PITTSBURGH – In the auto industry’s war for tech talent, Ford Motor Co. made an unusual $1 billion bet last year to fund an artificial-intelligence company in Pittsburgh with fewer than a dozen employees.
The aim was to build expertise in automated driving by offering job recruits a potentially lucrative perk that Ford couldn’t otherwise provide: an equity stake in the company, called Argo AI, for new hires in a fast-growing startup.
“Every employee is an owner,” said Argo Chief Executive Bryan Salesky. “They’re able to benefit from the upside being created in a direct way. That can’t be offered with a large company where the stock goes up and down with earnings.”
Argo has since grown to about 330 employees, in part by luring away software engineers and robotics researchers from Apple Inc., Uber Technologies Inc. and other tech companies.
Ford, which holds a majority stake in the company, is banking on Argo to help it catch up in the race to build driverless cars.
The Dearborn, Mich., car maker aims to start selling a fully autonomous car for commercial use in 2021. Argo is also working on an autonomous-driving system that they can eventually sell to other companies, too.
As cars become more high-tech, auto makers are scrambling to hire workers with expertise in fields such as robotics, computer science and machine learning.
But they’re often at a disadvantage, unable to match the high pay and equity offered by some Silicon Valley companies.
That has forced car makers and their suppliers to get more creative to recruit workers.
General Motors Co. committed roughly $1 billion two years ago to buy Cruise Automation, a driverless-technology startup in San Francisco that had only 40 employees at the time.
With GM’s backing, Cruise has expanded to 740 employees, making it a key recruiting hub in Silicon Valley.
Last month, the unit attracted a $2.25 billion investment from Japan’s SoftBank Group Corp.
Toyota Motor Corp. in 2016 created a robotics and autonomous-driving research institute affiliated with Stanford University, Massachusetts Institute of Technology and the University of Michigan. Nissan Motor Corp. is working with National Aeronautics and Space Administration engineers to develop robotic-vehicle technology.
Ford’s partnership with Argo is unique: The auto maker didn’t acquire the startup outright, choosing instead to become its client and financial backer.
Argo’s task is to develop a so-called “virtual driver system,” which consists of sensors, software and hardware, and then work with Ford engineers to integrate it into a new, driverless-vehicle design.
Ford likely won’t be first to market with a self-driving car, said Sam Abuelsamid, an analyst with Navigant Research.
Alphabet Inc.’s autonomous-car unit, Waymo, plans to start a robot-taxi service in the U.S. later this year. GM aims to start a driverless-cab service in 2019.
“But they’re making the right moves to put together a business model that’s going to be commercially feasible,” said Abuelsamid.
Argo’s Salesky, who formerly served as a director of hardware development with Google’s self-driving car program, said he started Argo in 2016 with former colleague Peter Rander to work more closely with auto makers.
The company’s main office in Pittsburgh, where it operates a test fleet of about 30 self-driving cars, has the look of a startup, with workers on treadmill desks and a ping-pong table in the break room.
In the past few years, demand for researchers with automated-driving experience shot up “like a hockey stick,” said Rander, who helped launch Uber’s driverless-car program in Pittsburgh.
To overcome a shortage of candidates, Argo looks for recruits with parallel skills who can be trained to work on autonomous driving, he said.
Argo also benefits from its proximity to Pittsburgh’s Carnegie Mellon University, which has one of the world’s top robotics research institutions.
Salesky and Rander were both researchers at the center, and many of Argo’s recent hires have come from a group of scientists that Uber poached from Carnegie Mellon three years ago to build its own driverless-car program.
The fierce competition is making it more difficult for companies to keep workers.
Matt Powers, an Argo staff engineer who recently joined from Apple and previously worked with Rander at Carnegie Mellon, said he regularly gets contacted by recruiters trying to lure him away.
But for him, Argo’s backing by a major auto maker is a key reason to stay.
“Argo is set up to be the rapidly evolving, agile technology company, and Ford knows production. They know how to plan out and build millions of vehicles,” he said. “Those two things don’t usually coexist.”