Company / division: Uber
Former GE CEO Jeff Immelt is Front-Runner for Uber CEO Job (Aug 21, 2017)
Uber Wins Court Case Over Obscure Terms and Conditions (Aug 18, 2017)
The Wall Street Journal reports that Uber is planning to shut down its US car leasing business, which was apparently losing $9,000 per car instead of the $500 Uber projected it would lose when creating the program. It sounds like Uber might have around $800 million in cars leased through the program, which Uber apparently holds titles to in trust rather than on its books, and it may have to sell many of them and the associated leases to get out of the business. The program and this outcome are indicative of Uber’s enormously aggressive expansion strategy and the huge sums it’s sometimes incurred in poorly thought out initiatives which have ended up significantly worsening its losses. Though it’s most common to see Uber’s losses attributed to its subsidies in ride sharing itself, a good chunk of its losses are made in these other aspects of its business and could be cut back significantly as it focuses on more rapid progress towards profitability. I suspect cutting the leasing program in particular wouldn’t dent growth much but would certainly go a long way towards improving margins. It’s also likely another example of an area where Uber might well do better to partner with a small number of large, reputable firms rather than taking such a direct role in the operation – in general, Uber seems far less willing to partner than Lyft, which is arguably holding it back in some areas.
Another week, another story about erstwhile Uber CEO refusing to go gently into that good night. The Information is reporting that Travis Kalanick has been quietly building up a bloc of shareholders who will back him in a potential fight over the course of several years, while also sounding out employees recently on whether they would support him in that eventuality. Though the details here are new, the broad thrust is similar to the reporting last week that Kalanick was hoping to be able to get back into an operational role at Uber sooner rather than later, something many in leadership at Uber don’t want, and also a situation that’s likely to put off potential new CEOs, which is presumably part of Kalanick’s motivation here. That he still doesn’t see how central his behavior has been to Uber’s struggles, and how badly it needs to operate for at least some time without him, is the biggest possible sign that Kalanick hasn’t actually changed and isn’t actually sorry for any of what he’s done, which is in turn the best possible signal that he shouldn’t come back. But it seems he has enough supporters left at Uber that he’s convinced himself it’s worth trying anyway. Update: later in the day, an internal email from Uber co-founder and board member Garrett Camp was leaked, in which he said Kalanick would not be returning as CEO, apparently attempting to defuse some of this speculation and even the push to get him back.
via The Information
Lyft’s Gross Bookings Growing at Higher Rate Than Uber’s (Jul 25, 2017)
Bloomberg has some inside data from Lyft that suggests its gross bookings grew by 25% year on year in the second quarter, which would be higher than the mid-teens growth Uber had told investors to expect in a preliminary call earlier this month. As with other recent signals that Lyft may be gaining on Uber, it’s tempting to read this as evidence that there’s some kind of backlash against Uber over its recent troubles, but I continue to see very little evidence of that. Rather, it’s likely that Lyft’s big push into new markets in the first half of this year has helped it grow bookings significantly during this period, while the Uber scandals have made a far more limited impact. And of course Uber’s results are on a much bigger base, meaning that its dollar growth is likely far larger than Lyft’s even if its percentage growth rate is lower. I’m happy to see Lyft gaining on Uber – it’s always struck me as a more ethical company with a leadership with more integrity than Uber’s, and I’ve been using Lyft pretty much exclusively when traveling recently. But I see very little evidence that Lyft is gaining on Uber broadly for this reason, and in using Lyft it’s often been clear just how big an edge Uber has – at airports, there are multiple times as many Ubers in the pick-up area as Lyfts, and at least half my drivers have been drivers for both services, often skewing heavily towards Uber in their actual share of driving (which often turns to a 100% share on specific days given the bonuses Uber offers for driving over a certain amount).
Waymo Drops Three of Four Patent Claims Against Uber (Jul 7, 2017)
Waymo has dropped three of the four patent claims in its lawsuit against Uber, partially complying with a suggestion from the judge in the case. The patents dropped relate to a design which Waymo became aware of, but which Uber doesn’t actually use and has promised not to use going forward, making them much less important. The judge has indicated throughout the process that he largely believes Waymo’s claims about Anthony Levandowski downloading files and bringing them to Uber, but has also suggested that the patent part of the lawsuit is going to be tough to prove and should be set aside by Waymo. Uber is, of course, trumpeting the news as a sign that the whole thing is misguided, while at the same time seeking depositions of Alphabet executives with a few to showing that the suit is motivated by a desire to slow Uber’s efforts down rather than a true desire for legal redress. The tone of Uber’s statement to various outlets today certainly suggests that it isn’t backing down on its aggressive response following the departure of Travis Kalanick as CEO, answering one of the questions I posed at the time he stepped down. Ultimately, though, narrowing the case to a few key points and potentially even dropping the remaining patent claim is likely to give Waymo a better chance at winning in court, even if the scope of that win is smaller than it originally hoped. Update: later in the day, the judge granted Uber’s request to depose Larry Page for up to four hours, per Recode.
Uber Talking to SEC About Giving Drivers Equity (Jun 29, 2017)
According to Axios, Uber has been meeting with the Securities and Exchange Commission to discuss giving drivers equity in the company. As the piece notes, this was something recently-acquired ride sharing startup Juno promised to do, but which it found legally difficult given SEC regulations. Of course, if drivers were employees, there would be entirely standard ways to deal with stock-based compensation, but the combination of the fact that Uber is a private company and drivers are contractors rather than employees make this more complex. Given the historical meteoric rise of Uber’s valuation, I could certainly see the appeal for drivers of getting a stake in the company, though the attraction will have waned a little as there have been reports of shares selling at lower prices in the private markets over recent months. Longer term, there are still big questions about whether Uber’s valuation will continue to grow if it doesn’t have a clear path to profitability and doesn’t seem to be winning decisively against Lyft and other big competitors in its important markets. And its big investment in autonomous driving is another potential huge cash sink which isn’t guaranteed to pay off, especially given the distraction and uncertainty created by the Waymo lawsuit and the departure of Anthony Levandowski and Travis Kalanick in recent weeks. Still, Uber does seem to be genuinely interested in trying to find ways to improve its relationship with drivers recently, and this is another potential step in that direction.