that technological progress almost always takes longer than we expect — the last mile in research and development may look like a trivial challenge, given the accomplishments that preceded it. But it’s often the most difficult part of the path to traverse.
Moreover, the progress of a new technology can often be mapped as peaks of achievement interspersed with troughs of disappointment and disaffection.
“Get your thick coats now,” he concludes. “There may be yet another AI winter, and perhaps even a full scale tech winter, just around the corner. And it is going to be cold.”
Business
Startup Varda Space Industries snags former Mattel plant in El Segundo
In an expansion of its business of processing pharmaceuticals in Earth’s orbit, Varda Space Industries is renting a large El Segundo plant where toy manufacturer Mattel used to design Hot Wheels and Barbie dolls.
The plant in El Segundo’s aerospace corridor will be an extension of Varda Space Industries’ headquarters in a much smaller building on nearby Aviation Boulevard.
Varda will occupy a 205,443-square-foot industrial and office campus at 2031 E. Mariposa Ave., which will give it additional capacity to manufacture spacecraft at scale, the company said.
Originally built in the 1940s as an aircraft facility, the complex has a history as part of aerospace and defense industries that have long shaped the South Bay and is near a host of major defense and space contractors. It is also close to Los Angeles Air Force Base, headquarters to the Space Systems Command.
Workers test AstroForge’s Odin asteroid probe, which was lost in space after launch this year.
(Varda Space Industries)
Varda is one of a new generation of aerospace startups that have flourished in Southern California and the South Bay over the last several years, particularly in El Segundo, often with ties to SpaceX.
Elon Musk’s company, founded in 2002 in El Segundo, has revolutionized the industry with reusable rockets that have radically lowered the cost of lifting payloads into space. Though it has moved its headquarters to Texas, SpaceX retains large-scale operations in Hawthorne.
Varda co-founder and Chief Executive Will Bruey is a former SpaceX avionics engineer, and the company’s spacecraft are launched on SpaceX’s workhorse Falcon 9 rockets from Vandenberg Space Force Base in Santa Barbara County.
Varda makes automated labs that look like cylindrical desktop speakers, which it sends into orbit in capsules and satellite platforms it also builds. There, in microgravity, the miniature labs grow molecular crystals that are purer than those produced in Earth’s gravity for use in pharmaceuticals.
It has contracts with drug companies and also the military, which tests technology at hypersonic speeds as the capsules return to Earth.
Its fifth capsule was launched in November and returned to Earth in late January; its next mission is set in the coming weeks. Varda has more than 10 missions scheduled on Falcon 9s through 2028.
For the last several decades, the Mariposa Avenue property served as the research and development center for Mattel Toys. El Segundo has also long been a center for the toy industry as companies like to set up shop in the shadow of Mattel.
The Mattel facility “has always been an exceptional property with a legacy tied to aerospace innovation, and leasing to Varda Space Industries feels like a natural continuation of that story,” said Michael Woods, a partner at GPI Cos., which owns the property.
“We are proud to support a company that is genuinely pushing the boundaries of what’s possible, and are excited to watch Varda grow and thrive here in El Segundo,” Woods said.
As one of the country’s most active hubs of aerospace and defense innovation, El Segundo has seen its industrial property vacancy fall to 3.4% on demand from space companies, government contractors and technology startups, real estate brokerage CBRE said.
Successful startups often have to leave the neighborhood when they want to expand, real estate broker Bob Haley of CBRE said. The 9-acre Mattel facility was big enough to keep Varda in the city.
Last year, Varda subleased about 55,000 square feet of lab space from alternative protein company Beyond Meat at 888 Douglas St. in El Segundo, which it started moving into in June.
Varda will get the keys to its new building in December and spend four to eight months building production and assembly facilities as it ramps up operations. By the end of next year, it expects to have constructed 10 more spacecraft.
In the future, Varda could consolidate offices there, given its size. Currently, though, the plan is to retain all properties, creating a campus of three buildings within a mile of one another that are served by the company’s transportation services, Chief Operating Officer Jonathan Barr said.
“We already have Varda-branded shuttles running up and down Aviation Boulevard,” he said.
Business
How Iran War Is Threatening Global Oil and Gas Supplies
Ships near the Strait of Hormuz before and after attacks began
Every day, around 80 oil and gas tankers typically pass through the Strait of Hormuz, the narrow waterway off Iran’s southern coast that carries a fifth of the world’s oil and a significant amount of natural gas.
On Monday, just two oil and gas tankers appear to have crossed the strait, according to a New York Times analysis of shipping activity from Kpler, an industry data firm. Since then, one tanker passed through.
“It’s a de facto closure,” said Dan Pickering, chief investment officer of Pickering Energy Partners, a Houston financial services firm. “You’ve got a significant number of vessels on either side of the strait but no one is willing to go through.”
Tankers have been staying away from Hormuz since the U.S.-Israeli attacks on Iran that began on Saturday. A prolonged conflict could ripple broadly across the global economy, threatening the energy supplies of countries halfway around the world and stoking inflation.
International oil prices have climbed 12 percent since the fighting began, trading Tuesday around $81 a barrel, and natural gas prices have surged in Europe and in Asia.
A senior Iranian military official threatened on Monday to “set on fire” any ships traveling through the Strait of Hormuz. Vessels in the region have already come under attack. Several oil and gas facilities have also been struck or affected by nearby shelling, though the damage did not initially appear to be catastrophic.
Where ships and energy facilities have been damaged
A fire broke out Tuesday at a major energy hub in Fujairah, United Arab Emirates, from the falling debris of a downed drone, the authorities said. On Monday, Qatar halted production of liquefied natural gas, or fuel that has been cooled so that it can be transported on ships, after attacks on its facilities.
The sharp reduction in tanker traffic is reducing the supply of oil and gas to world markets, pushing up prices for both commodities. And the longer that ships stay away from the Strait of Hormuz, the less oil and gas get out to the world, which could raise prices even more.
Shipping companies have paused their tankers to protect their crew and cargo, and because insurance companies are charging significantly more to cover vessels in the conflict area.
On Tuesday, President Trump said that “if necessary,” the U.S. Navy would begin escorting tankers through the strait. He also said a U.S. government agency would begin offering “political risk insurance” to shipping lines in the area.
In addition to tankers, other large vessels regularly go through the strait, including car carriers and container ships. In normal conditions, nearly 160 make the trip each day.
Some ships in the region turn off the devices that broadcast their positions, while others transmit false locations — making it hard to give a full picture of the traffic in the strait.
The Shiva is a small oil tanker that has repeatedly faked its location, according to TankerTrackers.com, which tracks global oil shipments. It is suspected of carrying sanctioned Iranian oil, according to Kpler. The Shiva was one of the two tankers that crossed the strait on Monday.
The oil and gas that typically move through the strait come from big producing countries like Saudi Arabia, Iraq, Iran and United Arab Emirates, and are exported around the world.
Where tankers moving through the Strait have traveled
In 2024, more than 80 percent of the oil and gas transported through the Strait of Hormuz went to Asia. China, India, Japan and South Korea were the top importers, according to the U.S. Energy Information Administration.
Countries have energy stockpiles that could last them into the coming months, but a continued shutdown of the strait could damage their economies.
Several big disruptions have roiled supply chains in recent years, but the tanker standstill in the Strait of Hormuz could have an outsize impact.
Business
Paramount credit downgraded to ‘junk’ status over debt worries
Paramount Skydance’s jubilation over its come-from-behind victory to claim Warner Bros. Discovery has entered a new phase:
Call it the deal-debt hangover.
Two major ratings agencies have raised concerns about Paramount’s credit because of the enormous debt the David Ellison-led company will have to shoulder — at least $79 billion — once it absorbs the larger Warner Bros. Discovery, bringing CNN, HBO, TBS and Cartoon Network into the Paramount fold.
Fitch Ratings said Monday that it placed Paramount on its “negative” ratings watch, and downgraded its credit to BB+ from BBB-, which puts the company’s credit into “junk” territory. Fitch said it took action due to “uncertainty” surrounding Paramount’s $110-billion deal for Warner Bros. Discovery, which the boards of both companies approved on Friday.
S&P Global Ratings took similar action.
To finance the Warner takeover, Ellison’s billionaire father, Larry Ellison, has agreed to guarantee the $45.7 billion in equity needed. Bank of America, Citibank and Apollo Global have agreed to provide Paramount with more than $54 billion in debt financing.
“Potential credit risks include the prospective debt-funded structure, Fitch’s expectation of materially elevated leverage and limited visibility on post-transaction financial policy and capital structure,” Fitch said.
Late last week, Paramount sent $2.8 billion to Netflix as a “termination fee” to officially end the streaming giant’s pursuit of Warner Bros. That payment paved the way for Warner and Paramount’s board to enter into the new merger agreement.
Paramount hopes the merger will be wrapped up by the end of September. It needs the approval of Warner Bros. Discovery shareholders and regulators, including the European Union.
Paramount executives acknowledged this week the new company would emerge with $79 billion in debt — a considerably higher total than what Warner Bros. Discovery had following its spinoff from AT&T. That 2022 transaction left Warner Bros. Discovery with nearly $55 billion of debt, a burden that led to endless waves of cost-cutting, including thousands of layoffs and dozens of canceled projects.
Warner still has $33.5 billion in debt, a lingering legacy that will be passed on to Paramount.
Paramount plans to restructure about $15 billion in Warner Bros. Discovery’s existing debt.
Paramount CEO David Ellison at a 2024 movie premiere for a Netflix show.
(Evan Agostini / Invision / AP)
Paramount told Wall Street it would find more than $6 billion in cost cuts or “synergies” within three years — a number that has weighed heavily on entertainment industry workers, particularly in Los Angeles.
Hollywood already is reeling from previous mergers in addition to a sharp pullback in film and television production locally as filmmakers chase tax credits offered overseas and in other states, including New York and New Jersey.
Some entertainment executives, including Netflix Co-Chief Executive Ted Sarandos, have speculated that Paramount will need to find more than $10 billion in cost cuts to make the math work. More recently, Sarandos went higher, telling Bloomberg News that Paramount may need $16 billion in cuts.
Cognizant of widespread fears about additional layoffs, Paramount Chief Operating Officer Andrew Gordon took steps this week to try to tamp down such concerns.
Gordon is a former Goldman Sachs banker and a former executive with RedBird Capital Partners, an investor in Paramount and the proposed Warner Bros. deal. He joined Paramount last August as part of the Ellison takeover.
During a conference call Monday with analysts, Gordon said Paramount would look beyond the workforce for cuts because the company wants to maintain its film and TV production levels.
Paramount plans to look for cost savings by consolidating the “technology stacks and cloud providers” for its streaming services, including Paramount+ and HBO Max, Gordon said. The company also would search for reductions in corporate overhead, marketing expenses, procurement, business services and “optimizing the combined real estate footprint.”
It’s unclear whether Paramount would sell the historic Melrose Avenue lot or simply centralize the sprawling operations onto the Warner Bros. and Paramount lots in Burbank and Hollywood.
Workers are scattered throughout the region.
HBO, owned by Warner Bros. Discovery, maintains its West Coast headquarters in Culver City; CBS television stations operate from CBS’ former lot off Radford Avenue in Studio City; and CBS Entertainment and Paramount cable channels executive teams are located in a high-rise off Gower Street and Sunset Boulevard, blocks from the Paramount movie studio lot.
“The combination of PSKY and WBD could create a materially stronger business than either individual entity,” Standard & Poor’s said in its note to investors. “However, this transaction presents unique challenges because it would involve the combination of three companies, with the smallest, Skydance, being the controlling entity.”
David Ellison’s production firm, Skydance Media, was the entity that bought Paramount, creating Paramount Skydance.
Ellison has not announced what the combined company will be called.
Paramount shares closed down more than 6% Tuesday to $12.45.
Warner Bros. Discovery fell 1% to $28.20. Netflix added less than 1% to close at $97.70.
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