Fortune – In a single night, self-driving startup Cruise went from sizzling startup to cautionary tale. Here’s what really happened—and how GM is scrambling to save its $10B bet

See original article by Jessica Mathews at Fortune.com

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October 2 was a quiet night on the streets of San Francisco. It was moderately cloudy, and Fleet Week activities had just begun at Sunset Library. But in the Tenderloin neighborhood, at 9:29 p.m., a pedestrian stepped out into the street, crossing Fifth and Market, and was struck by a green Nissan Sentra sedan. What happened next would ripple all the way through one of the largest corporations on earth—GM.

Because after the woman was struck the first time, “Panini”—one of the self-driving robo-taxis in Cruise’s fleet that had been out on the streets for about a year and a half—ran over her, stopped, and then dragged the woman for 20 feet as it tried to pull over.

Within seconds of the initial impact, Cruise’s control room in Scottsdale, Ariz.—where hourly agents monitored Cruise’s fleet 24 hours a day in cubicles fitted with three computer screens—was looped in. By the time a live three-second video of the incident transmitted onto the computer screens in front of Cruise’s remote assistance agents, the car had already incorrectly labeled the incident as a side collision and begun to pull over, unaware it was dragging a human body beneath its wheels. 

An exhaustive internal investigation reconstructed nearly every detail of the accident, but it couldn’t clear up exactly what Cruise’s remote assistance team saw that evening. One thing is certain: The incident was the most serious in Cruise’s history, and it immediately thrust the robo-taxi company and its 80% owner, General Motors, into a spiral of federal scrutiny and investigations as well as public outrage and condemnation.

Before the end of October 2023, regulators were alleging that Cruise had withheld important details of the incident from them. California’s Department of Motor Vehicles had rescinded Cruise’s operational permit, leading Cruise to voluntarily pull its vehicles off the streets across the U.S. GM—which had largely let the company run independently, despite its close communication with senior leadership and operations—swept in to replace nearly all of Cruise’s management, shuffle up its board, and lay off nearly a quarter of its almost 4,000 employees in a bid to salvage Cruise’s reputation and preserve the more than $10 billion that GM has plowed into the company over the last eight years. 

Cruise—once a crown jewel of General Motors CEO and Cruise Chair Mary Barra’s broader strategy to rival electric competitor Tesla—suddenly had become an outsize liability, just as General Motors was simultaneously trying to manage the six-week union strike by workers of the Big Three U.S. automakers that was threatening its business. Those labor strikes were unprecedented, but the revelations around Cruise’s back-and-forth with regulators were also unnerving GM shareholders. As a financial analyst put it during GM’s first earnings call that mentioned Cruise’s permit being revoked, the company’s handling of the whole debacle was very “un-GM-like.” “I agree with you,” Barra responded. “It was uncharacteristic, and it definitely is something that we’re working to manage well.”

But unlike a startup that implodes and then closes its doors, GM is unfurling the full force of a Fortune 500 giant to resuscitate the project. Whereas GM had previously taken more of a backseat approach with Cruise, it is now intimately hands-on in its subsidiary’s day-to-day—and in the sensitive task of rolling Cruise robo-taxis back onto the streets. To report this story, Fortune spoke with 11 former Cruise employees or contract workers, in addition to Cruise investors, analysts, and San Francisco politicians. Fortune also interviewed Cruise’s newly appointed chief safety officer, Steve Kenner. What is clear? The moves GM and Cruise’s new leadership team make next will be a roadmap of how a giant corporation can rescue an innovative startup—or be driven off course trying to save it.

‘I can’t stop smiling’

Two years ago, General Motors CEO Mary Barra, sporting a black leather jacket, peered into the window of a white and orange Chevy Bolt that was pulling up to the curb to pick her up—no driver in sight.

“Oh, my gosh. This is incredible,” Barra said after sliding into the back seat of the Cruise robo-taxi, known by Cruise staffers as “Tostada.” Barra was sitting next to Kyle Vogt, cofounder of Cruise and its then president and chief technology officer. “It’s too bad that we have to wear masks, though, because I can’t stop smiling,” Barra said.

The video, which Barra posted on her LinkedIn two years ago, showed her taking her first Cruise ride, though she had already been talking up its technology for years—ever since General Motors scooped up a majority of the startup’s shares in March 2016, and two years later when she became chair of its board. The acquisition, which was for a combination of cash and GM equity, put the fledgling company at $1 billion when it was still just three years old, cemented Vogt as a two-time billion-dollar exit founder—and made him and Cruise cofounder Dan Kan the youngest-ever senior directors at General Motors.

Vogt, who had built his first self-driving car prototype at the age of 13, had a small team of just 40 engineers when GM pulled it into the fold, but it quickly became an outsize piece of GM’s strategy as it experimented with rideshare and autonomy. GM had already made a strategic investment in Lyft, and in early 2016, it had launched its own car-sharing program called Maven, though it would shut that down during the pandemic.

Importantly, Cruise would become an integral piece of GM’s broader big-vision strategy to go 100% electric by 2035. Elon Musk’s Tesla had left legacy carmakers like General Motors in the dust. While General Motors had been working on manufacturing EVs since the 1990s, GM had struggled to manufacture electric vehicles en masse, and in 2022, had to recall many of its Chevy Bolt EVs over fire risks. Even if President Biden was publicly trying to give General Motors most of the credit for the EV revolution, it was Tesla that was successfully putting millions of cars on the streets—and it was being rewarded by investors accordingly. 

Cruise’s promise of self-driving vehicles was the kind of shiny new technology that could give General Motors an edge and differentiate it in the market—and maybe even make the legacy automaker “cool.” GM plowed $592 million into the company in 2017, doubling its staff within the first year of GM’s acquisition. Within eight years, Cruise had scaled to nearly 4,000 employees (plus a host of contract workers) across San Francisco, Seattle, Phoenix, Austin, Dubai, and in Japan. In 2022, Cruise beat Tesla and Alphabet’s Waymo to commercial operation, becoming the first company to launch a fared robo-taxi service in San Francisco that February. Cruise welcomed strategic investors like Honda and Microsoft. It was building out a driverless last-mile delivery service with Walmart in Phoenix and had 70 of its robo-taxis on the road in San Francisco by the end of 2022.

“We are the first company that has actually deployed an autonomous rideshare company service in San Francisco,” Barra told Fortune of Cruise in an interview in August 2022. “We’re actually charging for rides and there is no driver… So I’m very excited about where our technology is. So that’s huge.” 

About a year before Barra took that first ride, there was an executive shuffle within Cruise. GM veteran Dan Ammann, who had once rivaled Barra for the top seat at GM and had been chief executive at Cruise since 2019, was replaced by Vogt, and he left the company at the end of 2021. Ammann and Barra had sparred over when Cruise should go public, which was first reported by Bloomberg and independently confirmed by Fortune. (Ammann didn’t respond to Fortune‘s request for comment.)

Within two months after Ammann left the company, Cruise was rolling its cars onto the road in San Francisco, leading to internal clashes among some of its own employees, who debated whether the technology was accurate enough to roll out en masse. These clashes would only heighten in 2023 when the company started scaling at a rapid clip.

“These vehicles were not ready. And we would say as much,” one of the former employees says, noting that they believed that the number of “unwanted public interactions”—or UPIs—on the company’s internal database called “RINO,” were too high. The former employee described instances of vehicles freezing in the middle of a four-way stop or stopping when an emergency vehicle would go past it, and said that the robo taxis couldn’t see objects that were too close to the ground—recalling staffers joking about how a Cruise might run over Mayor London Breed’s cat, because the robo taxi wouldn’t be able to detect it.  “I believe that we were getting close—I just think that we tried it a little bit too early when there were things that were unsafe,” a separate former employee says, noting how isolated vehicle responses, such as a Cruise not stopping quickly enough at a stop sign, was akin to “if a computer had a learner’s permit.”

In 2022, Cruise beat Tesla and Google’s Waymo to operation, becoming the first company to launch a commercial robo taxi service in San Francisco that February. COURTESY OF CRUISE

There was a notable shift at Cruise particularly in 2023, when Vogt became laser-focused on scale, according to people who worked there at the time. One person says that the company set an internal goal to reach $150 million in annual revenue by the end of the year. “Deployment decisions were basically being made on-the-fly at night by [Kyle Vogt],” that person asserts. (Vogt declined to comment for this story)

But the subject of readiness was contested internally—particularly when Cruise was first launching service, and only had a few vehicles on the road. A former employee said the vehicles were “thoroughly tested” when they were first debuted for commercial service in 2022 in San Francisco. They described the lengthy process that led up to the rollout: Running billions of miles of simulations in what was called “the matrix,” testing on private road systems, and tens of thousands of miles with human drivers—all of which preceded the rollout. After the cars were rolled out in 2022, small issues would lead to a reduction in fleet size, or trigger a full fleet stoppage, they said.

But as more and more cars were introduced to the streets, Cruise was often at odds with the public in San Francisco, who didn’t seem quite ready for the new technology to be on the streets. People would mess with the cars—putting traffic cones on top of the vehicles so the robo taxis would pull over, or throwing rocks at the windshields. One remote assistance operator recalled a man pulling down his pants and sitting his naked bottom on the hood of the robo-taxi while she was trying to move the vehicle. “A lot of people didn’t want Cruise to exist and would make a joke out of it,” a former employee says. Another former employee recalled people slashing Cruise tires and a man who repeatedly chased the cars with a hatchet, sometimes when passengers were inside. 

And Cruise’s relationship with regulators was at times contentious. The city and county of San Francisco was repeatedly laying out complaints of driverless Cruise cars sitting disabled and blocking traffic, signaling in one direction yet moving in another, or blocking transit vehicles. In summer 2023, head of the SFMTA Jeff Tumlin went on a podcast, berating companies like Cruise and Waymo and making statements about the data they shared with regulators that were inaccurate (The podcast ultimately issue a factual correction around some of Tumlin’s statements of how AV companies were engaging with his agency).

There was an “us versus them” mentality that ran through the fabric of the organization, according to the internal investigation after the October incident, which was made public earlier this year, and accounts from former employees. Two former employees said senior leadership was resistant to working with San Francisco law enforcement and regulators.

That attitude extended to the media. Employees expressed frustration at the frequent negative media coverage or political jabs lodged at Cruise, and said some staffers took it personally. 

“Kyle was very passionate about what we do here at Cruise,” one of the former employees says. “He would talk all the time, at length, of drunk driving accidents and the amount of people who are killed every single year. He mentioned almost every single company stand-up meeting that we had—just to try and drive the point home that we can make a safer world by what we do here.” 

‘It was hard to watch’

For San Franciscans trying out the new, Cruise robo-taxi service for the first time, the whole process could feel futuristic. A user pulls up the app, orders a Cruise car with a clever name—like “Poppy”—and it pulls up to the curb. After getting in, a tablet in the back instructs you to shut the doors, then Poppy takes you on your way. 

Powering all of it was a lot of hidden manpower to make sure the vehicles stayed out of trouble. That’s where the staff in Scottsdale came in. When the fleet was operational, that office housed Cruise’s operations center, with a customer service team, an incident and crisis management team, and roadside dispatch. 

One of the rooms is a 24/7 control room, where remote assistance workers worked 10 hours a day, four days a week, monitoring both the autonomous fleet—suggesting routes for the taxis when they got stuck or didn’t know how to proceed—but also monitoring the vehicles that were being operated with drivers. If a driver took their hands off the steering wheel, or started blinking too slowly (indicating tiredness), the remote assistance workers would alert their supervisors. 

The mood in the control room was generally light-hearted, two former agents say. In true Silicon Valley startup fashion, Cruise’s office offered free meals to its employees—with chips, energy drinks, oatmeal, and candy for them to snack on from two kitchens during their shifts. Managers would crack jokes. “I thought it was fun,” one of them says. “Everybody was nice. Everyone was wanting to help you.”

But the evening of Oct. 2, after the pedestrian had been struck by a Cruise vehicle, the aura in the control room shifted markedly. No formal announcement about the crash was made within the control room, according to the agent present, though a longer, 14-second video of the accident was shared with some of the people present via Slack, or shown directly—alerting others to what had taken place, they said. 

One of the agents working that evening, who spoke with Fortune on condition of anonymity, left the control room for a period after being shown the footage. “I just took a walk—just to get my mind off of it—because it was hard to watch,” they said. (Cruise says that all RA employees involved in the response “were given the opportunity to go home to cope with the experience.”)

That evening, Cruise team members jumped into crisis management mode, paging employees who needed to be looped in and creating a virtual “War Room” on Google Meet and a corresponding Slack Channel to communicate about and deal with the incident. Meanwhile, employees went back-and-forth with the NHTSA, the San Francisco MTA, San Francisco Police Department, and San Francisco Fire Department about the incident and set up meetings for the following day. Cruise was fielding inquiries from the press and was solely focused on trying to correct the record to reflect that the pedestrian had initially been struck by a separate vehicle in a hit-and-run—not by Panini.

Employees didn’t know the extent of the robo taxi’s responsibility in the accident—that the vehicle had subsequently dragged the pedestrian 20 feet after she was struck by the other vehicle—until early the morning of Oct. 3, when the complete footage from the car had been uploaded to Cruise servers and reviewed. At that point, employees realized the incident was much more serious than they realized, and some 200 people at the company were pulled into the virtual “War Room.”

But Vogt and Cruise’s vice president of communications, Aaron McLear, decided not to alter Cruise’s press statement to include that Panini had dragged the pedestrian, nor share the full footage with reporters. “[W]e did share all the info with all of our regulators and the investigators. We have no obligation to share anything with the press,” McLear wrote in a Slack message, according to Cruise’s subsequent third-party investigation of the incident which GM made public earlier this year. (McLear declined to comment)

In meetings with regulators on Oct. 3 however, Cruise employees didn’t proactively discuss how its robo-taxi had dragged the pedestrian—instead relying on playing a full video of the incident, which showed the dragging, to speak for itself. And there were internet issues in all but one of the meetings with regulators—limiting what exactly officials saw and creating a disconnect in what regulators took away from the meetings, the investigation showed.

Adding to what had already been such a difficult week for the company and many of its employees, one of Cruise’s incident analysts had suddenly passed away a few days before the pedestrian accident, leading Cruise to bring in counselors and offer time off to the employees who were close to him. Around that same time, one of Cruise’s contract drivers, who was manually driving a robo-taxi in one of the new cities, was t-boned by a speeding driver and hospitalized with significant injuries. “That was a crazy week at Cruise–I’m not going to lie,” says someone who worked in the Scottsdale operations center.

Meanwhile, Vogt was pressing for things to return to normal, according to the investigation that followed the incident. When members of the safety and engineering teams asked whether the fleet should be grounded, Vogt and Cruise COO Gil West said the data didn’t justify a shutdown, the report says. And, to the concern of several Cruise staffers, Vogt and West determined to end the “War Room” by 6:05p.m, the day after the incident. Employees “expressed concern that there were no further scheduled [crisis management team] meetings for the biggest accident Cruise had faced in its history,” the report says. People were “livid,” an employee says.

“It was uncharacteristic, and it definitely is something that we’re working to manage well,”

MARY BARRA, CEO OF GENERAL MOTORS AND CHAIR OF CRUISE’S BOARD OF DIRECTORS

On Oct. 6, an article ran in Forbes in which San Francisco Supervisor Aaron Peskin accused Cruise of “telling a half truth,” and not disclosing that the robo-taxi had dragged the pedestrian 20 feet. Four days later, the DMV asked for a complete video of the accident, and a couple days after, the NHTSA told Cruise it intended to open a “preliminary evaluation” into the accident as well as three other incidents involving pedestrians in San Francisco.

On Oct. 24, the DMV suspended Cruise’s driverless permit, noting in a release that the Department believed Cruise vehicles were “not safe for the public’s operation” and that the company had “misrepresented any information related to safety of the autonomous technology of its vehicles.” The DMV rescinded Cruise’s permit the very same day that Barra had earlier underscored Cruise’s expansion plans on an earnings call with analysts. Shortly after, Cruise voluntarily pulled its entire fleet off the streets across the U.S., including its human-driven cars. Vogt resigned, and cofounder Dan Kan, the Chief Product Officer, resigned a day later. 

The company brought in Quinn Emanuel, a legal firm to investigate the incident, which determined that Cruise had suffered from “poor leadership, mistakes in judgment, lack of coordination, an ‘us versus them’ mentality with regulators, and a fundamental misapprehension of Cruise’s obligations of accountability and transparency to the government and the public.” After the findings, Cruise parted ways with nine employees and senior leaders, and completely cleaned house, bringing on a slew of new executives. 

But even after Quinn Emanuel’s 105-page report, questions remain about what exactly happened that night. Two operators were interviewed about a week after the incident and asked to share their recollection of events, according to Cruise’s subsequent investigation.  But they had been laid off by the time Quinn Emanuel sought to interview them and the investigators had to rely on a Cruise staffer’s “contemporaneous notes.” Another two interviewees provided information the law firm couldn’t verify that “appears contrary to the weight of the evidence,” the report said.  The agent working that evening who spoke to Fortune, who was laid off in November, said no one at Cruise had ever reached out to them about the incident. “There’s a lot of stuff lost now that people will never know,” another former employee says.

A representative from Zuckerberg San Francisco General Hospital, where the pedestrian was taken in critical condition, said that the pedestrian had been discharged, but declined to share any further information. The San Francisco Police Department said its investigation into the incident is still ongoing.

Cruise settled with the woman who was dragged at a figure between $8 million to $12 million, Fortune reported earlier this week. The company has also proposed a fine of $112,500 as part of a settlement with the California Public Utilities Commission (CPUC), which had accused the company of omitting material facts to the regulator.

The Cruise “Origin” vehicles, spacious van-like vehicles built by GM for Cruise, were being tested in Austin before Cruise pulled its vehicles off the streets last fall. Cruise is keeping them off the streets for now. COURTESY OF CRUISE

After October 2nd

GM has always been close to Cruise’s operations. GM controls the Cruise board (Of its seven seats, four are GM executives and three also sit on GM’s board.) And particularly after Ammann’s departure, GM’s relationship with Cruise’s senior leadership became more closely intertwined, according two people familiar with the matter. GM executives Regina Carto, who leads global product safety, and Frank Gorman, GM’s assistant general counsel, had regularly-scheduled meetings with several of Cruise’s senior leaders, one person with knowledge of the matters says. Meanwhile, Cruise’s AV technicians were regularly in touch with GM engineers to handle issues or updates with the Chevy Bolt. Cruise Origins, the spacious, van-like vehicles without driver’s seats, steering wheels, or pedals, would be tested at GM’s headquarters in Detroit, as well as one of their test tracks outside of San Francisco. Cruise frequently provided mileage reports to the board and other senior managers within GM, and it would report all major incidents, including how they were handled and how Cruise planned to improve its response moving forward. “Someone had some form of daily contact [with GM] on some level,” one former employee says. 

Two people specifically described an “undertone” within the company that GM was monitoring them. “There was a constant undertone that GM was watching. GM expects us to produce. We have to get on the road. Waymo is better than us,” one of them says, referring to Alphabet’s rival self-driving cars.

Still, Cruise had other investors, and GM had left it to operate independently, trusting its senior executive team to handle day-to-day operations, including its interactions with regulatory agencies, legal affairs, and communications.

After the incident, when GM shares dipped below $30 per share for the first time in three years, all of that would change. While Cruise EVP Mo Elshenawy was promoted to be the company’s co-president and CTO, board member Glidden stepped in as co-president and Chief Administrative Officer, and GM became acutely involved in investigating the October incident, restructuring the company and who was running it, and overseeing its interactions with the media. For example, GM’s Chief Communication Officer and other senior GM leaders started to sometimes sit in on Cruise board meetings, according to someone familiar with the matter. GM board member Jon McNeill, who was Lyft’s former COO, stepped onto Cruise’s board, and Mike Abbott, GM’s executive vice president of software and services, took an observer seat. GM’s president, Mark Reuss, personally interviewed Steve Kenner, previously the global director of automotive safety at Ford who was hired as Cruise’s Chief Safety Officer earlier this year. Glidden, who is GM’s executive vice president of legal, has been representing the company in its ongoing regulatory inquiries (His base salary rose to $1.1 million, up from $850,000 as a result, SEC filings show). 

In the weeks after the DMV’s suspension, Cruise employees were anxious—particularly after Vogt resigned. “[We] started to see the writing on the wall,” one of the employees says, referring to discussions of potential layoffs. “A lot of people just were really nervous.” 

With cars pulled from the roads in all markets, some staffers who worked directly with the fleet had little to do. Testing was moved into garages and test tracks. In the control room, remote assistance workers didn’t have cars to monitor, so were asked to review and label thousands of video clips during their shifts. 

Right up to the DMV’s suspension of Cruise’s permit, Cruise had been on a fast track to scale. The robo-taxi company had publicly announced plans to get to $1 billion in revenue by 2025. It was already providing limited service in Phoenix, Austin, Houston, Dallas, and Miami—and it was working on building out operations in Nashville, as well as overseas in Japan and in Dubai. Out in Phoenix, Cruise had been expanding its range of self-driving shopping delivery that it was doing with Walmart. 

A handful of Cruise Origins had been transported to Cruise’s R&D facility and track in Phoenix, where employees had been training with them. “We were just starting to get acquainted and integrated with the Origins,” says a former Cruise employee who was working with the vehicles.

Immediately, all of those plans were put on hold. With autonomous vehicles off the roads, Walmart deliveries in Phoenix reverted to human drivers, then eventually stopped altogether. During a layoff in 2023, General Motors ultimately let go of 24% of Cruise’s employees—or around 900 people—and later parted ways with many of its contractors.

“The leaders involved exercised very poor judgment in how they conducted themselves and interacted with the regulators,”

STEVE KENNER, CHIEF SAFETY OFFICER OF CRUISE

Approximately seven months since the incident, General Motors is just starting to lay the groundwork to relaunch. Cruise said earlier this week that it will start testing its self-driving vehicles in Phoenix—operating autonomously, but with human drivers inside the vehicles to take over, if needed. At the beginning of last month, Cruise submitted responses to the California DMV to reinstate its permit, though the DMV told Fortune those are still under review. As it relaunches service, Cruise plans to re-map each city where it will operate, slowly release commercial rides with human supervision, then eventually move to autonomous rides, according to Chief Safety Officer Kenner.

Kenner is unsparing about Cruise’s previous management. “The leaders involved exercised very poor judgment in how they conducted themselves and interacted with the regulators,” he tells Fortune. Since Kenner’s arrival, Cruise has restructured its operations around its safety team, so that Kenner has veto power before Cruise makes any kind of incremental rollout—even if it’s putting manually-driven cars on the street. He’s also told regulators that GM and Cruise will work together with them on safety issues. That’s already playing out in many of the meetings: All of Kenner’s meetings thus far with the NHTSA, which still has two investigations open into Cruise, have included GM’s head of product safety, Regina Carto, too. “She and I have been talking a lot—almost on a daily basis, including just finishing up [a call] about a half hour ago,” Kenner said in the interview.

Kenner has been traveling between Phoenix, Houston, Dallas, Austin, San Francisco, and Washington, D.C., meeting with regulators and transportation officials and trying to rebuild the company’s relationships. “I know trust is earned, and we’re going to be judged by our actions going forward,” Kenner said. “It’s going to take some time.

But even as Cruise robo-taxis start driving the roads again, it will be a different company than before. For one, employees are no longer awarded restricted stock units, just cash—making Cruise’s compensation plan more akin to that of a corporation than a Silicon Valley startup. (GM offered to buy shares at around $11-$12 per share earlier this year, according to a former employee, down from around $25 per share at the end of last year. Reuters reported similar details in February) 

GM has also slashed Cruise’s annual budget by $1 billion and has made it clear that it will pull back the pace. As of now, Cruise is keeping its Origin vehicles off the streets.

Cruise’s new, slower pace will make it more akin to Waymo, which had driven its vehicles 20 million miles with drivers before it started putting its cars onto the roads fully autonomously. That’s something former Cruise employees who were concerned the company was moving too fast think is a good thing. “They’re trying to implement some new safety initiatives which is great. It’s very good to see,” one of them says.

Cruise employees are quick to point to the data we have so far on self-driving vehicles, which both Waymo and Cruise have published, and which has been closely analyzed. The initial figures suggest that self-driving cars are much safer than their human counterparts. But new technology, it seems, is always going to be held to a much higher standard when it comes to safety.

“We all see the potential benefits and value of autonomous vehicles, including safety, but we need to make sure these powerful new technologies are ready for prime time,” says San Francisco City Attorney David Chiu, who through a lawsuit in December has sought to restrict the number of robo-taxis operating in San Francisco. Chiu describes himself as a supporter of self-driving cars—so long as they are safe. “Unfortunately the many events over the past year have suggested otherwise, so this is why we have been pushing for accountability, transparency, and guardrails.”

‘In the wilds of San Francisco’

Part of Cruise’s original allure, executives repeatedly told shareholders, was that Cruise could recruit different talent than GM, and had an ideal lab on the streets of San Francisco. “What really attracted us to Cruise was not only the capability that they had already developed, but the fact they were doing it, I call it, in the wilds of San Francisco, right? Literally on the downtown streets of San Francisco, the most—or one of the most complex environments to try to build and deploy new technology,” Pamela Fletcher, GM’s former vice president of electric vehicles, said at the Citigroup Global Technology Conference in late 2016.

Billions of dollars later, Cruise has lost much of what gave it that edge. It can no longer operate in the “wilds of San Francisco”—at least for now. And it’s no longer very independent from GM either. Moreover, Cruise’s first-mover advantage has been erased. “When you’re standing still, and Waymo’s moving forward—it’s a big difference,” says David Whiston, an automotive analyst at Morningstar.

When GE placed its bet on Cruise, it was hoping for all the glory that comes with getting in early on a lightning hot startup that’s unconstrained by bureaucracy and tradition. But it’s easy to forget the second part of the old startup mantra: “move fast and break things.” And in this case, a single misstep onto a dark San Francisco street didn’t just put Cruise’s reputation on the line, it imperiled GM’s, too. Now the 100-year-old company is in a position it never wanted to be in: It has to move fast—and fix things. 

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See original article by Jessica Mathews at Fortune.com