WEBVTT - Trinity's Chopra on Uber: I Would Sell Some Shares Now (Audio)

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<v Speaker 1>Charlie Peloton. That's a Bloomberg business flash. You're listening to

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<v Speaker 1>taking stock with bim box and Kathleen Hayes on Bloomberg Radio.

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<v Speaker 1>Uber in the news on two very big front fronts. Uh,

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<v Speaker 1>there's a big settlement being considered that would leave Uber

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<v Speaker 1>and lift drivers as independent contractors. And of course these

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<v Speaker 1>are two the biggest names in the on demand economy.

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<v Speaker 1>And uh, it might avoid policy changes that would have

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<v Speaker 1>would force them to rethink their business models. Okay, so

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<v Speaker 1>there you go, this whole question of you know, how

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<v Speaker 1>you treat Uber workers right the demand economy. Ah, Saudi

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<v Speaker 1>Arabia isn't paying any attention because it looks like the

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<v Speaker 1>Saudi Arabian public Investment Fund, their big sovereign wealth fund,

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<v Speaker 1>is going to be investing over three billion dollars in Uber.

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<v Speaker 1>Uber joining us now is a Ja Chopra general partner

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<v Speaker 1>Trinity Ventures, joining us from San Francisco. He's a long

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<v Speaker 1>time Silicon Valley BCNE. He's got lots to say about this.

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<v Speaker 1>Welcome and Ji, thanks for joining me. Glad to be here.

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<v Speaker 1>So let's start on the settlement because that is something

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<v Speaker 1>that has been going on for a while. It's it's

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<v Speaker 1>already controversial because there's been some settlements and the companies

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<v Speaker 1>are changing the way they hire their workers. And the

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<v Speaker 1>kind of contracts they make, So maybe those previous constraints

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<v Speaker 1>won't apply. Now, what's important to you as a VC,

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<v Speaker 1>as a potential investor? Yeah, so I think, UM, this

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<v Speaker 1>issue about ten workers whore contractors versus doubly two employees

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<v Speaker 1>who are hourly um, you know, full time employees for

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<v Speaker 1>the company. UM, is you know, going to not be

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<v Speaker 1>resolved with this settlement. I believe that this will be

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<v Speaker 1>just a stepping stone in that direction, and we will

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<v Speaker 1>continue to see UM more and more legal issues around

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<v Speaker 1>this over the next several years. UM. Still, eventually perhaps

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<v Speaker 1>regulations might might change, UM so that you know, all

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<v Speaker 1>of the Uber drivers and other on demand workers you

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<v Speaker 1>get a fair play. UM. I don't think this issue

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<v Speaker 1>is going to be resolve. It just one settlement that's

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<v Speaker 1>going on right now. If you were an investor in Uber,

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<v Speaker 1>would you sell now? Would you say, oh, if they're

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<v Speaker 1>going to start changing the rules of the game in

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<v Speaker 1>terms of government regulations and the way we can pay

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<v Speaker 1>and higher workers, it won't be as profitable. Or would

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<v Speaker 1>you say, hey, look, especially if I'm in Uber, there

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<v Speaker 1>there are the name in the in this whole, this

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<v Speaker 1>whole area now and they're going to continue to grow

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<v Speaker 1>and they'll they won't make that much difference. I would

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<v Speaker 1>sell some of my shares. I think the company has

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<v Speaker 1>got pretty good prospects, but also a lot of challenges.

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<v Speaker 1>They have a big battle that they're fighting in China,

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<v Speaker 1>which with the company called d D which is a

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<v Speaker 1>local competitor there that just you know, strengthened itself by

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<v Speaker 1>a billion dollar investment from Apple, So they are now

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<v Speaker 1>more formidable competitors. So they've got that challenge. They've got

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<v Speaker 1>the issue that they're not profitable in that market, They're

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<v Speaker 1>not profitable in Europe, and they may be ostable in

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<v Speaker 1>certain cities in the US, so they've got an overall

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<v Speaker 1>profitability problem. And then they have this looming issue of

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<v Speaker 1>autonomous cars. Because when autonomous vehicles become more prominent than

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<v Speaker 1>all of a sudden, one of the main advantages that

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<v Speaker 1>Uber has, which is that the drivers are bearing all

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<v Speaker 1>the burden of the automobile, including the cost of the automobile,

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<v Speaker 1>the insurance, the maintenance, and so forth, sort of goes away.

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<v Speaker 1>And now Uber's model shifts from being asset light, in

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<v Speaker 1>other words, they don't have any assets. The drivers have

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<v Speaker 1>to worry about that to asset heavy where they have

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<v Speaker 1>to actually own or leave cars, and so that transition

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<v Speaker 1>could be a pretty tricky one for them. So I

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<v Speaker 1>would sell some, but I would hold quite a bit

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<v Speaker 1>of it. And for sure, you know, we're at the

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<v Speaker 1>the Internet in the North American International Auto Show in

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<v Speaker 1>Detroit a few months ago, and four GM, all these

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<v Speaker 1>they're they're rushing into this space. So they're going to

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<v Speaker 1>have definitely also a lot of competition there. So the

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<v Speaker 1>Saudi so three billion dollars. The Saudis are trying to

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<v Speaker 1>diversify their economy right in their going to end up

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<v Speaker 1>with you know, a very big, big amount of global investment.

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<v Speaker 1>Are they making a mistake to put their money in Uber? Now?

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<v Speaker 1>I think they're looking at it primarily as a financial investment. UM.

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<v Speaker 1>This is something that you know, UM sovereign funds do

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<v Speaker 1>from time to time. They do so very selectively. They

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<v Speaker 1>do so in companies where the outcome is fairly certain

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<v Speaker 1>to be successful. It's just a magnitude of success that

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<v Speaker 1>is not clear. I think that's certainly true for Uber.

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<v Speaker 1>They are going to be a successful company, it's just

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<v Speaker 1>are they going to be Facebook size or they're going

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<v Speaker 1>to be smaller. That's the question in terms of evaluation

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<v Speaker 1>a few years out. So they're making a financial bet

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<v Speaker 1>and and I think that's that's how they have They

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<v Speaker 1>probably thought about it and figured that they can buy

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<v Speaker 1>five percent at this point in time. It also implies

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<v Speaker 1>that Uber is probably not thinking of going public in

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<v Speaker 1>the new future. They'll probably take this capital and deal

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<v Speaker 1>with some of the problems that I talked about earlier,

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<v Speaker 1>the challenge in China, the profitability, the issue with autonomous vehicles.

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<v Speaker 1>So I think this is a good thing for Uber

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<v Speaker 1>from that standpoint. So Jay Training Training Ventures in the

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<v Speaker 1>Bay Area, very big prestigious VC firm fed Reserve. We

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<v Speaker 1>don't know when they're gonna start raising rates, but they're

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<v Speaker 1>gradually making this turn. Right, there's going to be less liquidity,

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<v Speaker 1>certainly a lot of the activity less several years in

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<v Speaker 1>Silicon Valley people reaching for Yale that's kind of been

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<v Speaker 1>supported by that. Is this gonna affect you? And and

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<v Speaker 1>I guess even more broadly, what are you where are

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<v Speaker 1>you looking now for VC for investment opportunities? I think

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<v Speaker 1>that if you look at the major transformations that are

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<v Speaker 1>going on in our industry and the technology front, which

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<v Speaker 1>is the mobile device and its implications UM and the

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<v Speaker 1>core transformation from on premise deployment of technology to in cloud.

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<v Speaker 1>We are just in the middle of a major industries

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<v Speaker 1>are still in the earliest stages of being transformed. If

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<v Speaker 1>you look at transportation, for example, we are in the

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<v Speaker 1>first innings of autonomous cars. I mean it's just the

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<v Speaker 1>beginning with people like Tesla and others that are giving

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<v Speaker 1>some capability to drivers which are automated. I think there's

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<v Speaker 1>a lot more that's going to happen. If you look

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<v Speaker 1>at the entire medical sector, the way the records are kept,

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<v Speaker 1>the way delivery of medical services, particularly developing countries, there's

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<v Speaker 1>so many opportunities in this sector. If you look at education,

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<v Speaker 1>we're probably even before the first inning. So I think

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<v Speaker 1>there are huge opportunities because of these major transformations with

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<v Speaker 1>a powerful computer and everybody's profit called the mobile phone

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<v Speaker 1>and the cloud computing. J. H. Oprah, thank you so

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<v Speaker 1>very much joining us from Trinity Ventures in San Francisco.

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<v Speaker 1>This is taking Stock. Thanks for joining us today on

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<v Speaker 1>Bloomberg Radio. Up next Bloomberg Law, tackling the big issues

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