WEBVTT - Your Guide to the Uber IPO 0:00:02.080 --> 0:00:04.359 There are no finish lines in the world of business, 0:00:04.400 --> 0:00:06.800 but this is about as close as it gets. A 0:00:06.880 --> 0:00:09.920 decade after a startup called uber Cab started out as 0:00:09.920 --> 0:00:13.600 a black car service in San Francisco, Uber Technologies, Inc. 0:00:13.800 --> 0:00:16.079 Is going public in one of the largest I p 0:00:16.239 --> 0:00:19.040 O s of all time. Perhaps more than any other company, 0:00:19.400 --> 0:00:22.960 Uber has come to embody the exuberance and the hubris 0:00:22.960 --> 0:00:27.720 of today's tech titans. Uber's this generation startup disruptor. It 0:00:27.920 --> 0:00:32.400 barreled into cities, decimated the global taxi industry, and burned 0:00:32.440 --> 0:00:36.400 through billions of dollars in investor cash. Ubers twelve billion 0:00:36.440 --> 0:00:41.360 dollar valuation is seventeen billion dollar valuation massive forty billion 0:00:41.400 --> 0:00:46.080 dollar valuation. It also was embroiled in scandal. Uber came 0:00:46.120 --> 0:00:49.239 to symbolize the worst of Silicon Valley excess, with a 0:00:49.280 --> 0:00:52.639 complete disregard for regulations and a fierce win at all 0:00:52.680 --> 0:00:57.080 costs mentality. Uber founder Travis Kalanik announced he's resigning as 0:00:57.160 --> 0:01:00.880 CEO after five major investors to man did that he go? 0:01:01.200 --> 0:01:03.880 It marks a stunning downturn for one of Silicon Valley's 0:01:04.040 --> 0:01:08.360 highest flying startup. Former Expedient chief executive Dara Kasrosha he 0:01:08.480 --> 0:01:11.720 took over this week he replaced Today. Uber says it's reformed, 0:01:12.000 --> 0:01:14.920 it's been playing nice with city officials. The company's CEO 0:01:15.080 --> 0:01:18.840 has met with prime ministers and presidents, and the company 0:01:18.880 --> 0:01:22.600 is spending millions on new businesses. Perspectives that we had 0:01:22.600 --> 0:01:27.120 so been anticipating has been disclosed. Uber a seeking evaluation 0:01:27.440 --> 0:01:31.000 of eighties six billion dollars. That's about twenty eight percent 0:01:31.120 --> 0:01:35.400 lower than the tw billion dollar targeting. This week, Uber 0:01:35.440 --> 0:01:42.040 shares finally hit the public market. It's a moment that employees, investors, regulators, 0:01:42.080 --> 0:01:44.800 and many journalists, including my friend Eric here, have been 0:01:44.800 --> 0:01:48.040 waiting for. And it might also be the ultimate test 0:01:48.120 --> 0:01:50.440 of whether the new world of the so called gig 0:01:50.480 --> 0:01:53.800 economy can grow up and turn into a normal and 0:01:53.880 --> 0:01:57.840 dare we say, even profitable business. I'm brad Stone and 0:01:57.880 --> 0:02:08.120 I'm Eric newcomer, you're listening to decrypt it. So, Eric, 0:02:08.200 --> 0:02:11.600 you have been covering Uber for Bloomberg Technology now for 0:02:11.639 --> 0:02:14.440 almost four years. So personally, what does the I p 0:02:14.520 --> 0:02:17.120 O mean for you? It sort of feels like Uber 0:02:17.240 --> 0:02:20.359 is growing up and going away to college. So it's 0:02:20.360 --> 0:02:24.120 this fascinating moment where it's going from this private, sort 0:02:24.120 --> 0:02:27.920 of secretive company to this, you know, globally sort of 0:02:28.000 --> 0:02:33.000 much more open and transparent machine. Brad, I mean you've 0:02:33.000 --> 0:02:35.800 covered it, sort of, no less closely, wrote a book 0:02:35.960 --> 0:02:38.560 on the topic. How how are you feeling right now? 0:02:38.639 --> 0:02:40.600 You know? To me, I mean, the story of Uber 0:02:40.720 --> 0:02:42.720 is like in part of the story of San Francisco 0:02:42.840 --> 0:02:46.000 over the last decade, the story of getting around in cities. 0:02:46.080 --> 0:02:47.720 I just spent a couple of days in l A. 0:02:47.840 --> 0:02:49.400 You know, I don't rent a car when I go 0:02:49.720 --> 0:02:52.280 to cities like l A anymore. It's such a remarkable 0:02:52.280 --> 0:02:56.079 story of changes in urban transportation, changes in the global economy, 0:02:56.120 --> 0:02:59.119 and then changes in the way people are working. Right now, 0:02:59.240 --> 0:03:01.680 I think we need to to layout the two characters here. 0:03:01.720 --> 0:03:05.200 We've got Travis Kalenik, you know, the co founder of Uber, 0:03:05.560 --> 0:03:09.360 who defined sort of the image. He's the brash CEO 0:03:09.720 --> 0:03:15.880 who is willing to ignore regulators, operating gray spaces, destroy competitors. 0:03:16.200 --> 0:03:18.560 Travis still owns a good percentage of the company, right, 0:03:18.560 --> 0:03:21.320 how wealthy will he get in the next week, Well, 0:03:21.320 --> 0:03:23.919 it depends how much it's worth. But he owns nine 0:03:23.960 --> 0:03:26.600 percent of the company, so that's pretty easy math. If 0:03:26.639 --> 0:03:30.320 it's worth a hundred billion, dollars. That's about nine billion dollars. 0:03:30.440 --> 0:03:33.800 But he's going to be a multi multibillionaire because of 0:03:33.919 --> 0:03:36.760 his role in creating uber okay. And now his successor, 0:03:36.840 --> 0:03:39.960 Dara Kazra Shahi. How much does he own? And and 0:03:40.040 --> 0:03:42.840 describe him and how is he different from Travis? Dara 0:03:42.920 --> 0:03:46.760 is the professional CEO. He was hired after all of 0:03:46.800 --> 0:03:52.120 Travis's shenanigans. Travis gets ousted in and then Dara is 0:03:52.160 --> 0:03:55.560 the dark horse candidate who the board picks from Expedia 0:03:56.000 --> 0:03:58.760 to sort of stabilize the company. Dar is going to 0:03:58.840 --> 0:04:03.480 be far less wealthy. His compensation is largely tied to 0:04:03.760 --> 0:04:07.600 getting the Uber worth billion, So how much he actually 0:04:07.600 --> 0:04:10.520 makes off this whole thing will depend on his success 0:04:10.560 --> 0:04:14.680 at getting the company to sustain a really atmospheric valuation 0:04:14.760 --> 0:04:17.360 for a significant amount of time. How do you think 0:04:17.440 --> 0:04:19.680 Dara has done? Oh? I mean from a from a 0:04:20.640 --> 0:04:24.640 public image perspective, it's been remarkable, right, not not only 0:04:24.680 --> 0:04:26.919 the press attention that Uber gets, but the way in 0:04:26.920 --> 0:04:30.279 which regulators and cities like London and New York City 0:04:30.760 --> 0:04:33.960 you are, I think are more willing to come to 0:04:34.000 --> 0:04:36.960 the table uh and talk to Uber and create some 0:04:37.040 --> 0:04:39.359 kind of sensible rules. I mean, the bottom line is 0:04:39.400 --> 0:04:41.799 that for me at least, and tell me if you disagree, 0:04:41.839 --> 0:04:44.720 and some certainly do, that Uber has been good for 0:04:44.760 --> 0:04:47.719 cities there there have been negative impacts, like you know, 0:04:47.800 --> 0:04:51.720 increase congestion. But but but by and large, they've increased 0:04:51.880 --> 0:04:54.839 an opportunity for drivers, and they have solved a massive 0:04:54.880 --> 0:04:57.479 taxi shortage and a lot of cities. And yet, you know, 0:04:57.520 --> 0:05:01.560 because of Travis's reputation, because of the companies early orientation 0:05:01.600 --> 0:05:06.919 towards breaking rules or not negotiating and launching without permission, 0:05:07.600 --> 0:05:09.960 Uber just got this bad reputation. I think Dara has 0:05:10.000 --> 0:05:12.320 helped that quite a bit. I think on the optics front, 0:05:12.720 --> 0:05:16.040 there's no question he's turned things around. The only caveat 0:05:16.080 --> 0:05:18.320 I think I'd give it is just, you know, the 0:05:18.440 --> 0:05:22.160 status of drivers, that they're independent contractors and not workers, 0:05:22.680 --> 0:05:25.160 that they don't have a lot of visibility into how 0:05:25.240 --> 0:05:27.360 much money they make. I think if you had to 0:05:27.400 --> 0:05:30.200 think of the sins of Uber's business model sort of 0:05:30.760 --> 0:05:35.000 establishing the gig economy, that ethical question is alive today 0:05:35.080 --> 0:05:38.320 just as much as it ever was. You know, Eric, 0:05:38.440 --> 0:05:40.520 when I told you I was ubering around l A 0:05:40.600 --> 0:05:43.080 yesterday and I talked in preparation for this, I talked 0:05:43.080 --> 0:05:46.160 to every driver. There was one guy who was a 0:05:46.240 --> 0:05:49.120 nursing student and he was driving in the margins of 0:05:49.160 --> 0:05:52.920 his time in between classes. There was another guy who 0:05:52.920 --> 0:05:55.080 was a parking attendant who was doing this some days 0:05:55.120 --> 0:05:57.839 after work to earn some extra money. So to me, 0:05:58.440 --> 0:06:00.960 you know, it's created a new kind of opportunity. It's 0:06:01.000 --> 0:06:05.040 probably been a poor full time job, but um, you know, 0:06:05.080 --> 0:06:07.320 but without some of the protections that kind of normal 0:06:07.400 --> 0:06:13.240 full time labor has so eric Before we go any further, explain, 0:06:13.320 --> 0:06:16.880 explain to me the significance of this I P O moment. Right. 0:06:17.040 --> 0:06:20.039 Uber has never had any problems raising capital, So why 0:06:20.120 --> 0:06:22.839 do this at all? Right, for most companies, you go 0:06:23.000 --> 0:06:25.960 public because you need a massive amount of money to 0:06:26.160 --> 0:06:28.880 make the next leap, to really say, okay, we're going 0:06:28.920 --> 0:06:32.560 to deliver what we've been doing on a much larger scale. 0:06:32.839 --> 0:06:35.680 They've raised like twenty billion dollars on the private markets, 0:06:35.680 --> 0:06:39.480 which is an obscene amount of money. It's more about 0:06:39.839 --> 0:06:43.039 letting those existing shareholders that they've sold to be able 0:06:43.080 --> 0:06:45.840 to trade shares in a public market. So letting some 0:06:45.880 --> 0:06:49.200 people sell their stakes, it's allowing different people to come 0:06:49.240 --> 0:06:51.640 in and invest in Uber. And I think it just 0:06:51.760 --> 0:06:54.359 also is going to force them to operate with a 0:06:54.360 --> 0:06:57.719 little more quarterly rigor, right and and and they have 0:06:57.880 --> 0:07:00.400 been operating in a quasi public manner. I mean, you've 0:07:00.400 --> 0:07:04.400 been getting a lot of those quarterly financial statements. But certainly, uh, 0:07:04.720 --> 0:07:07.680 the wider world, as you say, retail investors will now 0:07:07.720 --> 0:07:09.960 be watching closely. And the one thing that they will 0:07:10.040 --> 0:07:13.920 be looking for is whether this company can ever make 0:07:14.240 --> 0:07:17.440 any money? Right, So, how how's that looking? So if 0:07:17.440 --> 0:07:20.480 you let's think about Uber his losses for a second, 0:07:20.640 --> 0:07:22.960 if you're talking about money out the door, they're losing 0:07:23.360 --> 0:07:26.480 ten billion dollars over the last three years. So it's 0:07:26.560 --> 0:07:29.040 a huge amount of money just to set the stage. 0:07:29.480 --> 0:07:31.960 And so then the question is can they outgrow it? 0:07:32.000 --> 0:07:35.520 Can they keep finding new ways to drive the revenue 0:07:35.600 --> 0:07:37.920 up so that somehow this could sort of be a 0:07:37.920 --> 0:07:42.000 profitable business. But Eric that the court transaction that underlies 0:07:42.080 --> 0:07:44.400 Uber the ride, I mean, there's so there's no reason 0:07:44.520 --> 0:07:47.520 that that should be unprofitable, right, right. I was rereading 0:07:47.560 --> 0:07:51.840 Garrett Camp, the other co founder of Uber's original slide deck, 0:07:51.880 --> 0:07:54.840 when he was planning Uber out, and he was said 0:07:54.880 --> 0:07:58.400 it was designed to be profitable, you know, and it 0:07:58.440 --> 0:08:00.840 seems so intuitive. Ubers take in the percentage of the 0:08:00.920 --> 0:08:04.520 fair that should be pure profit. That's a great business. 0:08:04.560 --> 0:08:09.360 That's why everybody loved Uber. The problem has been one competition. 0:08:09.520 --> 0:08:12.280 People are happy to switch between Lift and Uber, so 0:08:12.320 --> 0:08:15.840 when they're discounting, those discounts can be very expensive between 0:08:15.880 --> 0:08:18.840 the two companies. So that's been a major source of costs. 0:08:19.080 --> 0:08:21.440 But then there are other things. You know, Uber is 0:08:21.480 --> 0:08:24.280 now a company allowing people to move around the world. 0:08:24.640 --> 0:08:27.600 The risk that somebody dies or other forms of injury 0:08:27.920 --> 0:08:31.200 makes their insurance costs super high. So turns out there 0:08:31.240 --> 0:08:33.560 actually all these sort of embedded costs to how you 0:08:33.640 --> 0:08:36.120 run that business. And I would imagine that the hope 0:08:36.240 --> 0:08:38.760 is that this business will get more profitable over time 0:08:38.760 --> 0:08:42.240 because either you know, some rivals will will go out 0:08:42.240 --> 0:08:44.520 of business or leave the market so they'll be able 0:08:44.520 --> 0:08:47.120 to raise fares, or that they'll kind of grow into 0:08:47.520 --> 0:08:49.920 into greater scale. And so I guess that raises the 0:08:50.000 --> 0:08:52.720 question like how much growth is left. I mean, you 0:08:52.800 --> 0:08:55.520 look at a city like San Francisco or l A 0:08:55.720 --> 0:08:57.240 or a lot of cities around the world, and you think, 0:08:57.360 --> 0:08:59.400 you know, you can't really put too many more cards 0:08:59.400 --> 0:09:01.720 on the road of traffic is already pretty bad. So 0:09:01.760 --> 0:09:04.439 how how much runway is there left for Uber? Uber? 0:09:04.480 --> 0:09:06.800 You know, and it's s one plays a sort of 0:09:06.800 --> 0:09:10.680 funny word game, right. They talk about the serviceable addressable 0:09:10.720 --> 0:09:14.560 market and the total addressable market. In the serviceable addressable market, 0:09:14.600 --> 0:09:17.320 that's like competition with lift there dominate everywhere all over 0:09:17.320 --> 0:09:19.440 the world. They say, Okay, we have more than six 0:09:20.800 --> 0:09:22.720 of the market share, but then when it comes to 0:09:22.720 --> 0:09:25.560 total addressable market, they talk about it, you know, having 0:09:25.679 --> 0:09:29.040 less than one percent, because their point is transportation itself 0:09:29.120 --> 0:09:31.800 is huge and ride sharing is just at the beginning 0:09:32.400 --> 0:09:34.880 of that disruption. So what you're saying is the company 0:09:34.960 --> 0:09:37.959 is selling investors on a story that's much bigger than 0:09:38.080 --> 0:09:48.719 ride hailing. Let's talk about that next. Okay, Erica, So 0:09:48.800 --> 0:09:52.800 let's talk about Uber's future. You know, Uber is pitching 0:09:53.440 --> 0:09:56.840 this business as being much greater than ride hailing. So 0:09:56.960 --> 0:09:59.760 what what does the Uber of tomorrow look like? Well, 0:09:59.760 --> 0:10:01.920 we know it has food delivery, and that's an area 0:10:01.920 --> 0:10:05.120 where Uber has been super successful. I mean, the growth 0:10:05.679 --> 0:10:08.200 is more than year over a year, and that's what 0:10:08.320 --> 0:10:13.120 excites investors. It's long had an autonomous car research project. 0:10:13.160 --> 0:10:15.960 That's a bucket. There are scooters and electric bikes, and 0:10:16.000 --> 0:10:20.360 then there's this logistics business which is basically helping trucking 0:10:20.400 --> 0:10:23.760 companies and getting freight delivered all over the United States. 0:10:23.760 --> 0:10:26.240 So those are sort of the categories we know today. 0:10:26.400 --> 0:10:29.200 You didn't mention the flying cars. Oh yeah, the flying cars. 0:10:29.400 --> 0:10:31.080 It sounds like a joke, but of course they do 0:10:31.240 --> 0:10:34.559 have a research effort in flying cars, but it's more 0:10:34.600 --> 0:10:39.080 partnering with outside helicopter sort of companies, so they're trying 0:10:39.080 --> 0:10:41.280 to spend less money there. But you know, the future 0:10:41.360 --> 0:10:44.840 is everywhere to Uber and even flying cars. And do 0:10:44.920 --> 0:10:46.920 we what do we know about these new businesses, like 0:10:46.920 --> 0:10:49.480 how promising do they look? You know, we can see 0:10:49.520 --> 0:10:53.559 growth on uber eats. I I do think, you know, 0:10:53.920 --> 0:10:56.840 it's again an area where Uber is able to show, okay, 0:10:56.880 --> 0:10:59.400 we can tack on new things. But it's hard to 0:10:59.480 --> 0:11:04.720 understand how uber eats sort of operates profitably in the future, right. 0:11:04.760 --> 0:11:07.760 I don't know if there's enough information to really model 0:11:07.800 --> 0:11:09.600 out their business model. You just sort of have to 0:11:09.640 --> 0:11:14.079 trust that sort of people's way of eating is changing 0:11:14.160 --> 0:11:16.720 and that there's a reason that all these food delivery 0:11:16.760 --> 0:11:19.520 companies are growing at once. Looking at food delivery, I 0:11:19.520 --> 0:11:21.760 mean there's so many companies. There's door Dash, which has 0:11:21.800 --> 0:11:24.959 grown out of nowhere, there's still Postmates and caviare, and 0:11:25.040 --> 0:11:29.040 then there's already public crubhub. Do you think you know, 0:11:29.080 --> 0:11:32.920 in startups, usually it's the focus competitor that's seen as 0:11:32.920 --> 0:11:35.520 having the advantage. Do you think Uber's sort of platform 0:11:35.559 --> 0:11:38.760 approach will actually help it in food delivery? You know, 0:11:39.000 --> 0:11:40.760 another way to ask that is like, how are they 0:11:40.840 --> 0:11:45.280 leveraging their their current strength to get into the new market. Well, 0:11:45.320 --> 0:11:47.760 you know, on the consumer side, it's a different app, right, 0:11:47.800 --> 0:11:49.760 So it's not like there's a convenience that you're an 0:11:49.840 --> 0:11:52.319 Uber user. You're gonna be an Uber Eats customer also, 0:11:52.800 --> 0:11:55.880 And on the driver's side, I feel like the advantage 0:11:55.920 --> 0:11:59.000 is more illusory. I think the drivers that are are 0:11:59.040 --> 0:12:02.480 delivering for uber it's are different than most of the time, 0:12:02.520 --> 0:12:04.800 it seems to me, than the drivers that are taking passengers, 0:12:04.840 --> 0:12:07.320 you know, to and from the airport. So I don't 0:12:07.320 --> 0:12:09.679 know what advantage that they have. I think at one 0:12:09.720 --> 0:12:12.000 point they had this sensibility that you know, they were 0:12:12.000 --> 0:12:15.000 going to like have more prepared meals or a smaller 0:12:15.040 --> 0:12:18.280 selection and to deliver faster. That's kind of gone away, 0:12:18.559 --> 0:12:20.520 So I think they're kind of now just trying to 0:12:20.559 --> 0:12:23.360 compete with more focused competitors in the market that those 0:12:23.440 --> 0:12:27.760 rivals know a little bit better now. Uber also brings 0:12:27.840 --> 0:12:31.040 up the Amazon comparison, as everyone does these days, and says, 0:12:31.080 --> 0:12:34.080 you know, cars are to us what books are to Amazon. 0:12:34.200 --> 0:12:36.800 And I don't know, I find that to be problematic 0:12:36.880 --> 0:12:40.160 as well. I mean, Amazon had, you know, one customer 0:12:40.200 --> 0:12:42.760 that was buying things from it, and on the back 0:12:42.840 --> 0:12:46.120 end of distribution system, these the warehouses where they could 0:12:46.120 --> 0:12:49.839 apply technology to deliver more efficiently. And and yes, the 0:12:49.880 --> 0:12:52.600 warehouses were stocked with books, but it wasn't a huge 0:12:52.679 --> 0:12:55.959 leap to put toys and CD ROMs and and uh 0:12:55.960 --> 0:12:58.959 and then ultimately clothes and jewelry and those same facilities. 0:12:58.960 --> 0:13:01.400 But you know, as I say, Uber, it's a it's 0:13:01.400 --> 0:13:03.920 a different customer, it's a different app, you know. And 0:13:03.960 --> 0:13:05.880 then and then on the on the back end, the 0:13:05.960 --> 0:13:09.480 kind of different driver with different important things about you know, 0:13:09.600 --> 0:13:12.560 speed and keeping food warm and getting it to the 0:13:12.559 --> 0:13:15.360 customer quickly. So I don't know, does the Amazon comparison 0:13:15.360 --> 0:13:18.040 hold water to you? Right? I think you draw a 0:13:18.040 --> 0:13:22.280 smart comparison. I mean, Amazon lost so much money because 0:13:22.280 --> 0:13:26.120 it's building up all this infrastructure, it has these warehouses, 0:13:26.160 --> 0:13:28.560 but then when it's done with them, it has this 0:13:28.640 --> 0:13:31.560 great advantage over competitors and it can use them to 0:13:31.640 --> 0:13:35.240 beat them and other products. So the question for Uber 0:13:35.360 --> 0:13:38.320 is just does it have that same sort of situation 0:13:38.360 --> 0:13:41.520 you talked about drivers. How much is a driver base 0:13:41.600 --> 0:13:45.280 for one product useful for another. I'd say somewhat, and 0:13:45.320 --> 0:13:47.840 I think honestly Uber would agree that to some degree 0:13:47.840 --> 0:13:51.040 they're different drivers. What Uber would really argue is it's 0:13:51.080 --> 0:13:55.599 a technological advantage that they're a logistics expert, and I 0:13:56.280 --> 0:13:59.200 that's not the best mode in the world, just sort 0:13:59.200 --> 0:14:07.880 of an s furtise versus an actual network effect. Okay, well, 0:14:07.920 --> 0:14:11.480 so let's talk about the big day Thursday, trading begins 0:14:11.559 --> 0:14:14.960 actually on Friday. What do we know about how excited 0:14:15.000 --> 0:14:18.160 the market is for this listing, Well, they're excited at 0:14:18.160 --> 0:14:22.160 a price. Uber set a conservative sort of range that 0:14:22.160 --> 0:14:25.280 would value the company at eight to ninety billion, and 0:14:25.280 --> 0:14:28.880 we've reported that certainly within that range at the low end, 0:14:28.880 --> 0:14:32.560 there's plenty of appetite to buy the eight to ten 0:14:32.600 --> 0:14:36.000 billion dollars worth of shares that would get Uber public. 0:14:36.080 --> 0:14:39.080 And so now we're in this sort of gamesmanship phase 0:14:39.560 --> 0:14:43.360 where Uber tries to read the markets and decide whether 0:14:43.400 --> 0:14:45.600 they should raise the price, whether they should keep it 0:14:45.600 --> 0:14:48.680 where it is, because of course I p O is, 0:14:48.760 --> 0:14:52.200 unlike any other financial event, have this very perverse goal, 0:14:52.320 --> 0:14:55.720 which is you want to go public below the price 0:14:55.760 --> 0:14:58.160 you actually think you're worth, so that all those sort 0:14:58.160 --> 0:15:02.040 of fidelities of the world euro prices get some sort 0:15:02.040 --> 0:15:05.720 of get out or so boost when it starts trading, 0:15:06.120 --> 0:15:08.360 and that gives them the return to keep them sort 0:15:08.400 --> 0:15:11.240 of convicted on your stock. And so it's this weird 0:15:11.720 --> 0:15:15.480 marketing game to show that early trading boost and and 0:15:15.520 --> 0:15:17.520 so they're sort of in the process of figuring that 0:15:17.560 --> 0:15:20.200 out right now. And it also seems like a referendum 0:15:20.280 --> 0:15:23.040 on everything that has happened in Silicon valid and the 0:15:23.080 --> 0:15:26.280 private capital markets over the last ten years. I mean, 0:15:26.280 --> 0:15:29.640 the valuation of Uber was insane. So the last private 0:15:29.680 --> 0:15:33.760 valuation was seventy six billion dollars, right, But then investors 0:15:33.800 --> 0:15:36.080 went and said, and you know, pitched this idea that 0:15:36.160 --> 0:15:38.400 Uber could be worth over a hundred billion dollars. But 0:15:38.480 --> 0:15:40.400 let's just say it ends at around you know, the 0:15:40.520 --> 0:15:43.320 day ends, and Uber is worth about ninety billion. I mean, 0:15:43.360 --> 0:15:46.120 what does does it suggest that investors are are convicted 0:15:46.160 --> 0:15:48.800 about the long term opportunity? Yes, I think we have 0:15:48.920 --> 0:15:52.720 to zoom out and say, wow, at nine billion, you know, 0:15:52.880 --> 0:15:56.040 it's worth more than General Motors. It's worth more than 0:15:56.680 --> 0:16:01.200 tons of major American come and ease. Right when you 0:16:01.240 --> 0:16:03.960 back out, it's still a remarkable business story that this 0:16:04.080 --> 0:16:08.760 was all built and basically the last decade. Okay, so 0:16:08.800 --> 0:16:12.040 we're as journalists and it's Bloomberg journalists. We do not 0:16:12.160 --> 0:16:15.480 get to invest in these companies, and we certainly don't 0:16:15.480 --> 0:16:17.560 get paid for giving investment advice. But I just have 0:16:17.600 --> 0:16:20.520 to raise the hypothetical, Eric, would you be a buyer 0:16:20.800 --> 0:16:23.880 at a valuation at ninety billion buyer of Uber stock? 0:16:25.200 --> 0:16:27.640 It's funny. I know Uber super well, But to me, 0:16:27.880 --> 0:16:31.440 an investment in Uber is an investment on the macro 0:16:31.560 --> 0:16:34.920 economic environment and tolerance for companies with tons of debt, 0:16:35.160 --> 0:16:39.040 and that is a subject which I know very little about. Uh. 0:16:39.400 --> 0:16:41.440 It feels like at some point there's going to be 0:16:41.920 --> 0:16:45.440 a reckoning over what to do about the fact that 0:16:45.520 --> 0:16:49.280 Uber loses so much money and to eventually value a company, 0:16:49.280 --> 0:16:51.400 you have to turn a profit, and so I just 0:16:51.440 --> 0:16:55.200 wouldn't want to be exposed to the uncertainty that at 0:16:55.240 --> 0:16:58.200 some point there's gonna be a market correction, and people 0:16:58.640 --> 0:17:02.760 want to be companies that can kick off cash because 0:17:02.800 --> 0:17:04.960 that's what they know is safe. I don't know, Brad, 0:17:05.000 --> 0:17:07.080 what do you think about it? You know, I, first 0:17:07.080 --> 0:17:09.199 of all, I really do think that this over the 0:17:09.240 --> 0:17:12.480 long term, that this transportation market will be one with 0:17:12.600 --> 0:17:15.639 the application of of AI, you know, not just to 0:17:16.080 --> 0:17:19.199 you know, to create autonomous cars, but more efficient you know, 0:17:19.359 --> 0:17:22.920 routes and you know better better maps. And I think, 0:17:23.280 --> 0:17:25.640 you know, I think that actually other companies are maybe 0:17:25.640 --> 0:17:28.760 a little better situated. It's no longer a founder lead company. 0:17:29.160 --> 0:17:31.560 You know, DARO is very incentivized to get the company 0:17:31.600 --> 0:17:33.800 through the I p O. Yeah, just a sees on 0:17:33.840 --> 0:17:36.000 that point. I mean, that is the funny thing. Right, 0:17:36.040 --> 0:17:38.720 So if you go public a hundred billion dollars, to 0:17:38.760 --> 0:17:41.160 be a good investment, you have to have a story 0:17:41.320 --> 0:17:43.120 to be a two in or billion dollar company, right 0:17:43.119 --> 0:17:47.240 because it's about growth. You need sort of new product 0:17:47.280 --> 0:17:50.199 ideas to keep understanding where it's going to go. And 0:17:50.240 --> 0:17:54.520 I think that the vision that Uber is the next Google, right, 0:17:54.560 --> 0:17:56.480 I mean, do you I guess that's what I was saying. Yeah, Like, 0:17:56.520 --> 0:17:59.080 I don't know, you know, will this be an inventive 0:17:59.119 --> 0:18:02.040 company over the term. I mean I think that you know, 0:18:02.119 --> 0:18:06.240 that's often fueled by like the entrepreneurship inside the company. 0:18:06.320 --> 0:18:08.679 And you know, say what you want about Travis, you know, 0:18:08.720 --> 0:18:11.399 and some of the early co founders and engineers, but 0:18:11.600 --> 0:18:14.560 they had that and because of circumstances, because they got 0:18:14.680 --> 0:18:17.680 very wealthy very quickly, they've kind of cycled out. So 0:18:17.960 --> 0:18:20.359 I guess I'm not convinced that in five years and 0:18:20.400 --> 0:18:22.639 ten years it continues to be a company that's inventing 0:18:22.640 --> 0:18:24.639 new things. And then one other point, you know, there 0:18:24.640 --> 0:18:27.320 are things here that probably limit their growth, which is 0:18:27.359 --> 0:18:30.639 like the tolerance of cities for more traffic, you know, 0:18:30.800 --> 0:18:33.119 like to put more cars on the road in the 0:18:33.160 --> 0:18:36.040 biggest markets you know, New York and l A and 0:18:36.160 --> 0:18:39.360 Paris and London. You know, we're going to congestion pricing, 0:18:39.440 --> 0:18:41.200 you know, we're going to fewer cars on the road 0:18:41.240 --> 0:18:44.520 and not more. And so in their biggest business, ride sharing. 0:18:44.560 --> 0:18:46.320 You know, it's like you're gonna have to grow in 0:18:46.359 --> 0:18:48.560 the smaller cities and the suburbs. What do you think 0:18:48.560 --> 0:18:51.200 it means for other companies and for Silicon Valley overall? 0:18:51.680 --> 0:18:54.560 If the c I p O goes well, the music 0:18:54.640 --> 0:18:58.320 keeps playing, you know, the party keeps going. Uber worked, 0:18:58.600 --> 0:19:03.640 the doubters were raw, the way Silicon Valley does business works, 0:19:03.680 --> 0:19:08.600 and that the technology is still transforming the world. You know, 0:19:09.040 --> 0:19:11.840 right now Weber is looking like a success story for 0:19:11.880 --> 0:19:15.520 Silicon Valley. So, Eric, last question. Uber is going public 0:19:15.560 --> 0:19:18.879 on Friday, but the more important day might be in 0:19:18.960 --> 0:19:23.320 three months time when it announces their first quarterly report 0:19:23.480 --> 0:19:25.760 as a public company. So what what do you think 0:19:25.800 --> 0:19:28.200 then they will be like and and and what will 0:19:28.200 --> 0:19:30.960 investors be looking for? And is it different than the 0:19:31.000 --> 0:19:33.400 way people have been evaluating this company for the last 0:19:33.440 --> 0:19:36.320 ten years? You know, Then we get into this world 0:19:36.320 --> 0:19:39.399 where people are judging Uber relative to past performance. It's 0:19:39.440 --> 0:19:43.960 all about expectations, you know. It starts this quarterly machine 0:19:44.119 --> 0:19:48.320 of did they increase revenue, how's the ride sharing business doing, 0:19:48.359 --> 0:19:51.399 how is uber Eats doing, how are the losses? You know, 0:19:51.480 --> 0:19:55.880 then we really have a much more sort of established 0:19:55.920 --> 0:19:58.040 framework for what it's worth. And then it's how well 0:19:58.040 --> 0:20:03.520 can I execute on that so this is a long journey, um, 0:20:03.560 --> 0:20:05.880 and can you imagine, you know, if if the stock 0:20:05.920 --> 0:20:08.639 performance isn't great and then we get like active ast 0:20:08.680 --> 0:20:12.840 shareholders and the whole drama around this company starts again. 0:20:13.640 --> 0:20:16.280 That will make your life more interesting. It's funny to imagine. 0:20:16.320 --> 0:20:19.960 It's hard to guess who would be a more steady 0:20:20.000 --> 0:20:24.200 hand than our you know, I mean the dream journalist situation, 0:20:24.240 --> 0:20:27.920 of course, is Travis Kalanick saying this company is not 0:20:28.080 --> 0:20:31.240 the exciting one that I created, and you should put 0:20:31.280 --> 0:20:33.160 me back in the chair. But I think right now 0:20:33.200 --> 0:20:36.520 his reputation is too much in tatters for that to happen. 0:20:36.600 --> 0:20:38.520 And yet you have to imagine, though, that he is 0:20:38.520 --> 0:20:40.639 plotting his comeback, right, I mean, that's got to be 0:20:40.640 --> 0:20:43.640 in the cards. I would not count Travis out yet 0:20:43.720 --> 0:20:47.560 he wants that comeback story one way or another. Well. 0:20:47.680 --> 0:20:49.920 I look forward to following the Uber journey as a 0:20:49.960 --> 0:20:52.399 public company, and Eric, I look forward to reading your 0:20:52.440 --> 0:20:59.000 stories about it. Thanks, and that's it for this week's 0:20:59.000 --> 0:21:01.840 episode of decrypt It. Thanks for listening. If you have 0:21:01.920 --> 0:21:04.040 a story to share, I'd love to hear it. You 0:21:04.080 --> 0:21:06.720 can write to us at decrypted at bloomberg dot net. 0:21:07.080 --> 0:21:10.640 Or I'm on Twitter at Eric Newcomer and I'm at 0:21:10.680 --> 0:21:13.520 brad Stone And please help us spread the word about 0:21:13.520 --> 0:21:16.160 our new season by leaving us a rating or submitting 0:21:16.160 --> 0:21:19.879 a comment in your favorite podcast app. This episode was 0:21:19.920 --> 0:21:23.280 produced by Peo Gedcary and Lindsay crowd Awell. Our story 0:21:23.400 --> 0:21:26.760 editor was Anne Vandermay. Thank you also to Emily Busso 0:21:26.880 --> 0:21:30.840 and Aki Edo. Francesco Levi is head of Bloomberg Podcast. 0:21:31.160 --> 0:21:32.240 We'll see you next week.