Apple Is Building Its Largest Startup Ever

What was once discussed within certain technology circles is now in mainstream news. Apple is building a startup focused on designing an electric car. When compared to previous product initiatives, Apple is embarking on its most ambitious project in its history. In recent years, there has been much debate surrounding the factors that have contributed to Apple becoming the most valuable company in the world. There is growing evidence that Apple is confident it still has the keys to success. The startup team Apple is putting together and the corporate values that support such a team will determine Apple's ultimate success in the automobile industry. 

Project Titan

Apple wants to design a car and has formed its own startup to assemble a team of automotive and robotic experts. Apple's ambition with the automobile has been in the making for years, but only in recent months has Apple's outside hiring led many to conclude that development may be far more advanced than first thought. Unsurprisingly, most were skeptical of Apple designing its own car, especially if the untapped potential in the automative space was not clear. There continues to be many questions as to how Apple could position itself to come up with a new kind of experience on the road by designing the entire automobile. 

This past February, the WSJ gave the most detail about Apple's Project Titan project, reporting that Apple's automobile initiative had managerial hierarchy and structure. On September 21st, the WSJ revealed additional information about Project Titan, including news that it had progressed to the point of being given the green light with managers now having permission to expand the team to 1,800 people. Recent reports have pointed to Project Titan's headquarters being located in Apple-leased office space in nearby Sunnyvale, a short distance from Apple HQ in Cupertino.  

In recent months, there has been a running tally of employees believed to be working on Project Titan. Given that the team already includes hundreds of employees, the following list represents a small percentage of the total group. Nevertheless, a few trends become apparent.

  1. Project Titan is being led by long-time Apple managers dating back to the iPod development in the early 2000s.
  2. Apple already had numerous employees with automobile-related experience, including a few from the Industrial Design group. 
  3. Apple has poached employees from a range of automobile manufacturers including Tesla, Ford, Volkswagen, Fiat Chrysler, and Mercedes-Benz. 
  4. There is evidence that Apple is specifically interested in the areas of battery technology (A123 Systems hires) and autonomous driving (numerous hires). 
  5. Outside hiring continues to ramp indicating an increasing level of advancement, importance, and priority.  

As reported by the WSJ, Steve Zadesky appears to be playing a major role in Apple Car development. In addition, Jony Ive and Marc Newson will likely play a pivotal role in coming up not only with Apple Car's design, but also the materials and manufacturing processes involved in such a product. 

A Startup Mentality

Apple's ultimate success with Project Titan will depend not on whether Apple can build autonomous features into an automobile or come up with a breakthrough user interface. Rather, those features are byproducts of the much bigger product that Apple is trying to build: the best team of automotive experts in the world. Even though Apple prides itself on a culture that puts the product first, the biggest risk factor to Apple Car is corporate politics and too many layers of management and decision-making. Success will come from allowing ideas to grow from the design labs to showroom without having interference. In addition, having a team comprised of members with various backgrounds and experiences could prove to be detrimental in making technology more personal. The following table highlights Apple's increased ambition with Apple Car compared to iPhone and Apple Watch development.

Using the Same Apple Playbook for Apple Car

Early Apple Car development shares aspects of previous Apple product development cycles. In the mid-2000s, hundreds of engineers working on the iPhone were separated from the rest of Apple. Adam Lashinsky detailed the thought process behind this move in his book "Inside Apple":

"By selectively keeping some employees from concerning themselves with colleagues elsewhere in a giant company, Apple creates the illusion that these employees in fact don't work for a giant company. They work for a giant start-up...The original iPhone team, for example, didn't interact with the people working on the iPod, then the dominant and fast-growing product at Apple. The iPhone organization was allowed to raid the iPod group and other areas of the company for engineering talent. That's because the iPhone was a corporate priority, driven from the top."

Evidence suggests Apple Car is Apple's growing priority. Project Titan leadership has reportedly been poaching employees from other divisions, and one should expect this trend to intensity in the coming years. This is not to suggest that the iPhone, iPad, and Mac will be put on the back-burner. Instead, Apple is only now finding its stride with those products. As seen with the iPhone 6s / 6s Plus, Apple did not settle for a "S" cycle update but is instead much more focused on shipping new iPhone features each year that help support the shift to a leasing paradigm where many iPhone buyers upgrade to the latest iPhone model every year. Take a look at iPod trends back when the iPhone was being developed; Apple actually saw increasing iPod sales on new and innovative models all the way up to 2008. It is important to not underestimate the breadth of talent Apple has dedicated to its current product lineup, even after taking into consideration losses to Project Titan.

The other element that Apple has used masterfully to build suspense for its products over the years is secrecy. This extends even to the actual team working on the product under development. It is very likely only a small number of Project Titan members have seen automobile prototypes. This would be similar to the way Apple allowed very few people to know  the full story about the iPhone during development, as chronicled in Fred Vogelstein's "Dogfight: How Apple and Google Went to War and Started a Revolution": 

"Engineers designing the iPhone's electronics weren't allowed to see the software it would run. When they needed software to test the electronics, they were given proxy code, not the real thing. If you were working on the software, you used a simulator to test hardware performance." 

The end goal is simple: limit the number of people that have access to the most valuable information. 

Adapting the Apple Playbook to the Environment

There are signs that Apple isn't just trying to repeat the path to success taken with past products, but rather is adapting to the current environment. In a sign that Apple is moving beyond its traditional comfort zone with automobiles, the company has needed to look outside to hire many Project Titan team members. The intriguing theme found with Project Titan recruitment is that Apple has hired talent from various industries and fields including the current automotive industry, software and technology industries, and even R&D labs in academia. All of this is in contrast to how the iPhone was developed. The Apple vs. Samsung patent trial revealed certain aspects as to how the iPhone team came into existence. Scott Forstall, head of iOS software at the time, described some of the parameters including looking within to hire all software people:

"Steve [Jobs] didn't want to hire anyone from outside of Apple to work on the software, but he said I could hire anyone in the company I wanted. So I'd bring recruits into my office. Sit them down and tell them, 'You are a superstar at Apple. Whatever you are doing now, you'll do fine. But I have another project that I want you to consider. I can't tell you what it is. All I can say is that you will have to give up untold nights and weekends and that you will work harder than you have ever worked in your life."

Talent Wars

Personal transport will be the next big battleground for technology companies. We are already seeing the early stages of this battle when it comes to retaining talent, not to mention intense recruitment battles. One benefit, and some say reason, for all of the reports on Project Titan is that Apple is able to inform the world, unofficially, that they are assembling a team tasked with producing an electric car. In a way it can be thought of as a casting call sent out not just to other technology companies, but to entire industries including automobile manufacturers and supply chain management experts. One can also include the mapping and augmented reality fields as being connected to the automobile space, from which Apple has been actively acquiring talent over the past year.

Apple, Google, Tesla, and Uber have shown a willingness to get involved in the transportation space, and it is not unreasonable to expect others to join in the coming years. At the same time, current automakers are quickly building up their own R&D labs in Silicon Valley with the focus being on the software side of the equation, including autonomous driving. The winners in this war will be those that are able to attract the best and brightest. One way of accomplishing this goal is to create an environment conducive to achieving results. This is one benefit from Project Titan where new employees are likely brought on with the premise that the team acts like any other startup but has the backing of a $650 billion market cap company with $200 billion of cash and cash equivalents on the balance sheet. 

Tim Cook's and Jony's Role

Project Titan represents Apple's second new product category in the Tim Cook era. There are similarities in how the Apple Car and Apple Watch were developed which provide clues as to the type of leader Tim Cook is and how he thinks about Apple's values. With Apple Watch, Apple was willing to alter some of its outward appearance and take on slightly different goals involving wearables and luxury themes. This same philosophy will apply to Project Titan where Apple will need to change some of its practices, such as working with regulatory agencies more, in order to be able to ship a working product.

Tim Cook's role and value as CEO continues to come into focus: find the most talented people in a certain field, and get them to come to Apple by building the right kind of environment conducive to making the impossible seem in reach. Meanwhile, Jony is tasked with making sure the product always comes first, ranging from new iPhones and iPads to new Apple Stores and Apple Campus 2. 

Cook and Jony are overseeing Apple's largest creation yet: an electric car startup called Project Titan.

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