Don’t think gold. Think blue jeans.

When most people think of autonomous vehicles, they think of cars.

Thought of Tesla, didn’t you?

Elon Musk is such a master promoter that most people think of electric vehicles and envision a Tesla. What you and I would give to be able to capture mind share like that.

Lots of other car companies entering the electric vehicle market think that way. The list is getting exhausting. BMW, Nissan, Hyundai, Kia, Renault, Audi, Hummer, Range Rover, Porsche, Lotus, Dacia, Polestar, Skoda, Vauxhall, MG, Fisker, Seat, Cupra, Byton, Lightyear, Rivian, Faraday, and ID. Are your eyes rolled in the back of your head yet?

How do you compete with that?

You likely don’t. It takes a lot of capital to build a car factory. Elon Musk you’re not. The holy grail of most investors you stand a chance of raising capital from is a business that can grow really fast without a ton of capital.

They aren’t looking to fund a car factory. Even if you could build one, there aren’t enough market niches for all these car competitors to survive. The shakeout will be painful with lots of dead carcasses lying around everywhere.

Where else to look?

The best market niches for vehicles aren’t cars. One of the most successful electric vehicle companies I have known is Proterra, which makes electric buses and for a while was headquartered in my hometown of Greenville, SC.

OK, it takes lots of capital to build buses. Proterra raised hundreds of millions of dollars from Kleiner Perkins and others. At least, through, Proterra can dominate the market for electric buses. Everyone and his brother aren’t trying to build an electric bus.

Steve LeVine at The Mobilist recently wrote a couple of articles about batteries: Will Ultra-Cheap Batteries Drive a New Roaring Twenties? and Who Will Win the Age of Battery Nationalism? He notes battery prices dropping will drive a lot of innovation, observing that the vehicles will evolve into those

whose wheels can be retracted, park sideways, and drive in micro-mobility lanes protected from large vehicles, as well as delivery bots toting e-commerce packages.

Vehicles morphing into computers on wheels means they will come in new sizes and shapes doing different jobs than vehicles today. Right now you recognize the Amazon Prime delivery driver frequently in your neighborhood. Soon they’ll just send the Amazon robot to your door… that is until the FAA allows them to fly over the delivery drone.

More importantly, Steve’s found the entrepreneurial scent. The best opportunities aren’t the vehicles themselves, but the components of the vehicles.

The best places to look

Great entrepreneurial opportunities around electric and autonomous vehicles are highlighted by the Clemson University International Center for Automotive Research. They recently announced $18M in funding from the US Army to support a new Virtual Prototyping of Ground Systems Center. They will build and validate various virtual models and simulations for off-road vehicles with:

• advanced electrified propulsion,
• situational intelligence,
• AI-enabled autonomy and
• team-routing algorithms.

CU-ICAR says that three themes characterize the research efforts:

• off-road autonomy for multi-scale vehicle fleets;
• propulsion systems and smart energy; and
• virtual prototyping and digital engineering for autonomy-enabled off-road vehicles.

Many of these are the kinds of digital innovations that are capital efficient and can grow into unicorn businesses very rapidly. Validate that you have discovered one of these seams in the market and investors will flock to your mine.

The Biden administration says they are going to spend $1 trillion on electric vehicles and infrastructure. Through your entrepreneurial eyeglasses don’t read “vehicles” read “infrastructure”.

Think blue jeans

In 1849, California was flooded with people thinking they could strike it rich mining for gold. A few miners struck it rich. Most spent a lot of money and a ton of time only to come up empty.

Most of the people who made most of the money in the California gold rush sold pickaxes, shovels, and blue jeans to the miners.

Maybe you can be the next Elon Musk, who knows? But more likely, you’ll make your fortune becoming the next Levi Strauss.

There’s gold in them thar hills. Be smart about where you look for it.