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October 20, 2017
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Uber

Uber-SoftBank deal “very likely” to be finalized in the next week

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The Uber-SoftBank deal is almost done, said Arianna Huffington on stage at WSJ D.Live in Laguna Beach on Monday. When pressed whether SoftBank’s multi-billion dollar investment in Uber could be finalized within the week, the Uber board member replied that it’s “very likely.”

She confirmed media reports that the proposed deal would involve both a direct investment in the company at the last private valuation and also a secondary transaction, buying out existing shareholders at a yet-to-be-determined discount.

Uber is still “waiting on what’s going to transpire in terms of the price,” said Huffington.

She added that having SoftBank “on your cap table is very important when they’re also investing in so many of our competitors around the world.” Implying that there could be more acquisitions in ridesharing, she said to “expect to see some consolidation.”

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Huffington also spoke about the difficult period Uber has faced in the past few months. The company’s work environment had come under fire, leading to the departure of several key executives, including co-founder and CEO Travis Kalanick.

“If your culture is so driven by growth at the expense of other things, there are consequences,” said Huffington. “Culture, we’re now recognizing, is the immune system of a company.”

She voiced optimism about Uber’s new leader, Dara Khosrowshahi. Calling him “unflappable,” she said that there’s a renewed focus on image. His “goal is to get people to love the company and not just the product.”

Huffington also said that Khosrowshahi has a greater focus on cost-cutting, in order to meet the goal of taking Uber public by 2019.

Featured Image: Andrew Burton/Getty Images

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News Source = techcrunch.com

Uber product lead Daniel Graf explains Uber’s shifted approach to building tech

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Uber’s Head of Product Daniel Graf thinks that the company’s recent problems may end up being good for the ride-hailing provider’s product development in the long term; in some ways, it’s brought collaboration to the fore in a company structure that previously preferred work being done in relatively discrete silos, walled off from the potential to do more by combining the efforts of the maps team with, say, the driver product team.

Now, however, Graf says there’s a lot of cross-functional work going on, and an effort to bring in members of other teams on product development not necessarily in their primary area whenever it makes sense to do so. Uber is fundamentally changing its approach to how it operates, Graf says, and that change might never have happened if it hadn’t had to take a good long look at its own business and practices in the wake of Susan Fowler’s sexual harassment allegations and Travis Kalanick’s ultimate departure as CEO.

Graf has been at Uber for nearly two years now, after joining in December of 2015 and originally heading up product for Marketplace at Uber, which handles trip pricing and related business. He then moved up to lead product across the company temporarily, before becoming permanent in the role as of March of this year. His background includes a long stint at Google, as well as a brief time at Twitter before making his way to Uber, and he seems genuinely pleased about the changes that Uber is undergoing in terms of its product direction after all the organizational changes.

“At the end of the day we’re a tech company and the focus has to be on shipping product,” Graf said in an interview. “Actually I think, especially in the last few months, we’ve done a really good job on turning the ship on that front.”

The changes are mostly to do with a shift in focus, away from the rapid growth and expansion that fueled Uber previously, and toward a more thoughtful evaluation of product — you can see the evidence of this in Uber’s willingness to roll back some of its less successful efforts, like its Xchange Leasing business, or the quick rollback of its altered driver destination limit when that wasn’t working out. Increasingly, there’s emphasis on deliberate action instead of just growth for growth’s sake.

“Internally, it’s exciting to see what’s happening,” he added. “We’re growing so fast, faster than most companies ever before. When you’re growing at this speed, it’s easy to forget what it means to work cross-functionally, to collaborate, to leverage each other, and I think that’s one of the big changes we’ve seen this year where teams are actually collaborating much stronger together.”

Graf cites Uber’s 180 Days of Change campaign as an example of that newfound focus on collaboration. The campaign, which sees Uber revamping its driver-side product and services over a half-year planned rollout, involved people from driver team, rider team, maps team and marketplace team all working together. This is not the kind of effort you’d have seen at the company before, Graf says.

“That’s the big change we’ve been going through,” he told me. “It’s so much more important than just ‘Let’s grow, let’s do a feature here and add a feature here,’ without really thinking holistically about the customers. You have to prioritize really, really carefully.”

NEW YORK, NY – MAY 21: Daniel Graf accepts a Webby award for Google Maps for iPhone at the 17th Annual Webby Awards at Cipriani Wall Street on May 21, 2013 in New York City. (Photo by Bryan Bedder/Getty Images for The Webby Awards)

Uber’s growth is what prompted its strategy shift toward collaboration, according to Graf. The ride-hailing company has a number of different user groups now, across all aspects of the business, and it just wasn’t going to work to continue to work in mostly closed-off individual teams on each different product line and individual function.

“We can’t do anything in a silo anymore — it has to be super-collaborative. And this is a very conscious change,” Graf explained. “We did our strategic planning for the second half of this year, and customer obsession was our key theme, and customer obsession means you don’t develop for your team, you develop for your customer, and that means the rider, the driver, the eater; you do what’s right for them, and that means there are several people who chime in for this.”

We could read, almost every day a headline and be like ‘What the heck is going on at this company?’

— Daniel Graf, Head of Product at Uber

In the end, Graf says in response to a question about how you build product at a company going through what Uber is dealing with, that cross-functional approach was a natural complement to the kind of introspection employees were going through anyway to process events.

“We could read, almost every day a headline and be like ‘What the heck is going on at this company? This is not the reason I came here,’ ” Graf said. “And this is why we spent so much time within [the] tech [group] in planning for the second half of this year, and had several tech all-hands where we all came together to remind ourselves why we’re here. We looked at our business numbers over the last nine months, they were growing, and growing — that was never the issue. So you’re looking at that, you’re looking at what’s happening in the world and what our products are doing, that actually was the positive side.”

It seems a monumental task to remain optimistic in the face of all that’s transpired at Uber, and considering its ongoing challenges with Transport for London revoking its license and a recent report that found its app contained code with the potential to record user’s screens, but Graf seems relentlessly optimistic, and even suggested its challenges might make Uber a better company in the long run.

“If I look where we are now, with Dara [Khosrowshahi] on board, with our product pipelines, with what we’ve shipped over the last few months with our business numbers, if I look at all this as a holistic picture, I couldn’t feel better about the company,” he said.

News Source = techcrunch.com

No quick win for Uber in London over license loss

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Disappointment for Uber today if it was hoping an apology and a personal visit from its new CEO would quickly reboot relations with the local transport regulator in London, which last month stripped the company of its license to operate.

The market is Uber’s most important in Europe, where it claims to have some 3.5 million users and around 40,000 drivers.

Today London’s mayor, Sadiq Khan, said Transport for London (TfL) will defend its decision not to renew Uber’s license — with Uber’s appeal process likely to last months (although it can continue to operate in London during this process).

Khan confirmed that TfL would be sticking to its guns during his regular Mayor’s Question Time session. “The courts now will consider the appeal from Uber and of course TfL will defend the decision they made,” he said (via Reuters).

Late last month TfL announced it would not be renewing Uber’s license on account of its approach and conduct demonstrating “a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications”.

The four issues TfL flagged as feeding its decision were: Uber’s approach to reporting serious criminal offenses (the company has since said it’s working with London’s Met Police on a new system for reporting crimes); its approach to how driver medical certificates are obtained; its approach to carrying out background checks to ensure drivers do not have a criminal record; and how it has explained its use of internal software (codenamed Greyball) in London — software apparently designed to block regulatory bodies from gaining full access to the app and prevent officials from undertaking regulatory or law enforcement duties.

On Greyball Uber has previously stated it has not used the software in London for the purposes TfL cites — raising the obvious question of what it was using Greyball for. (We’ve asked and will update this story with any response.)

Yesterday Bloomberg reported that Uber is facing at least five criminal probes from the U.S. Justice Department — two more than previously reported. The additional DoJ probes are whether it violated price-transparency laws; and its role in the alleged theft of trade secrets outlining Alphabet’s autonomous-driving technology. (Uber has already been taken to court by Alphabet’s Waymo division over the alleged trade secrets theft. Waymo is seeking some $1.8BN in damages).

Safe to say, troubles from Uber’s legacy operations and its preference for cutting regulatory corners continue to pile up. A change of tone and a new-look CEO aren’t going to clear away all the muck overnight.

Indeed, the company was called out during a UK parliamentary committee session earlier this week, taking evidence on gig economy working practices, for the “aggressive nature” of its initial response to TfL’s decision. At the same session it also faced questions about its handling of reports of sexual assaults by drivers on its platform and on risks to road users from Uber drivers overworking.

Featured Image: Carl Court/Getty Images

News Source = techcrunch.com

Ola raises $1.1B led by Tencent to fuel battle with Uber in India

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It’s been a long while coming but Uber’s chief rival in India is finally raising a big round, and joining the billion-dollar round club at the same time.

Ola today announced that it has closed $1.1 billion in fresh financing. That’s the largest funding round in the company’s six-year history and its first major raise since November 2015 when it closed $500 million from investors.

The company has since raised smaller, undisclosed amounts provided by existing investors, but it is fair to say that this new round has been much expected — and needed. It’s look like there’s more to come, too, with Ola telling media it is close to finalizing an additional $1 billion that would take the round’s final close to $2.1 billion.

Ola has had its valuation clipped as low as $3.5 billion this year, but a source with knowledge of the new deal told TechCrunch that the company is on track for a post-money valuation of $7 billion once the full $2.1 billion raise is finalized. That’s a slight bump (pre-money) on that 2015 fundraise when Ola was valued at $5 billion post-money which is notable given recent devaluations.

Perhaps even more interesting that the valuation is the investors.

Media leaks have spoiled the surprise somewhat — Ola has been obligated to report some of its funding to regulators in India, ensuring a drip-drip of news — but China’s Tencent is a new backer and the lead investor of the round. SoftBank, an existing Ola investor (and an investor in Grab, Lyft, Didi AND seemingly soon Uber), is also in, but Ola isn’t disclosing which “U.S.-based financial investors” joined them. Media reports suggested one is Coatue, which has backed Grab and Didi, but Didi — which made a previous Ola investment and has reinvested in Grab and widened its investment network worldwide — appears to have sat this round out.

Make of that what you will.

But Tencent’s participation is particularly intriguing and further proof that the Chinese giant — valued at more than $300 billion — is upping its game in India through local tech firms that are battling global rivals. Tencent backed Flipkart via a $3 billion funding round this summer — which provided long-overdue ammunition for its battle with Amazon — it led a critical raise for WhatsApp rival Hike, which valued the Indian upstart at $1 billion, and it invested in healthcare firm Practo which harbors bold international expansion plans.

Didi fits that mold perfectly, being that it is the local fighter that is taking on a global giant, Uber.

That’s really been Ola’s focus all along: to out localize its foe. And on paper it has done that with a number of initiatives that include:

However, on the business side of things Ola’s losses have mounted. According to filings reported by Business Standard, parent company Ani Technologies saw losses triple to reach $360 million for the 2016 financial year despite revenue jumping seven-fold to $160 million.

That led to a series of smaller investments from backers such as SoftBank, which is reported to have put $250 million in at a lower valuation of $3.5 billion in April of this year, to keep the house in order. More broadly, a renewed focus on more sustainable spending led one market research firm to conclude that the number of rides from Uber and Ola in India actually decreased in the first quarter of 2017 due to a cutback in previously generous subsidies for drivers and passengers.

Uber doesn’t reveal numbers for India, while Ola declined to give its figures. However, a source close to Ola told TechCrunch that it is currently handling more than two million completed rides per day across its services, which it claims includes 800,000 drivers.

One thing that is more certain behind the hazy numbers guessing game is that this round finally gives Ola some stability. Uber has been busy fighting its own fires and attending pressing concerns in the U.S. this year but now, with a new CEO in place, there’s no reason it wouldn’t double down on India to avoid a repeat of its demise in China, where it was forced to sell to Didi after losing the market.

India is equal in promise, with over a billion people and a growing economy, and it remains Uber’s most important overseas market as evidenced by its dedicated tech center and past investment of over $1 billion. Now, with new funding in place, Ola has a level of war chest assurance at its disposal should Uber go pedal to the floor in India.

The company didn’t say too much about how it plans to spend this new money, other than the usual favorites of increasing supply of drivers — so more efforts on leasing and affordable car finance — and developing technology. The latter focuses on the use of artificial intelligence and machine learning to solve issues like which side of the road a passenger is waiting on. That might sound trivial but in the megacities of Asia it is a factor can cost you an additional 20 minutes if you get it wrong.

One area where Ola is not actively investing is self-driving cars, it has said that congestion and pollution are more critical in India. That said, it has made progress with a fleet of electric cars and rickshaws which have operated in the city of Nagpur since earlier this year. That’s a model the company is hopeful it can replace in other parts of the country with the right support from government agencies and other stakeholders.

For now though, this much-needed financing will give Ola stability. While Grab is actively trying to beat Uber out of Southeast Asia after raising $2 billion, its India peer might now be able to realistically dream that it too can take the initiative against its U.S. rival.

News Source = techcrunch.com

Logistics on-demand startup Lalamove raises $100M as it approaches a $1B valuation

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Unicorns are like buses for Hong Kong. After living in the shadow of other cities and waiting around for its first, it now has (almost) two billion-dollar companies within months… and in the same space.

GoGoVan became the country’s first unicorn in September following a merger deal with China-based 58 Suyun, and now Lalamove — another Hong Kong company specializing in logistics on-demand in China and other parts of Asia — has snagged $100 million in new financing at a valuation that is just shy of the $1 billion mark.

Both Lalamove and GoGoVan both offer transportation and logistics services on-demand, very much in the same style that Uber works for passengers.

Typically aimed at business users, the services allow goods to be transported from A to B via trucks, vans, motorbikes using a smartphone app that connects them with vehicle owners. Uber tried that itself — and in Hong Kong, too — but its ‘Uber Cargo’ service was shuttered less than two years after its launch.

Lalamove founder and CEO Shing Chow estimates the logistics market in China alone is worth $1.7 trillion a year, so it isn’t surprising that Uber was among those to take a look. But the once-bustling field of contenders has whittled itself down over the years as realities of business kicked in.

“There were probably 200-300 competitors when we started [in 2013],” Lalamove’s head of international Blake Larson told TechCrunch in an interview. “Now, for what we’re doing, there’s a very small group.”

That’s primarily because this isn’t really a consumer service despite inevitable comparisons to Uber. Or, at least, consumers alone aren’t enough to turn the service into a business. Instead, there is a reliance on business users — and particularly SMEs — who are a very different audience. As Larson previously explained, business customers are driven by reliability and service quality more than short-term incentives like low prices funded by fare subsidies.

Lalamove divides its business between a China unit and an overseas arm that covers Hong Kong, Taiwan and parts of Southeast Asia. Overall, the business is in 100 cities and it has accrued some 15 million registered users with a network of more than two million drivers.

Larson claimed “a bunch” of cities are already profitable which shows investors that the business — which isn’t yet net profitable as a whole — is a sustainable one. That’s a point Uber and others in the consumer ride-hailing space are still grappling with.

This new funding for four-year-old Lalamove is actually somewhat unexpected since the company raised a (then-largest) round of $30 million in January when Larson told TechCrunch that it didn’t need to raise again.

Not quite famous last words. He did add a caveat in January that the company might still take more money and, indeed, as is often the case with startups that start to really show promise, interest was inbound.

“When you really need money, nobody has it for you, but when you don’t need it you get offers,” the Hong Kong-based American exec joked.

Lead investor ShunWei Capital, a growth stage fund headed by Xiaomi CEO Lei Jun, came knocking, and “several” existing backers including Xiang He Capital and MindWorks Ventures doubled down and joined the round. Larson said the financing was two-times over-subscribed, which he again attributes to solid financials giving investors confidence.

As for the valuation, he said it was just shy of the billion-dollar mark when talks first began a few months ago but, where discussions to start now, it would be at over $1 billion. In other words, becoming a unicorn or reaching this highly-coveted valuation wasn’t a target.

“We didn’t want it to become a distraction,” Larson said.

Larson [seated far right] was a speaker at the inaugural TechCrunch China event in Shenzhen this summer

On to more tangible topics, Lalamove plans to spent the capital continuing its growth. Larson said that headcount in Hong Kong, its international HQ, is set to double to 200 staff. The Chinese business will “at least” match that growth if not exceed it, he said, in order to execute on an ambitious plan to expand total reach from 110 cities to 200-250.

Beyond reaching more parts of China, the plan is to go deeper in existing markets — which means move into places like Malaysia and Indonesia in Southeast Asia — rather than head to new places such as India, East Asia or beyond Asia itself. That’s contrary to GoGoVan, which said in September that it plans to raise upwards of $200 million to expand to new continents.

Larson said Lalamove takes inspiration from companies like Grab and GoJek which have gone beyond capital cities in markets like Southeast Asia to service tens of cities in countries like Indonesia, Vietnam and Thailand, to name but three examples. He added that it would take a major strategic partnership or opportunity to expands to parts of the world like Africa, Latin America, etc.

For its growth beyond China, Lalamove is counting on the fact that Southeast Asia, which Larson said already “competes with Chinese cities based on order numbers,” will scale and raise its revenue for the business.

The Lalamove head of international had previously discussed the likelihood of an IPO, potentially in Hong Kong, before 2020. This funding doesn’t change that plan, he explained, but he played it down as something that it is some way in the distance.

“[An IPO] is totally plausible,” he said. “We’re making sure we are IPO-ready as a company [but] we don’t have any impetus to do it immediately or at any fixed time. We won’t commit to anything but definitely see it as a viable option.”

Featured Image: Lalamove

News Source = techcrunch.com

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